On Wall Street, investment bankers are the fattest of cats... Many of them are stars. But most stay out of the spotlight. They would rather let their investment deals speak for themselves.
Why Investment Banking Matters for the Economy
By Joe Austin, senior analyst, Chaikin Analytics
On Wall Street, investment bankers are the fattest of cats...
Many of them are stars. But most stay out of the spotlight. They would rather let their investment deals speak for themselves.
And if you've ever been an investment banker (or wanted to be one), you probably know that the hours are long... and the work is grueling.
But on the flip side, these folks make serious money.
It's one of the few professions where your bonus can be a multiple of your salary – hence the "fat cat" status.
But no matter how you feel about the profession, there's a lot to learn from how investment bankers are doing.
That's because when things are good for them, it means that corporate America is confident. And that bodes well for the economy.
It's not a perfect leading indicator. But it's a decent gauge of where things are headed. And that's useful information when you're investing in stocks...
Wall Street legend Marc Chaikin predicts the markets could see a massive reset beginning days from now... but not in the way you might expect. In short, you have just days left to get out of cash... and adopt a powerful new way of handling your money (NOT gold or cryptos) that could double your portfolio. Click here to learn more.
According to Wall Street legend Whitney Tilson, an extremely rare window in the markets is about to open. It's an often misunderstood market setup only seen 13 times since 1920. The last time this happened, it minted a million brand-new millionaires – in a single year. But he says this unique window in the markets could close much sooner than anyone realizes, leaving most investors in the dust... while making a select few incredibly rich. Get the No. 1 stock (with 500%-plus upside potential) for this rare market event now.
Keep in mind that investment banking has had a rough couple of years recently. After a banner year in 2021, the next year was awful.
The New York state comptroller – who sees all the paychecks – said that banker bonuses in 2022 were their worst since 2008.
Things didn't get better in 2023. With global dealmaking falling to its lowest levels in a decade, investment-banking fees also slipped.
The war in Ukraine, market volatility, rising inflation, and the Federal Reserve's rate hikes all weighed on corporate mergers and acquisitions (M&A) and capital markets activity.
Investment-banking revenues declined around 20% from the third quarter of 2022 to the third quarter of 2023.
But this year, there were some big surprises when banks reported their third-quarter earnings...
And it was all about the investment bankers.
For example, Goldman Sachs (GS) said its investment-banking fees were up 20% year over year.
JPMorgan Chase's (JPM) investment-banking fees were up 31% from the year before. That was double what the bank expected the month before.
And Morgan Stanley (MS) reported a whopping 56% year-over-year increase in its investment-banking fees.
You can see the big spikes in the chart below...
According to Dealogic, investment-banking revenues globally rose 21% this year. In North America, revenues were up 31%.
Those are some great numbers. And you can just imagine how big the bonuses will be.
But there's good news for the rest of us, too...
That's because those big banking numbers mean that corporate America is looking ahead. And it's optimistic about what it sees.
Now, the Federal Reserve lowering interest rates certainly gave all this a boost. But this at least tells us that the Fed's strategy is working... and that the outlook for growth is good.
That's because in a growing economy, there's greater access to capital. When they think they have the wind at their backs, companies are more willing to issue debt or make acquisitions.
Morgan Stanley thinks that deal volumes could be up as much as 50% this year. It says non-financial companies and private-market investors are sitting on about $8 trillion in unallocated capital.
That's a lot of cash that can get put to work. Morgan Stanley sees banking, energy, health care, real estate, and technology as the sectors most primed for M&A.
So with this in mind, let's see what the Power Gauge has to say...
We can track capital markets through the SPDR S&P Capital Markets Fund (KCE). It holds stocks like Goldman Sachs, Morgan Stanley, JPMorgan, Citigroup (C), and Bank of America (BAC).
Right now, the Power Gauge gives KCE a "very bullish" rating. That's a great first sign.
We can also look at the individual ratings of the 61 companies in the fund. Of these, 46 currently have a "bullish" or better rating. Meanwhile, 15 are in "neutral" territory. And none have a "bearish" or worse rating.
