Genuinely curious on your thoughts, and could see it both ways. And more importantly, how long until we are back in that environment?
Bullish case
Peak rates, geopolitical tension (war) is generally good for the economy (as morbid as it is), potential shift to a more pro business administration, sponsors understanding that they’re simply not going to achieve multiples underwritten in 20 and 21 and “move on with the new normal, etc
Bearish case
Broad layoffs in all white collar jobs, roaring inflation for the average person (food, rent, etc), war that gets china involved materially and imposing US sanctions or attacking Taiwan where the US gets all of our semis from, etc
Hoping for some optimism for Q3…Q2 gonna suck
Let me check my Chrystal ball
Didn’t say what will happen. I asked what you think will happen.
First time someone asked you for your view, huh, intern?
Hey man we all gotta start somewhere. And atleast I’m not every other intern on this app who says they’re a 2nd year Vp
Completely agree. Though, and I mean this with good intentions, getting defensive & sarcastic when being asked for a view is pretty weak / soft. You’ll get lit up at work and ruin your reputation in 3 seconds if anyone above the VP level asks for your opinion and you sound like a dipshit
You know what’s weak and soft? Taking anything on this app serious while not being able to read a joke.
Any time between tomorrow and 2030 would be my guess, would defer to the guy with the crystal ball tho
Good chance things pick up materially in 2025. Interest rates will be well on their way back down, Trump will be back in charge.
Expect 2024 to be similar to 2023 (eg bad)
I think that’s my base case too.
Can’t fucking wait! MAKE AMERICA GREAT AGAIN!!
Nothing to do with Trump, everything to do with interest rates - not like dealflow is booming in geographies where he isn't president. The common theme is rates.
Dealflow in some groups have already began picking back up compared to this point last year
Deal activity largely seems to depend on interest rates so still need time for things to readjust
That’s encouraging.
My, hope, is that this slow and steady pickup will put a pause on all these layoffs by the summer / Q3.
What groups?
IMO things will slowly improve this year and 2025 will be the start of good times again.
Peak rates is “generally good for economy,” what?
You’re not technically wrong, but rates are a lagging indicator. Rates come up in response to the economy beginning to overheat. When the economy is “overheating” or, getting to that point, are the good times.
In response to that, the fed hikes to slow the economy down. They begin to cut when they’re on the verge of going “too far” and causing a deep recession (like catching a falling knife). So typically when we hit the true “peak”, like now, it’s generally the bad times. Like now.
Fed is reactive, not proactive.
Deal volume will come back, but will be striated relative to global events, i.e. aerospace and defense picks up significantly, TMT cools off. I personally think restructuring offers quite the moat as far as stability, as does looking at private credit or DCM. 2025 is anyone's guess, but like others are saying, pro business pro economy governments tend to lead to better activity for banks.
A lot is a disconnect between Sellers and Buyers on multiples. Sellers saw what they could've gotten if they sold 2-3 years ago and want that price, or they aren't realizing why the comps they pulled for valuations doesn't align with buyer's expectations. Similarly, buyers are having to back into 15-25% IRR (depending on firm and return expectations of shareholders/LPs) but with rising cost of capital, those returns are nearly impossible with semi-conservative underwriting. If sellers readjust their exit multiples or if rates drop low enough that these acquisitions are as profitable as they need to be again, then deal flow can pick up again quickly. But in private markets, people are less likely to budge on their prices unless they really need to and the Fed isn't in a huge rush to slash rates.
Agree. Fucking depressing following the fed today
they were never going to cut today. I'm guessing they cut 3 times before 2025. I think they are going to cut before summer, then take time to assess whether they see the economy not getting out of hand again. If they like what they see I think we may end the year with 3 or 4 cuts with the others being consecutive. Just my 2 cents
Just look at the forward SOFR curve. That’s the collective opinion of everyone who think they know something of macro/policy and is willing to put their money down
forward curve is typically wrong / too optimistic. My personal and likely inaccurate opinion is that the first rate cut will be June at the earliest and Sept at the latest
Okay so bet against it and make a million bucks…?
I'm still long on extreme out of the money SPXU calls for a reason. Rates aren't going down any meaningful amount in 2024 any more than inflation was transitory. There may be a cut in the fall because, well, elections, but the Fed has been openly stating rates will stay up for years.....and if we see sub 4% rates its not a good thing. Newsflash: the FED doesn't give two shits about stock or housing prices.
Yo. We got a deep Chinese agent on here. Dollar Bill, doesn’t your CCP have a good intel community? Hit them up for details. But my HBS MBA tips are:
(1) stop bushwhacking your homegrown tech giants
(2) formalize the current hamhanded solutions to your country’s giant property bubble
(3) Chinese demographics are setting up like Japan in the early 90s. Good luck with that.
trump will win, peace with ukraine and russia, sanctions lifted, decreased inflation in EU, london ib market will pick up
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