What's going on?

JPMorgan Chase and Goldman Sachs kicked off earnings season with stronger-than-expected second-quarter results on Tuesday, setting the tone for their investment banking rivals to come.

What does this mean?

Both JPMorgan and Goldman saw their profits shoot past expectations, sure, but the real story could be found elsewhere. Revenue from their trading businesses was down versus the same time last year, although � as JPMorgan�s CEO pointed out last month � that was all but inevitable when activity was so high this time last year. Dealmaking revenue, meanwhile, was firing on all cylinders: Goldman�s segment � which advises businesses on stock market listings and company acquisitions � had its second-best ever quarter, while JPMorgan�s did a brisk, expectation-beating business too.

Why should I care?

Zooming in: Big banks have divergent futures.

It�s easy to lump big US banks together, but to understand why JPMorgan�s share price has only risen 24% this year versus Goldman�s 44%, it�s worth looking at where they differ. JPMorgan is widely seen as a trading powerhouse, particularly in currencies, commodities, and �fixed income� (i.e. bonds). A post-pandemic recovery, then, isn�t great for the bank, since there�ll be a lot less volatility to trade on. Goldman, on the other hand, is a deal factory. And since dealmaking�s on track for a record year � and since that momentum is expected to continue for at least a couple more � the bank should benefit in the long term.

The bigger picture: Europe�s banks are waiting in the wings.

JPMorgan also announced that it�d keep buying back its own shares, which shouldn�t come as much of a surprise: US banks have been rewarding their investors ever since the Federal Reserve � which banned buybacks during the pandemic � gave them the go-ahead last month. Europe�s central bank isn�t being quite so generous, but investors are hopeful that it�ll let the region�s banks loose later this year too.