John Authers on Recent Wall Street Developments

April 24, 2012 Debbie Jacobs In the News

John Authers, senior investment columnist for the Financial Times, recently discussed the conclusion of the U.S. banking’s earning season, as well as the most recent proceedings on Wall Street with investment banking correspondent Daniel Schaefer.

Authers asked Schaefer whether the negativity towards investment banks (shown in the above chart) has been overdone.

“There’s not a very easy answer to that question,” Schaefer answered. “Yes, it is overdone if the Eurozone crisis turns out to be solved, and if Spain doesn’t get in to more trouble, then it definitely is overdone. Investment banks do have a lot of problems like regulatory problems, and many of the businesses are much less profitable than they used to be, and generally there is a lower revenue level in many of the areas from M&A to fixed income trading.

But indeed, despite all those problems, it (the chart) looks very drastic- there is a buying opportunity if you believe that the Eurozone crisis will be solved.”

The discussion then shifted to focus on 2012’s first quarter in particular. “Obviously, this is a very much better quarter for markets, should’ve been very good for their trading revenues. Have the investment banks, or the US groups that include investment banks, profited from that quarter to the fall?” Authers asked.

“They have somewhat profited from the trends we’ve seen in the market, but I have to say this has already been priced in the past few months. We’ve seen the rally in U.S. investment banks until mid March, from the start of the year, because people were pretty optimistic about things like fixed income trading, and a couple of markets in other areas. Banks have profited from it, but not much more than markets have actually expected.

Watch the full video here.

2012 Earnings, Financial Times, Goldman Sachs, John Authers, Wall Street.,

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