What’s Behind Wall Street’s Bumper Year

Summary

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Episode Overview

Podcast: WSJ What’s News
Episode Title: What’s Behind Wall Street’s Bumper Year
Date: December 12, 2025
Host: Alex Osila, The Wall Street Journal

This episode explores three core stories shaping business and finance: the factors driving one of Wall Street's most profitable years ever, shifting rhetoric on climate change among politicians and CEOs, and notable global headlines, including corporate milestones and international incidents. Featuring insights from WSJ Wall Street Editor David Benoit and Chief Economics Commentator Greg Ip, the episode delivers fast-paced analysis and on-the-ground reporting.

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Key Discussion Points & Insights

1. Wall Street’s Outstanding Year

Segment Start: 00:32
Guests: David Benoit, WSJ Wall Street Editor

• Record-Breaking Bank Performance

  • Market revenue surges: A boom in both trading and investment banking — highlighted as possibly the "second biggest year in history" for banking fees at Goldman Sachs.
  • Trading volume growth: JP Morgan’s head of consumer banking expects "growth in the low teens from a year ago for trading revenues."
  • Active M&A environment: Major deals—including the buyout of Electronic Arts, Google’s acquisition of Wiz, and the impending Warner buyout—drove fee windfalls for banks.
  • Investor behavior: Retail clients increased demand for trading services and leveraged trading, further inflating banks' earnings.
  • Milestone for Bank of America: Achieves record-high stock price for the first time since before the 2008 financial crisis.

• Drivers Behind the Bumper Year

  • Market volatility helps banks: "Chaos works out pretty well for the banks" (David Benoit, 02:32).
  • Political influence: The perception that "Donald Trump is going to approve deals" spurred companies to act on M&A.
  • White House & Fed policy: Ongoing speculation and uncertainty about the Fed and economic direction prompted active market participation.

• Bank Strategy for 2026

  • Aggressive growth posture: "Everyone is pretty cutthroat right now, right? They see all these fees out there and they're all trying to get them." (David Benoit, 03:41)
  • Spending for expansion: JP Morgan plans $105 billion in expenses next year, an increase focused on investment in AI, talent, and customer growth.

• Memorable Quote:

  "We are seeing a lot of banks talk about we're ready to spend, we're ready to grow, we want to grow faster."
  — David Benoit, 03:44

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2. Changing Climate Rhetoric

Segment Start: 07:54
Guest: Greg Ip, WSJ Chief Economics Commentator

• Shift in Public & Political Focus

  • Climate concern peak: Four to five years ago, climate was central to political and business discourse, especially under President Biden’s administration.
  • Changing priorities: Rising inflation and global instability (e.g., Russia-Ukraine war) have redirected attention to economic security and personal finances.
  • Muted alarms: "Politicians and CEOs seem to have muted those alarms and softened their warnings." (Alex Osila, 07:50)
  • Political climate shift: Larry Fink, Bill Gates among those dialing back public urgency on climate, reflecting changed winds after Trump’s election.

• Future of Climate Policy

  • Carbon tax unlikely: "A lot of policies that would have been helpful... like a carbon tax, become even harder to enact now... I have to admit that that cause was lost ages ago." (Greg Ip, 08:53)
  • Realistic approaches: Moving away from "climate catastrophism" toward "a more kind of subtle, sober climate realism"—focus on incremental, politically feasible steps.
  • Tech optimism: Despite policy inertia, progress in renewables and energy storage is set to ensure emissions continue declining, especially in the US.

• Memorable Quotes:

  "Climate change is not something they're inclined to worry about when they're more worried about their pocketbooks or... the security of their energy supply."
  — Greg Ip, 08:32

  "Rather than focusing on the catastrophic outcomes and the need to change everything all at once right now, people focus instead on what's politically supportable and doable."
  — Greg Ip, 09:33

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3. Other Major Headlines

US Markets Recap (00:32 – 02:32)

• Stock market correction: Nasdaq plunged 1.7%, led by a dramatic Broadcom sell-off; Dow and S&P 500 also declined.
• Broadcom’s record drop: Stock fell over 11%, losing $219 billion in market cap after guidance disappointed despite record sales.
• Bank of America’s milestone: Stock returns to pre-2008 heights.

