☕️ Worst over for Wall St

Some promising signs for bulge bracket investment banks.

July 19, 2023

Good morning.

It’s quarterly earnings season in the US and so for the signs for bulge bracket investment banks have been promising.

Last year was the worst for M&A and IPOs on Wall Street since 2016, sparking widespread layoffs across the industry. Deals and trading revenue have been a drag on revenue this quarter, but markets are forward looking and despite a sluggish M&A market there are glimmers of hope for the industry.

So far this quarter Morgan Stanley, BofA, Citigroup and JPMorgan have all posted higher than expected revenue from equity underwriting, and all but Citi also beat estimates for debt underwriting.

It was enough for Morgan Stanley’s outgoing boss James Gorman to declare that the worst for Wall St is over. We will see whether the improvement trend holds up when the industry’s big dog (/ vampire squid) Goldman Sachs delivers its results later tonight.

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MARKET MOVERS

*Stock data as of the market close. Commodities and crypto data in USD.

Market News: Ansell shares were towelled after the personal protective equipment maker sharply downgraded its earnings guidance and announced a restructuring program. The company was a major beneficiary of COVID-19 as the pandemic boosted demand for PPE. But those days are clearly now over.

THE QUICK SYNC

  • Glimmers of hope on Wall St for investment banking. (Bloomberg | Yahoo Finance)

    • Morgan Stanley’s James Gorman says the worst is over for trading and investment banking. (Bloomberg)

  • Microsoft has launched a new generative AI subscription product for Office365. (CNBC)

  • Meta’s Threads rolls out first batch of updates. (CNN)

  • EY’s Australian chief blasted rival firm PwC for its misuse of confidential government information. (Guardian)

TRADING FLOOR

M&A:

  • Hillhouse Capital will pay about $500m for a controlling stake in George Clinical. (AFR)

  • Whitehaven could buy BHP’s Daunia mine without an equity raising. (The Australian)

  • Eight Investment Partners is evaluating its options after experiencing a significant institutional mandate redemption. (AFR)

  • ACL’s Healius deal looks less attractive due to share price movements. (The Australian)

  • Intermediate Capital Group has held discussions to take a stake in privately owned Storage Investments Australia. (AFR)

  • Glow Capital has closed its first deal following the acquisition of a majority interest in Cargo Crew. (AFR)

  • Renovatio Bioscience secured a contract worth more than $5m with retailer Coles Group. (BNA)

  • Oaktree Capital Management could be angling for exclusivity in funding talks with Star Entertainment. (The Australian)

Capital Markets:

  • Alpha HPA has Macquarie booking meetings with small-cap investors.(AFR)

  • RBC suggests a raise could be on the cards for 29Metals due to challenges with its Capricorn copper mine. (The Australian)

VC:

  • Hostplus tips another $100m into uni commercialisation fund IP Group. (StartupDaily)

  • Sensor Global has successfully closed its seed funding round and raised $2.65m from well-known property investors. (SmartCompany)

Others:

  • Shares in Ansell were pummelled 14% (AFR)

  • Lithium Power International's response to Street Talk's article on the situation in Chile raises more questions than it does answers. (AFR)

  • Anthony Klein resigns from Board of Taxation. (SMH)

THE WATERCOOLER