Goldman Sachs CEO David Solomon is warning investors that third-quarter results could carry a less favorable mix, with fixed-income trading softer than equities and non-compensation expenses running roughly $500 million above the prior quarter. The caution comes even as Solomon says client activity remains strong and corporate confidence stays elevated, creating a split picture for investors heading into earnings.

Speaking Wednesday at the Barclays Financial Services Conference, Solomon said Goldman's equity business remains "very strong," while fixed income, currencies and commodities has "been a little bit softer on a relative basis."

There are still a couple of weeks left in September. "We'll see where that balances out," he added.

Several one-off factors are also complicating the quarter.

Goldman expects a more muted contribution from investments after unusually strong activity in the second quarter. Non-compensation transaction costs are running higher because of elevated business activity and accelerated technology spending.

The bank also pulled forward "in a very, very tax-efficient way" several years of charitable giving.

Together, those factors are expected to push non-compensation expenses about $500 million higher sequentially.

Loan-loss provisions should also be slightly higher than a year ago because of what Solomon described as idiosyncratic factors.

Still, the broader operating backdrop remains constructive.

Solomon said corporate CEO confidence is high and noted that S&P 500 earnings growth is running about 30% above expectations from the start of the year.

Investors Takeaway

The near-term setup looks mixed rather than fundamentally weak.

Softer FICC revenue, lower investment gains and $500 million of additional expenses could pressure third-quarter earnings even if equities and broader client activity remain healthy.

But Solomon's longer-term framework is more important. He believes roughly 6% revenue growth could translate into more than 10% earnings growth as technology improves efficiency and operating leverage.

Goldman also sees room to raise profitability in banking and markets even without significantly higher activity, while asset and wealth management continues growing at better than a high-single-digit pace.

The key investor question is whether the third-quarter cost spike proves temporary. If it does, strong activity and operating leverage could keep the longer-term earnings story intact.