We Believe Morgan Stanley and Goldman Sachs Are Well Positioned as Investment Banking Recovers

With interest rates at or near their peak and the increasingly popular view that the United States will avoid a recession, investment banking revenue is poised to rebound from recent lows. However, given the record levels of investment banking and trading revenue that U.S.-based banks booked in 2020 and 2021, there's an open question with regard to the reasonable level that investment banking revenue recovers to. While we don't believe that investment banking revenue will reach 2020-21 heights in the foreseeable future, we do believe that U.S.-based investment banks should have consistently higher revenue than they had before the COVID-19 pandemic due to the pullback of Europe-based banks.