On Wall Street, investment bankers are the fattest of cats... Many of them are stars. But most stay out of the spotlight. They would rather let their investment deals speak for themselves.

Why Investment Banking Matters for the Economy By Joe Austin, senior analyst, Chaikin Analytics On Wall Street, investment bankers are the fattest of cats... Many of them are stars. But most stay out of the spotlight. They would rather let their investment deals speak for themselves. And if you've ever been an investment banker (or wanted to be one), you probably know that the hours are long... and the work is grueling. But on the flip side, these folks make serious money. It's one of the few professions where your bonus can be a multiple of your salary – hence the "fat cat" status. But no matter how you feel about the profession, there's a lot to learn from how investment bankers are doing. That's because when things are good for them, it means that corporate America is confident. And that bodes well for the economy. It's not a perfect leading indicator. But it's a decent gauge of where things are headed. And that's useful information when you're investing in stocks... 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Get the No. 1 stock (with 500%-plus upside potential) for this rare market event now. Keep in mind that investment banking has had a rough couple of years recently. After a banner year in 2021, the next year was awful. The New York state comptroller – who sees all the paychecks – said that banker bonuses in 2022 were their worst since 2008. Things didn't get better in 2023. With global dealmaking falling to its lowest levels in a decade, investment-banking fees also slipped. The war in Ukraine, market volatility, rising inflation, and the Federal Reserve's rate hikes all weighed on corporate mergers and acquisitions (M&A) and capital markets activity. Investment-banking revenues declined around 20% from the third quarter of 2022 to the third quarter of 2023. But this year, there were some big surprises when banks reported their third-quarter earnings... And it was all about the investment bankers. For example, Goldman Sachs (GS) said its investment-banking fees were up 20% year over year. JPMorgan Chase's (JPM) investment-banking fees were up 31% from the year before. That was double what the bank expected the month before. And Morgan Stanley (MS) reported a whopping 56% year-over-year increase in its investment-banking fees. You can see the big spikes in the chart below... According to Dealogic, investment-banking revenues globally rose 21% this year. In North America, revenues were up 31%. Those are some great numbers. And you can just imagine how big the bonuses will be. But there's good news for the rest of us, too... That's because those big banking numbers mean that corporate America is looking ahead. And it's optimistic about what it sees. Now, the Federal Reserve lowering interest rates certainly gave all this a boost. But this at least tells us that the Fed's strategy is working... and that the outlook for growth is good. That's because in a growing economy, there's greater access to capital. When they think they have the wind at their backs, companies are more willing to issue debt or make acquisitions. Morgan Stanley thinks that deal volumes could be up as much as 50% this year. It says non-financial companies and private-market investors are sitting on about $8 trillion in unallocated capital. That's a lot of cash that can get put to work. Morgan Stanley sees banking, energy, health care, real estate, and technology as the sectors most primed for M&A. So with this in mind, let's see what the Power Gauge has to say... We can track capital markets through the SPDR S&P Capital Markets Fund (KCE). It holds stocks like Goldman Sachs, Morgan Stanley, JPMorgan, Citigroup (C), and Bank of America (BAC). Right now, the Power Gauge gives KCE a "very bullish" rating. That's a great first sign. We can also look at the individual ratings of the 61 companies in the fund. Of these, 46 currently have a "bullish" or better rating. Meanwhile, 15 are in "neutral" territory. And none have a "bearish" or worse rating. Put simply, the Power Gauge sees big opportunity in this corner of the market right now. To monitor how all this plays out, we'll also have to see how the deal flow looks at the end of the fourth quarter. And we'll have to hear what the banks say about the outlook for next year. So whether you celebrate investment bankers' success or cringe at their excess... there's a lot to learn from how they're doing. Right now, investment banking has its mojo back. And that's good news for all of us. Good investing, Joe Austin   Editor's note: Next week, Chaikin Analytics founder Marc Chaikin is unveiling his newest breakthrough with the Power Gauge... In short, it's a new way to spot potential buying sprees from Wall Street on 5,000 stocks – before they happen – for the chance to double your portfolio over the next year. Marc is going on camera to share all the details on Tuesday, October 29, at 10 a.m. Eastern time. And it's completely free to watch his unveiling. All you have to do is register in advance right here. Market View Major Indexes and Notable Sectors     # Hld:     Bullish     Neutral     Bearish Dow 30 -0.01% 10 17 3 S&P 500 -0.06% 148 277 68 Nasdaq +0.11% 22 69 9 Small Caps -0.39% 544 1011 365 Bonds +0.1% — According to the Chaikin Power Bar, Large Cap stocks and Small Cap stocks are Bullish. Major indexes are mixed. *  *  *  * Sector Tracker Sector movement over the last 5 days Information Technology +1.34% Utilities +0.88% Energy +0.58% Financial +0.55% Communication -0.05% Materials -0.36% Discretionary -0.36% Staples -0.58% Industrials -0.78% Real Estate -0.88% Health Care -1.14% *  *  *  * Industry Focus Retail Services 12 45 21 Over the past 6 months, the Retail subsector (XRT) has underperformed the S&P 500 by -10.11%. Its Power Bar ratio, which measures future potential, is Weak, with more Bearish than Bullish stocks. It is currently ranked #16 of 21 subsectors. Indicative Stocks VVV Valvoline Inc. FIVE Five Below, Inc. DLTR Dollar Tree, Inc. *  *  *  * Top Movers Gainers PM +10.47% GM +9.81% DGX +6.85% NSC +4.94% CHTR +4.57% Losers GPC -20.97% GE -9.05% PHM -7.24% WBA -6.89% NUE -6.46% *  *  *  * Earnings Report Reporting Today Rating Before Open After Close CME, GD, T KO, WAB LRCX, MOH, ORLY No earnings reporting today. Earnings Surprises CSGP CoStar Group, Inc. Q3 $0.22 Beat by $0.06 MANH Manhattan Associates, Inc. Q3 $1.35 Beat by $0.29 GM General Motors Company Q3 $2.96 Beat by $0.56 GPC Genuine Parts Company Q3 $1.88 Missed by $-0.55 MCO Moody's Corporation Q3 $3.21 Beat by $0.34 *  *  *  * You have received this e-mail as part of your subscription to PowerFeed. If you no longer want to receive e-mails from PowerFeed, click here. 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