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00:00 Julie Hyman
Bank earnings are in focus with two of Wall Street’s biggest players delivering fourth quarter results. For more reaction, let’s bring in Stephen Bigger, director of financial Services Research at Argus, and Devin Ryan, director of financial technology research at Citizens. Guys, thanks so much for being here. It’s been an interesting morning, hasn’t it? Because Goldman and Morgan Stanley both reported. The stocks kind of languished a little bit and then have been perking up after the conference call. Devin, you and I were emailing a little bit trying as I was trying to get my hands around what was going on there.
00:30 Julie Hyman
Um, in your mind, what were sort of the key things that were said on the calls that maybe turned the sentiment here?
00:39 Devin Ryan
Yeah, good morning, Julie. So, uh, yeah, I think that the point is the bar was really high for these companies heading in. So, uh even though they both beat numbers pretty nicely, that was kind of baked into expectations. I think most on the buy side assumed they would beat. So then therefore, you know, it all became around what they were going to say on the call and what they were going to give in terms of uh kind of new targets where they’re going to address the old targets and update. And at Morgan Stanley, um you know, they didn’t increase their return on tangible common target, which I think most people were hoping they would.
01:04 Devin Ryan
Uh but positively they addressed it on the call and effectively I think investors are walking away feeling like, yeah, they’ll probably continue to beat that number and it’s just more out of conservatism. So I think that’s the Morgan Stanley nuance and so people feel quite a bit better exiting that call. And then Goldman Sachs really kind of came out swinging on um you know, their old targets particularly around asset and wealth and I think setting a much higher bar for themselves and reaffirming their mid-teens ROE
01:30 Devin Ryan
um you know, through the cycle or kind of over the medium term, but with the expectation that there’s a lot they can do on capital. Um still kind of $30 billion plus of uh buyback authorization and that’s going to be a tool. So I think people also feel pretty good there with a very constructive capital markets tone on the call plus uh some self-help here as we go into 2026. It was really about the outlook because we all knew that the quarter itself was going to be really strong.
01:54 Julie Hyman
Yeah, and speaking of outlook, Steve, um Goldman in particular, that equities trading revenue number was just kind of incredible there. though the a record for any bank ever at $4.31 billion. Um do you expect the momentum, not just for Goldman, but, you know, for some of the other uh capital markets businesses across Wall Street to continue to see that performance?
02:14 Steven Bigger
Yeah, Julie, we do. I mean, this is a unique environment, obviously for the investment banks right here. It’s really a, you know, a perfect storm in a good way.
02:22 Steven Bigger
You’ve got a great backdrop. You’ve got good, you know, fiscal, monetary policy, you’ve got uh, you know, rising boardroom confidence. You had global announced M&A deal value was up over 40% in 2025. So I think, you know, a lot of those deals still haven’t closed. So there’s some of that uh backlog still that will, will, you know, generate into revenues and uh moving into this year. So, and it’s really across the board. I mean it’s, it’s the, you know, trading volumes have been good based on volatility. It’s across equities and fixed income, currency, commodities.
02:54 Steven Bigger
Um the M&A story, you know, continues to stay high, the boardroom confidence is is getting better. Uh there’s a lot of competitive pressure on the side of corporates to either grow revenues or cut costs which can be done uh through M&A. Um that more favorable regulatory environment that uh we’ve we’ve talked about most of this year adding to deal uh demand and you know, particularly these mega deals, uh and especially in Vogue with with a lot of that driven by the need for scale.
03:19 Steven Bigger
Uh whether it’s across technology, industrial, uh financial sectors. Uh so, you know, all combined uh that that’s a very good backdrop for this year. And let’s not forget falling interest rates and uh more favorable financing terms, right? So it’s been a the market has been willing to absorb new debt, new equity uh and that is a prerequisite to, you know, to keeping that M&A story going.