Fed Leadership Watch (04:40)

• Trump’s choice for Fed chair: President Trump is wavering between former Fed governor "KE" and National Economic Council Director Kevin Hassett.
• Memorable Trump Quote:

  "I think the two Kevins are great." (Alex Osila, 04:44)

• Trump wants the next Fed chair to consult with him on interest rates and pushes for more rate cuts.

International News (05:54 – 07:54)

• Narges Mohammadi arrested: Iranian Nobel laureate detained violently, per her brother.
• Tibetan protest crackdown: Dozens detained for protesting a gold mine project in western China.
• Michigan football scandal: Former coach Sharon Moore dismissed and charged after misconduct investigation.

Costco’s Holiday Strategy (10:14)

• Adapting to tariffs: Reducing foreign-sourced items, offering more US products, resulting in a smaller assortment.
• Food sales boom: 4.5 million pies sold in three days before Thanksgiving (10:37).

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Notable Quotes & Timestamps

• On bank performance:
  "Chaos works out pretty well for the banks." — David Benoit, 02:32

• On climate realism:
  "As this sort of climate catastrophism... retreats, it gets replaced by a more kind of subtle, sober climate realism." — Greg Ip, 09:30

• On corporate adaptation:
  "We're ready to see a big year for banking in 2026 again, depends on, you know, what happens in geopolitics and the rest of the world." — David Benoit, 04:21

• On retail behavior:
  "US bakeries also set a record in the three days leading up to Thanksgiving selling 4.5 million pies. That's over 7,000 pies per warehouse over a three day period." — Segment Narration, 10:37

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Timestamps for Important Segments

• Wall Street performance: 00:32 – 04:32
• Fed chair speculation: 04:40 – 05:27
• International headlines: 05:54 – 07:54
• Shifting climate rhetoric: 07:54 – 10:10
• Costco's holiday strategy: 10:14 – 10:48

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Episode Tone & Style

The episode is brisk, analytical, and fact-driven, with a focus on clear explanation and timely news. Direct speaker quotes and specific market and policy details make the content both accessible and authoritative.

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This summary covers the major themes, key insights, and notable moments, providing a comprehensive guide for anyone who missed the episode.

Transcript

[A]

How does F1 turn data into insights at 200 mph? AWS is how fans get inside the strategy. AWS powers next level innovation for millions of businesses. Why politicians have stopped talking about a climate crisis. Plus what's driving one of Wall Street's best years ever.

[B]

People are turning to their banks saying hey, help me trade, help me borrow more money to trade. All that leads to record market's revenue.

[A]

And President Trump says he's still deciding between two Kevins to lead the Federal Reserve next year. It's Friday, December 12th. I'm Alex Osila for the Wall Street Journal. This is the PM edition of what's news, the top headlines and business stories that move the world today. Major US Stock indexes fell today. The Nasdaq led the losses dropping 1.7% after it was dragged down by Broadcom stock. The chip maker dropped more than 11% and suffered its largest one day market cap loss on record, losing $219 billion according to Dow Jones Market Data. After its latest earnings report, the company posted a record $18 billion in sales but raised questions about its sales forecasts and margins. Chief Executive Hock Tan said Broadcom's fast growing AI business has lower gross margins than other areas China, while its forecast for non AI revenue for the current quarter was flat. The Dow dropped half a percent and the S&P 500 lost 1.1%. Meanwhile, bank of America notched a symbolic win today when its share price finally recovered from the 2008 financial crisis, closing at its first record high since November 2006. The shares are now up 25% this year and closed up 1.1% today at $55.14 a share. Bank of America isn't the only big bank having a great year. This year is wrapping up as one of the best years ever for Wall street, based on comments from bank leaders at a Goldman Sachs conference this week. For more on what's driving this, I'm joined by our Wall street editor, David Benoit. David, a couple stats from today's story. Goldman Sachs CFO said it looked like the bank's second biggest year in history for banking fees. On the market side, JP Morgan's head of consumer banking was forecasting growth in the low teens from a year ago for trading revenues. What made this such a hot year in investment banking and trading for these big banks?

