Big banks were counting on American prosperity, but volatility works too: Morning Brief

This is The Takeaway from today's Morning Brief, which you can sign up to receive in your inbox every morning along with:

• The chart of the day

• What we're watching

• What we're reading

• Economic data releases and earnings

The American growth trade as we know it — juiced by AI might, hopes of a soft landing, and coming deregulation — may have fallen away. But an outgrowth of shifting tariff policies has sparked another lucrative exchange on Wall Street: the volatility trade.

A surge in trading activity has shuttled billions of dollars to the nation’s largest banks as investors have attempted to protect their money or deploy it in the face of market gyrations.

Earnings reports from the big five banks in recent days revealed they collectively raked in nearly $37 billion in trading revenue this past quarter, touting record sales from equities changing hands.

Warren Buffett famously urged investors to “be fearful when others are greedy and greedy when others are fearful.” A corollary for the financial institutions facilitating those trades is to sit back in any environment and collect fees.

Wall Street wants stocks to go up, sure, but most importantly, it just wants stocks to move.

The big banks' trading may mostly be for hedge funds, pensions, and large companies — big institutional investors. But everyone's rolling up their sleeves at the volatility and tinkering with their portfolios, looking to optimize or take advantage of the moment.

As my colleague Josh Schafer reports, everybody's trading. Dip-buying flows following the week of “Liberation Day” reached record levels, according to data from VandaTrack, including $3 billion in net purchases on April 3. That was the largest daily total since VandaTrack began collecting the data in 2014.

Buying at recent lows and FOMO trading explained much of the heightened activity. But another interpretation is that an entire class of retail investor has been trained to throw their cash into stocks in a continuation of a pandemic-era shift in personal finance.

You are probably better off not looking at your diminished 401(k) account when the market is convulsing. But pushing an order on a trading app has become something of a pastime for an increasingly large American demographic, the foundation for group chats among young people, and the basis for an entire genre of aspirational lifestyle content.

That big banks' big shot clients are doing this too is a great "stars, they're just like us" moment. But it's also part and parcel of the same volatility that's been a hallmark of the 2025 stock market and a lesson in the importance of a diversified portfolio of banks' business lines.