What's the outlook for dealmaking, corporate and investor sentiment, and markets?
Despite a challenging global economy and geopolitical landscape, the outlook for dealmaking, IPOs, and corporate and investor activity is expected to improve in 2024 - courtesy Goldman Sachs Insights
Our Beyond The Trades Report is a highly popular trading media portal & podcast ranked in the top 5% at Spotify that breaks down the strategic thinking, business and money behind trading. If you are not already a subscriber, sign up and join 375,000+ others who are part of our TPlusTwoHoldings community.
Despite a challenging global economy and geopolitical landscape, the outlook for dealmaking, IPOs, and corporate and investor activity is expected to improve in 2024, according to Jim Esposito, Dan Dees, and Ashok Varadhan, the co-heads of Goldman Sachs' Global Banking & Markets business, on Goldman Sachs Exchanges.
For one, the market for IPOs, which started to pick up in recent months, should accelerate in the back half of 2024, especially if the Federal Reserve starts cutting rates next year, says Dees. “When you step back even further, I think the environment for capital raising will be very robust because it has to be in the years ahead,” he says. “We are in the age of innovation, of accelerating innovation. All that innovation needs to be funded.”
M&A activity should also improve. While private equity's dealmaking velocity is expected to slow with the rise in interest rates, companies are starting to step up their strategic activity, says Esposito. “I think corporates in some places were getting priced out of the market, and I do expect to see corporates starting to step in and fill the void,” he says. “We do expect to see a reasonable pickup in dealmaking activity, especially now that we seem to be through the other side of this interest rate hiking cycle.”
However, what's different about the current market cycle is the long-term debt dynamic, says Varadhan. Long-term yields have risen at a time when some buyers for that debt are pulling back. “It's hard to see long-term rates coming down meaningfully. Our base case on the trading desk is we expect a more normalized yield curve, a steeper yield curve, but really more with normalized and lower rates in the front end and not a lot of relief in the back end,” says Varadhan.
Our Weekly Substack Report is being sponsored by our good friends at Microefutures Educational & Live Trading Room.
