Today is Tuesday, April 5, 2022, and here’s your weekly selection of essential intelligence on financial markets and the global economy from S&P Global Market Intelligence. Subscribe to be notified of each new Insight Weekly.
In this edition, we explore the revenue outlook for the global investment banking sector. Investment banks' underwriting and deal advisory revenues are set for a hard landing as companies shelve M&A and IPO plans amid hawkish central bank policies and uncertainty surrounding the Russia-Ukraine war. But there could be one bright spot for investment banks — the recent surge in U.S. credit union-bank M&A activity. A slowdown in such deals is not in sight, providing investment banks with plenty of opportunities to boost their advisory revenue figures.
Short sellers, who bet on a stock's decline by selling borrowed shares in hopes of buying them later at a lower price, have steadily increased their positions against all sectors of the U.S. stock market since the start of 2022, when equities surged to all-time highs. The largest short interest has been in consumer discretionary, healthcare and energy stocks amid elevated global oil prices, surging inflation and persistent fears over COVID-19.
The Russian war on Ukraine has disrupted oil, natural gas and coal supply chains, exacerbating tightness across metal markets and heating up prices for nickel, steel, aluminum, copper and a host of other materials critical to electric vehicle manufacturing. EV makers, already struggling with a shortage in semiconductors alongside the rest of the auto industry, now face problems securing metals essential to the batteries that power the cars.
- In Focus: Investment Banking Outlook
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War, rate hikes mar growth prospects for global investment banking activity
Tightening financial conditions and the spike in geopolitical risk will hit investment banks' underwriting and deal advisory revenues in 2022.
—Read the full article from S&P Global Market Intelligence
Investment banks capitalize on surge in credit union-bank M&A deals
As the number of U.S. credit union-bank M&A deals has risen in recent years, investment banks are seeing increased competition to advise on the credit union side along with opportunities to boost advisory revenue.
—Read the full article from S&P Global Market Intelligence
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- Deep Dives: Credit and Markets
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Short sellers raise bets on US stock market drop
Consumer discretionary remained the most-shorted sector in mid-March, largely due to the impact of rising inflation on demand for nonessential goods.
—Read the full article from S&P Global Market Intelligence
Stocks, bonds diverge on Fed rate plans as yield curve inverts
Stocks are climbing from recent lows while U.S. Treasury bonds are falling as both markets weigh whether the Federal Reserve can successfully raise interest rates without derailing the economy.
—Read the full article from S&P Global Market Intelligence
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- Deep Dives: Financials
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Higher capital requirements near as bank risk scores climb
Four of the eight U.S. global systemically important banks said they expect higher surcharges in 2023 and 2024.
—Read the full article from S&P Global Market Intelligence
US banks maintain big surpluses over required loss cushions
Global systemically important banks have continued to be active issuers of debt and preferred stock, sustaining comfortable margins above required levels of total loss absorbing capacity.
—Read the full article from S&P Global Market Intelligence
Russia conflict endangers positive revenue outlook for securities services banks
The secondary impact from the Russia-Ukraine war on securities services revenues "could be huge if the war escalates and causes a major meltdown of the global equity market," said Eric Li, research director at Coalition Greenwich.
—Read the full article from S&P Global Market Intelligence
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- Deep Dives: Fintech
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Core banking innovation empowers smaller banks to think like fintechs
The force of innovation behind core banking systems is enabling smaller banks to explore new revenue sources from financial technology applications.
—Read the full article from S&P Global Market Intelligence
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- Deep Dives: Private Equity
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UK wealth manager FNZ propels February global VC investment to $44.1B
The technology, media and telecommunications sector continues to be the top choice of venture capital investors, accounting for 46.1% of total global investment.
—Read the full article from S&P Global Market Intelligence
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- Deep Dives: Metals and Mining
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Raw materials in short supply for EV makers struggling to meet customer demand
The world's growing appetite for electric vehicles during a spike in gasoline prices could be forestalled as EV makers struggle to secure the materials needed to complete vehicles, potentially muting EV uptake rates, industry experts said.
—Read the full article from S&P Global Market Intelligence
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- Deep Dives: Energy and Utilities
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US tariff investigation could imperil some utility-scale solar plans
The U.S. Commerce Department inquiry, which was requested by California manufacturer Auxin Solar, "would be detrimental for all kinds of solar demand," Raymond James analyst Pavel Molchanov said.
—Read the full article from S&P Global Market Intelligence
Costs, permitting hurdles dampen potential for new nuclear capacity
Rising oil and gas prices and mounting pressure to decarbonize power grids are unlikely to spur a global buildout of nuclear generation, despite renewed momentum for weaning Europe off Russian natural gas supplies, according to A.B. Bernstein analysts.
—Read the full article from S&P Global Market Intelligence
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- Deep Dives: ESG
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Investors' diversity quest may push women's health out of the doldrums
A lack of female investors and entrepreneurs, combined with an unclear definition of women's health, has thwarted the growth of a market that comprises half the world's population.
—Read the full article from S&P Global Market Intelligence
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Seacoast Bancorp to cross $10 billion in assets following Apollo acquisition
Utica Shale gas drillers Ascent, Gulfport said to be in talks for $8B merger
National Grid to sell £4.2B stake in UK gas network to Macquarie consortium
Familiarity, similarity driving Berkshire's Alleghany deal
Wisconsin banks in merger of equals seek major Dane County presence
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Navigating Risks and New Realities
Geopolitical tensions are at an unprecedented high and markets are noticeably stressed. Explore the data and analysis you need to stay ahead of evolving conditions with insights on credit risk, supply chain, maritime & trade, economic & country risk, and more.
Written and compiled by Louis Bacani