Goldman $GS Faces Bonus Bloat as Q3 Bank Earnings Season Heats Up

Q3 earnings season is officially arriving with a very specific vibe: JPMorgan Chase ($JPM) walks in like it owns the place, Goldman Sachs ($GS) shows up fashionably late and slightly over budget, and Bank of America ($BAC) is still finding parking. According to Bloomberg Podcasts' Week Ahead breakdown, the divergence between these three is sharper than it looks from the outside.

$JPM is expected to post mid-to-upper teen growth in both trading and investment banking, which is the kind of number that makes analysts do a little dance. That sets a genuinely high bar for the sector, and if JPMorgan clears it, expect the entire XLF trade to get a confidence boost heading into the back half of earnings season.

$GS has a more complicated story. Equities trading looks solid, but the bank is staring down higher expenses tied to bonuses and charitable contributions that are expected to dent the bottom line. Add in delayed high-profile IPOs (the Anthropic deal and an SKH spin-off are in the pipeline but not yet closed), and Goldman is threading a needle between strong revenue and a cost structure that isn't exactly on a diet right now. Morgan Stanley faces similar IPO headwinds, for what it's worth.

$BAC is the odd one out. Bloomberg's preview flags flat trading results, which in a quarter where its peers are printing double-digit gains, is the financial equivalent of showing up to a potluck with store-brand chips. PNC Asset Management CIO Amanda Agati (via Bloomberg Podcasts' Strong Earnings segment) sees strong fundamental breadth as underappreciated broadly, but BofA's setup makes it hard to share her enthusiasm specifically here.

The macro backdrop does offer some cover. Consumer spending is holding up better than sentiment surveys suggest, with retail sales running above inflation and weekly spending data staying firm. That's a tailwind for banks across the board, even if BofA captures less of it than its rivals. TheChartGuys note that XLF is confirming a daily uptrend after weeks of pressure from rising 10-year yields, which at least gives the sector a technical reason to breathe.

If JPMorgan clears its bar on Friday morning, the whole bank trade gets a green light. If Goldman's expense line surprises to the upside, the stock gets a timeout. Either way, Q3 earnings season just found its opening act, and it's wearing a pinstripe suit.