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Goldman Sachs (GS +2%) is trading modestly higher after reporting a huge EPS beat. GS reported its third consecutive EPS beat above $1.50+. Revenue grew 6% yr/yr to $15.06 bln, which also was better than expected, and driven by strong growth in its GBM segment. This nice upside follows a similar pattern from what we saw with JPM last week. And just like with JPM, we think commentary about the economy, tariffs, inflation and the impacts on the consumer is what's taking center stage.

• The company said that ongoing policy uncertainty and market volatility drove many clients to reposition their portfolios, driving higher activity in its FICC and Equities businesses. Goldman conceded that it's entering Q2 with a markedly different operating environment than earlier this year.
• Global Banking & Markets (GBM) is by far Goldman's largest segment. Segment revs in Q1 grew 10% yr/yr and 26% sequentially to $10.71 bln. Notably, Investment Banking (IB) fees dropped 8% yr/yr to $1.91 bln, primarily due to significantly lower revenue in Advisory. In fairness, IB was lapping a strong IB quarter a year ago. However, GS said the volatile backdrop led to more muted activity relative to the levels expected coming into the year.
• Its other big segment is Asset & Wealth Management (AWM), but it was a drag on overall growth with segment revs down 3% yr/yr to $3.68 bln. This reflected significantly lower revs in Equity investments and Debt investments. Equity investments were impacted by significantly lower net gains from investments in private equities and higher net losses from investments in public equities.
• From a macro view, Goldman said that its clients, including CEOs and institutional investors, are concerned by the significant uncertainty that has constrained their ability to make important decisions. This uncertainty and fears over a potentially escalating trade war have created material risks to the US and global economy. GS is encouraged by the administration's recent actions to pursue a more gradual policy, but how this plays out is still unknown.
• Goldman noted that its economists expectation for growth in the US have fallen meaningfully from over 2% to 0.5%. The prospect of a recession has increased with growing indications that economic activity is slowing down around the world. Goldman expects markets will likely continue to be volatile until there is further clarity. Goldman noted that few countries have benefited more from a post-World War II economic and financial order than the US.

Overall, Goldman's report was pretty similar to what we saw with JPM last week, namely impressive financials with strong beats but cautious macro commentary. JPM has much more exposure to the consumer with its Chase Bank arm while Goldman is more of a true investment bank, but the commentary was similar. Basically, the uncertainty over tariffs is slowing economic activity and growth. Goldman sounded pretty cautious about heading into Q2. We suspect we will get similar comments from Citigroup (C) tomorrow morning.