00:00 Speaker A
Goldman Sachs Sachs out with a new note on M&A activity. The firm reducing its forecast from 25% growth in deals to 7% amid policy uncertainty here. So basically this would be US M&A volume growth. They're saying it's now only going to be 7% this year from last year. And they say this is a function of US economic growth, CEO confidence, financial conditions, they talk about tariffs obviously having an effect, and they say that this year announced M&A activity is up 15% year-over-year. Um and Barb, what stood out to me from this note is not that M&A activity, IPO activity has collapsed. It's just that it's sort of trending near average and there had been big hopes that there would be a resurgence this year, that this administration would foster an environment that would be healthier to capital markets. It doesn't seem to be happening.
01:40 Barb
No, it doesn't. And the M&A up 15% year-to-date, I think was those were deals already in the works. And that's really hitting a 15-year average. IPOs are pretty much um flat with last year. You know, and that's what why you had the big banks running and it was on the um outlook for better economy, um deregulation, and of course, M&A picking up in their capital markets. That was Goldman Sachs, Morgan Stanley, JP Morgan. And it does it's not happening because, and I think the number one reason right now is the tariff uncertainty. Everybody's holding back. CEOs are not confident enough. And certainly for an IPO, you want to come into this market, you price it in the morning, and the stock, you know, the market goes down 500 points and your IPO is cut in half. There's no way you're going to do that. So we need we'd had two years of 24 plus percent returns in the S&P. Things seemed stable. The economic outlook looked stable. And so that was all the predictions for M&A and IPO pickup were based on that. And now, you know, we've seen, I mean you would expect some volatility coming into the year because of the high valuations, but still fundamentals look good. Now, you know, all bets are off, so it's going to take a while, um now, I think, for things to become stable and and company managements to feel confident enough to come back.
04:15 Speaker A
Um I I want to ask you about the implications for banks in particular because obviously that's a source of their business when they have more deals being done, when there's more IPOs. At the same time that there's this concern about a slowing consumer. I'm just glancing on the YFi interactive again at the big banks year to date and we're seeing a decent amount of red here. JP Morgan is down. Bank of America is down. Morgan Stanley, Wells Fargo's up a little bit, but many of the big banks are not doing well. Is is this an area you want to stay away from in part because of this lack of capital markets activity?
05:02 Barb
Well well, no, that wouldn't be the only thing. I think you really I think they are depressed, you know, as the reason the market is down in general because of the uncertainty about economic growth. There is a growth scare that's going on. And I think for those banks, obviously economic growth is important for banks. And so you want to see a pickup, you know, right now probably lending will get more data, but lending's probably on hold. Small business, you've seen what's happened to the Russell 2000. You know, when you've got everything on hold, people stop doing business, they stop borrowing. And that hurts the the bank's bottom line. So I think that's why at some point they're going to be very attractive because this will stabilize. So, I don't know when, hopefully by the end of the first half, but um yeah, I think that's the problem. Yeah.
06:22 Speaker A
Yeah.
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