Financials-Sector Fallout: Macro Clues from Conferences and Interim Data

Conference season brings about its own set of volatility catalysts. Portfolio managers and traders must keep their ears out for clues on the state of the broad economy, specific industries, and individual companies. That’s not a bunch of fluff – just take a look at what happened to shares of Ally Financial (ALLY) last week. On September 10, the $10 billion market cap Consumer Finance industry stock endured its worst session since March 2020.1

Cautious comments from its CFO Russ Hutchinson at the Barclays 22nd Global Financial Services Conference resulted in intense selling pressure on ALLY as fears rose that auto borrowers are more pinched than previously thought.2 He noted that credit challenges had intensified as Q3 progressed and that its customer base is having trouble handling elevated inflation and a weaker employment situation.

Conference Drama Unfolding

ALLY is a cautionary tale that, even though we are smack in the middle of the earnings offseason, news can break at any time. A number of major conferences are ongoing and on tap through the end of the quarter that could have material impacts on the global stock market. Among the standouts is the Bank of America Securities 29th Annual Financials CEO Conference next week which could shed further light on households' financial health.

Wall Street Bankers Cooling Their Heels

It’s not just the consumer that may be facing uphill battles. Our data show that larger, more institutional, banks might not be so sad to flip the calendar to 2025. Trends in M&A and IPOs remain light despite the occasional deal and go-public story sparking optimism that corporate dealmaking is on the mend.

We’ve highlighted a few such narratives while underscoring that much depends on how the economic situation unfolds. Adding to the frustration is uncertainty on Capitol Hill and what the legislative framework might be like next year. Always the optimists, perhaps now that the Fed has started its rate-cutting campaign, there will be a tailwind for Wall Street banking activities.

That’s also the hope of Goldman Sachs CEO David Solomon. Speaking at Goldman’s Communacopia & Technology Conference in San Francisco last week, Solomon described the economy as “still in pretty good shape” despite some softness in capital markets so far in 2024.3 He outlined a bullish trajectory in M&A trends lately as certain areas of underwriting and banking “continue to chug along.”

global M&A

tick up