Displaying items by tag: wall street

(New York)

Wall Street is getting behind the stock market in a way that is atypical for the current environment. Following a big fall in stocks, banks and analysts usually get shy about calling a rally and generally stay neutral or call for further losses. However, following the best two consecutive trading days since February, they are getting behind stocks with unusual vigor. For instance, JP Morgan’s all-world analyst said that the “rolling bear market” might turn into a “rolling squeeze higher” and that “the potential for a violent upside rally is substantial”.

FINSUM: We are not as optimistic as Wall Street, but certainly don’t feel gloomy about the market given the strength of earnings and the economy.

(New York)

Well it didn’t look like it would be a great year for bonuses, but 2017 bonus data is just in and it was a good year for the industry. Bonuses were up a whopping 17% this year and nearly eclipsed their pre-Crisis levels for the first time. The big bonuses largely reflected the growth of the leveraged loan market, which boosted fees across the industry. The New York state comptroller makes a good point about the data, saying “The large increase in profitability over the past two years demonstrates that the industry can prosper with the regulations and consumer protections adopted after the financial crisis”.

FINSUM: With bonuses getting to near pre-Crisis levels, it seems to be another sign that things are getting toppy.

(New York)

Unfortunately, there have been many school shootings and other massacres over the last few years. Each of them was followed by a brief outcry to increase gun regulation, to which there was no government response. However, something feels different this time around, and President Trump is moving to tighten some gun rules. Now it might be Wall Street’s turn to step back, as big asset managers such as BlackRock are looking at ways to strip gun companies out of the portfolios of clients who do not want to invest in them. Gun sector stocks have slumped badly since Trump’s election, mostly because the threat of new regulation—which drives gun sales—seems to be gone.

FINSUM: We are very unsure of how things will proceed here, but we can say that there does seem to be increasing political momentum towards more gun control for the first time in many years), which could influence Wall Street.

(New York)

One of the biggest names on Wall Street is warning investors that a recession is coming. Ray Dalio, head of the world’s biggest hedge fund, says that we are likely in for a recession as the Fed has to navigate a tricky tightening cycle. Dalio says the economy is in a hard-to-navigate period of tightening rates that will be hard for the Fed to get right. Rates are likely to rise quickly, which could spark a recession. The view is a reversal for Dalio, who had been until very recently saying that it was foolish to be wary of the stock market.

FINSUM: Dalio’s calls from Davos just a few weeks ago look foolish now, but he does make a good point that this will be a tricky period for the Fed to navigate well.

(New York)

Goldman Sachs just reported its first quarterly loss since 2011. The good news is that the loss does not mean the sky is falling in on investment banking or the markets. The loss was because of a huge $4.4 bn tax charge the company took in advance of the new tax regime for this year. Aside form the tax charge, Goldman’s business looked solid, with higher overall revenue and pre-tax margins in 2017. The one sore spot was bond trading, which produced only $1 bn of revenue.

FINSUM: The fall in bond trading revenue at GS has been prolific. In 2009 the firm created $23 bn of revenue in FICC trading. In 2017 revenues were just $5.3bn.