Put simply, the Power Gauge sees big opportunity in this corner of the market right now.
To monitor how all this plays out, we'll also have to see how the deal flow looks at the end of the fourth quarter. And we'll have to hear what the banks say about the outlook for next year.
So whether you celebrate investment bankers' success or cringe at their excess... there's a lot to learn from how they're doing.
Right now, investment banking has its mojo back. And that's good news for all of us.
Good investing,
Joe Austin Editor's note: Next week, Chaikin Analytics founder Marc Chaikin is unveiling his newest breakthrough with the Power Gauge...
In short, it's a new way to spot potential buying sprees from Wall Street on 5,000 stocks – before they happen – for the chance to double your portfolio over the next year.
Marc is going on camera to share all the details on Tuesday, October 29, at 10 a.m. Eastern time. And it's completely free to watch his unveiling. All you have to do is register in advance right here.
Market View
Major Indexes and Notable Sectors
# Hld: Bullish Neutral Bearish
Dow 30
-0.01%
10
17
3
S&P 500
-0.06%
148
277
68
Nasdaq
+0.11%
22
69
9
Small Caps
-0.39%
544
1011
365
Bonds
+0.1%
— According to the Chaikin Power Bar, Large Cap stocks and Small Cap stocks are Bullish. Major indexes are mixed.
* * * *
Sector Tracker
Sector movement over the last 5 days
Information Technology
+1.34%
Utilities
+0.88%
Energy
+0.58%
Financial
+0.55%
Communication
-0.05%
Materials
-0.36%
Discretionary
-0.36%
Staples
-0.58%
Industrials
-0.78%
Real Estate
-0.88%
Health Care
-1.14%
* * * *
Industry Focus
Retail Services
12
45
21
Over the past 6 months, the Retail subsector (XRT) has underperformed the S&P 500 by -10.11%. Its Power Bar ratio, which measures future potential, is Weak, with more Bearish than Bullish stocks. It is currently ranked #16 of 21 subsectors.
Indicative Stocks
VVV
Valvoline Inc.
FIVE
Five Below, Inc.
DLTR
Dollar Tree, Inc.
* * * *
Top Movers
Gainers
PM
+10.47%
GM
+9.81%
DGX
+6.85%
NSC
+4.94%
CHTR
+4.57%
Losers
GPC
-20.97%
GE
-9.05%
PHM
-7.24%
WBA
-6.89%
NUE
-6.46%
* * * *
Earnings Report
Reporting Today
Rating
Before Open
After Close
CME, GD, T
KO, WAB
LRCX, MOH, ORLY
No earnings reporting today.
Earnings Surprises
CSGP CoStar Group, Inc.
Q3
$0.22
Beat by $0.06
MANH Manhattan Associates, Inc.
Q3
$1.35
Beat by $0.29
GM General Motors Company
Q3
$2.96
Beat by $0.56
GPC Genuine Parts Company
Q3
$1.88
Missed by $-0.55
MCO Moody's Corporation
Q3
$3.21
Beat by $0.34
* * * *
You have received this e-mail as part of your subscription to PowerFeed. If you no longer want to receive e-mails from PowerFeed, click here.
You're receiving this e-mail at indra21poetra@gmail.com.
For questions about your account or to speak with customer service, call +1 (877) 697-6783 (U.S.), 9 a.m. - 5 p.m. Eastern time or e-mail info@chaikinanalytics.com. Please note: The law prohibits us from giving personalized investment advice.
Any brokers mentioned constitute a partial list of available brokers and is for your information only. Chaikin Analytics, LLC, does not recommend or endorse any brokers, dealers, or investment advisors.
Chaikin Analytics forbids its writers from having a financial interest in any security they recommend to our subscribers. All employees of Chaikin Analytics, LLC (and affiliated companies) must wait 24 hours after an investment recommendation is published online – or 72 hours after a direct mail publication is sent – before acting on that recommendation.
This work is based on SEC filings, current events, interviews, corporate press releases, and what we've learned as financial journalists. It may contain errors, and you shouldn't make any investment decision based solely on what you read here. It's your money and your responsibility.
Tidak ada komentar:
Posting Komentar