[B]

I think you can basically say chaos works out pretty well for the banks on the investment banking fees that Goldman's talking about. This is going to wind up pretty much the second best year outside of 2021 for all M and A. Across the globe, we've seen really big deals. We saw the buyout of Electronic Arts, the video game maker. We saw Google buy Wiz, a security company. We've got the ongoing fun of Warner buyout from Netflix or whoever. The banks love those things. That's where they get their fees. And companies really jumped on. Donald Trump is going to approve deals. This is our chance to strike on the market side again. I think you can pretty well point to the White House here. You look back in April and we had a lot of turmoil in the markets because of Liberation Day. That smoothed out, but we've had lots of questions about where the economy's going, questions about what the Fed is up to. All that stuff leads to people trading stocks and stocks are at all time highs, right? We're closing in on Dow. 50,000 people are turning to their banks saying, hey, help me trade, help me borrow more money to trade. All that leads to record markets revenue.

[A]

How are these banks approaching getting new business in 2026 and how is that changing?

[B]

So everyone is pretty cutthroat right now, right? They see all these fees out there and they're all trying to get them. We are seeing a lot of banks talk about we're ready to spend, we're ready to grow, we want to grow faster. Which is kind of a different tone than we've heard for the last few years where it's sort of been like, we're doing okay, don't worry about us. I think the big sign from this conference was JP Morgan announced they're going to spend $105 billion in expenses next year, which is up like 10 billion from this year and up 30 something billion from just a few years ago. This is money on AI, this is money on talent. This is money on just like putting it to more customer use. So this is pretty big stuff. We're ready to see a big year for banking in 2026 again, depends on, you know, what happens in geopolitics and the rest of the world. But that's how they're feeling going into 2026. On the back of this big year.

[A]

That was WSJ Wall street editor David Benoit. Thanks, David.

[B]

Thanks for having me.

[A]

In an Oval Office interview with the Wall Street Journal today, President Trump said he was leaning toward choosing either former Fed governor KE or National Economic Council Director Kevin Hassett to lead the Federal Reserve next year. Trump said that, quote, I think the two Kevins are great. Hassett has been viewed as the front runner after Trump said in recent weeks that he had already made up his mind about who should lead the central bank. He restated that today, but suggested he hasn't made a final decision. Trump also said that he thought the next Fed chair should consult with him on where to set interest rates and pushed for more rate cuts. Coming up, why a former Michigan football coach was arrested and what's flying off the shelves at Costco. That's after the break.

[C]

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[A]

In international news, Iranian Nobel Peace Prize laureate Narges Mohamedi was arrested at a public event today. Her brother said she was violently detained in northeastern Iran while attending a memorial service. Mohammadi, who was awarded the prize in 2023, gained global attention for speaking out against the Iranian government's oppression of women and torture of dissidents. Iran's mission to the United nations declined to comment on her arrest. And we're exclusively reporting that Chinese authorities last month arrested dozens of Tibetans in a rare act of defiance. They were protesting a gold mining project that threatened their livelihoods in a Tibetan autonomous area in western China. That's according to Tibetan activists and Tibet's government in exile. As of yesterday, 11 of the protesters initially detained were still held. Chinese authorities didn't respond to a request for comment. One of the richest, most powerful institutions in college sports was upended this week when the head coach of the Michigan football team was fired and then charged with a felony count of home invasion and two misdemeanors, including stalking. The university had fired Sharon Moore, the former coach, on Wednesday after an investigation found that he had had a sexual relationship with a female member of Michigan's football staff. Moore's lawyer said today that he was set to be released on a $25,000 bond. Whatever happened to the climate crisis? Over the past few years, high profile names like Bill Gates and BlackRock CEO Larry Fink have sounded the alarm about the dangers of climate change. But more recently, politicians and CEOs seem to have muted those alarms and softened their warnings. So what's changed? WSJ chief economics commentator Greg IP joins me now. Greg, the underlying facts around climate change, of course, have not changed. Carbon emissions are still rising. The climate's getting warmer. NASA said that 2024 was the hottest year on record. So why are we talking about climate change differently now?

