Title: “Wall Street Banks Report Record-Breaking Quarter, Bolstered by US Election Trading and Investment Deals”
Jonathan Gray of Blackstone Inc., Ron O’Hanley of State Street Corp., Ted Pick of Morgan Stanley, Marc Rowan of Apollo Global Management LLC, and David Solomon of Goldman Sachs Group Inc., were all present at the Global Financial Leaders’ Investment Summit in Hong Kong, China, on November 19, 2024.
US investment banks recently revealed an exceptional quarter, fueled by a surge in trading around the US election and an increase in investment banking deals. For instance, JPMorgan Chase witnessed a remarkable 21% revenue spike to $7 billion in the fourth quarter, marking their best-performing quarter ever. Goldman Sachs’ equities business generated a record $13.4 billion over the year.
This was a much-needed boost for Wall Street, which had experienced a somewhat stagnant period as the Federal Reserve battled inflation. However, the easing stance of the Fed and the election of Donald Trump in November led to banks such as JPMorgan, Goldman, and Morgan Stanley exceeding quarterly expectations.
The machinery that keeps Wall Street ticking is just starting to gather momentum. Due to regulatory uncertainty and rising borrowing costs, US corporations have largely remained inactive in recent years when it comes to mergers or acquisitions.
This inactivity, however, is set to shift, according to Morgan Stanley CEO Ted Pick. With renewed confidence in the business environment, including hopes for lower corporate taxes and smoother merger approvals, banks are seeing a growing backlog of merger deals. “Morgan Stanley’s deal pipeline is the strongest it’s been in 5 to 10 years, maybe even longer,” Pick said.
Capital markets activity, including debt and equity issuance, began to recover last year, rising 25% from the low levels of 2023. Multibillion-dollar acquisitions are crucial for investment banks like Morgan Stanley, as they are high-margin transactions that stimulate activity throughout the organization.
“The last piece is what we’ve been waiting for, which are M&A tickets,” Pick said, referring to the contracts governing merger deals.
The IPO market, another value creation engine for Wall Street, has been sluggish in recent years, but it’s set to pick up speed. “There has been a meaningful shift in CEO confidence,” Goldman Sachs CEO David Solomon said. “There is a significant backlog from sponsors and an overall increased appetite for deal-making supported by an improving regulatory backdrop.”
This should make for a profitable time for Wall Street’s dealmakers and traders, after a few lean years.
