Are there any counter cyclical groups?
Are HC and RX groups that usually grow during a recession or economic downturn? If I'm not mistaken, capital markets and M&A are cyclical?
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M&A is not necessarily cyclical, you tend to advise on a lot of strategic alternatives
Alright, any other groups? Any groups that grow during a recession or have increased demand?
Alcohol, tobacco, gambling, and firearms.
Lmao. Anyway, logical way to look at it is in stocks - which stocks are counter cyclical or considered 'safe havens'? P&U is very stable, consumer staples, etc. Not sure if you'd classify them as counter cyclical per se but certainly less cyclical than groups like lev fin, energy, and mining.
FIG isn’t countercylical per se but if the concern is volatility there’s always action since there tends to be a lot of consolidation and RX in the FIG space during bear markets
For example, in the current climate. If the market continues to worsen, would RX groups grow?
This is not post-Lehman market and I have not seen much rise of restructuring groups through the cycle. I mean they have always been there and they will always be there. Maybe yes, there will be more activity and more hiring but it is not the restructuring will replace M&A in terms of size of the group or relevance.
All groups will suffer in a downturn, given there will be less financing (or it will be more expansive), people would be on hold before doing transformational transactions, capital markets valuation would not be as favorable as they were, and so on but we are not there yet.
can someone explain why HC appears counter cyclical? is this a ‘safe haven’ convention too or is there another reason why business booms in downturns?
Be careful not to confuse broadly defensive industries with defensive industries for M&A. Healthcare, power/utilities, some consumer staples and defensive retail, SaaS, midstream O&G, and a few more subsectors might have more stable fundamentals than pro-cyclicals during a crisis, but M&A volumes have historically declined during recessions because uncertainty, volatility, lack of confidence, and dried-up credit markets kill deal-making. Restructuring volumes increase.
Should it then be considered that no M&A or Cap Markets-focused group is really counter cyclical or "safe" in a recession?
Yes. Downturn = more uncertainty = investment decisions are postponed = lower investment banking activity.
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