[D]

Well, if you go back four or five years ago, when I think climate concerns were kind of at their peak, there was a different political and cultural milie look at the term of President Biden. I mean, he comes in, you know, he's completely invested in the climate agenda, talks about the urgency of acting right away, he passes a couple of really big spending bills to try and do a number of things, including promoting green investment. But then right around that time, inflation takes off, partly because of all the spending and the Biden packages and Russia's invasion of Ukraine. And what you've seen since then is people's priorities have basically changed. Climate change is not something they're inclined to worry about when they're more worried about their pocketbooks or, or their security, the security of their energy supply. And with the election of President Trump, I think a lot of folks, including CEOs like BlackRock, Larry Fink, have sort of sensed there's been a shift in the political wind and they're talking about it differently and they're trying to downplay a lot of the things that they used to emphasize just a few years ago.

[A]

So what does that mean for the prospect of combating climate change?

[D]

Well, obviously a lot of policies that would have been helpful in terms of accelerating the move to net zero emissions, like a carbon tax, become even harder to enact now. Although, you know, as somebody who has been pushing for a carbon tax for decades, I have to admit that that cause was lost ages ago.

[A]

Then what do you see as more likely to happen against climate change?

[D]

First of all, given the technological progress that we've made on low emissions technology, and I'm talking about wind, I'm talking about solar, I'm talking about battery storage, I'm talking about promising developments in advanced nuclear emissions are likely to head downwards globally before long, and they've been heading downwards for the United States for some time. And that's likely to continue almost irrespective of the policy landscape. The second thing is, I think that as this sort of climate catastrophism which sort of consumed us a few years ago, retreats, it gets replaced by a more kind of subtle, sober climate realism, where rather than focusing on the catastrophic outcomes and the need to change everything all at once right now, people focus instead on what's politically supportable and doable and what has a proven track record, which means things like incentivizing innovation and commercialization of low emissions technology.

[A]

That was WSJ chief economics commentator Greg ip. Thank you, Greg.

[D]

Thanks for having me.

[A]

Lots of companies are trying to mitigate the effects of tariffs for the holiday season. Costco's approach is to drop some items affected by tariffs and source more items from the US that means it's selling a smaller assortment of products. One thing, it's selling a lot of food like pizza and pies, as Costco Chief Financial Officer Gary millerchip said on its latest earnings call, lots and lots of pies.

[E]

US bakeries also set a record in the three days leading up to Thanksgiving selling 4.5 million pies. That's over 7,000 pies per warehouse over a three day period.

[A]

Costco's revenue topped forecasts in its latest quarter, but shares were nearly unchanged today. Some analysts say investors may be hungry for a special dividend. And that's what's news for this week. Tomorrow, you can look out for our weekly markets wrap up what's news in markets Then on Sunday, WSJ chief China correspondent Ling Ling Wei answers questions about the technology race between the US And China. That's in what's New Sunday. And we'll be back with our regular show on Monday morning. Today's show is produced by Pierre Biennime with supervising producer Tali Arbel. Michael Lavall wrote our theme music. Jessica Fenton is our technical manager, Aisha El Musleam is our development producer, Chris Zinsley is our deputy editor. And Falana Patterson is the Wall Street Journal's head of news Audio. Alex I'm Alex Osola. Thanks for listening.

[F]

Exchanges, the Goldman Sachs podcast featuring exchanges on navigating macro uncertainty exchanges on the forces shaping global markets. For the sharpest analysis on finance, business and the economy, count on exchanges between leading minds at Goldman Sachs. New episodes every week. Listen now.