What s Next for Wall Street?

Transcription

1 What s Next for Wall Street? Panel Detail: Monday, April 26, :30 PM 3:45 PM Speakers: H. Rodgin Cohen, Partner, Sullivan & Cromwell LLP James Dinan, Founder, Chairman & CEO, York Capital Management Kenneth Moelis, CEO, Moelis and Company Moderator: Robert Shafir, CEO of Asset Management, CEO of the Americas Region, Credit Suisse 1

2 Most major U.S. banking laws are a response to crises 1860 Federal Reserve Act (1913) (Bank runs) Depository Institutions Deregulation and Monetary Control Act (1980) (S&L crisis) Financial Institutions Reform, Recovery and Enforcement Act (1989) (S&L crisis) Federal Housing Finance Regulatory Reform Act (2008) National Bank Act (1864) National Currency Act (1863) Source: Milken Institute. (Civil War & wildcat banking) Federal Deposit Insurance & SEC (Great Depression) Garn-St Germain Depository Institutions Act (1982) (S&L crisis) Federal Deposit Insurance Corporation Improvement Act (1991) (Banking crisis) Sarbanes- Oxley Act (2002) (Enron and WorldCom bankruptcies) Emergency Economic Stabilization Act (2008) 2

3 Stock prices of Wall Street firms have risen significantly from March 2009 lows Current: April 16, 2010 Source: Bloomberg. 3

4 Default risk of Wall Street firms has fallen sharply post-crisis Daily: January 1, 2008 April 16, 2010 Source: Bloomberg. 4

5 Default risk of major Wall Street firms has fallen sharply post-crisis *Current: April 16, 2010 Source: Bloomberg. 5

6 U.S. securities industry employment down 58,000 from 2007 peak Year-end: Source: SIFMA. 6

7 Wall Street securities industry employment down 26,000 from 2007 peak Year-end: Source: SIFMA. 7

8 Financial industry once again accounting for large portion of corporate profits Quarterly: 2001Q1 2009Q4 Source: BEA. 8

9 Structured finance staging a comeback? Quarterly: Q Q Source: SIFMA. 9

10 Will/should CDO market return? Quarterly: Q Q Source: SIFMA. 10

11 Wall Street bonus pool rebounded in 2009 Annual: Source: New York Office of the State Comptroller. 11

12 Global underwriting fees up sharply in Q Source: Dealogic. 12

13 U.S. M&A activity beginning to strengthen Quarterly: Q Q Source: Dealogic. 13

14 Global M&A activity recovering Quarterly: Q Q Source: Dealogic. 14

15 Top 10 global M&A advisers reshuffling Source: Dealogic. 15

16 Hedge fund returns: what a difference a year makes Source: Credit Suisse/Tremont Hedge Fund Index. 16

17 Performance of hedge fund sector proxies versus major equity gauges Monthly: January 2004 March 2010 Source: Bloomberg. 17

18 Global hedge funds are beginning to hit highwater marks Source: Eurekahedge. 18

19 Fee structure of global hedge funds shifting away from traditional 2 & 20 Source: Eurekahedge March

20 Many hedge funds are charging below the standard 2% management fee Source: Preqin April

21 Large institutional investors taking interest in managed hedge fund accounts Source: Preqin February

22 Transparency and liquidity influencing shift towards managed hedge fund accounts Source: Preqin February

23 Hedge fund investors are receiving greater transparency Source: Credit Suisse 2010 Global Hedge Fund Investor Survey. 23

24 Hedge fund investors are doing their homework prior to investing Source: Credit Suisse 2010 Global Hedge Fund Investor Survey. 24

25 Top 10 global hedge fund prime brokers by assets under management Source: Eurekahedge. 25

26 Notional amount of derivatives contracts held by U.S. commercial banks still rising Quarterly: Q Q Source: Comptroller of the Currency. 26

27 Wall Street banks make up lion s share of derivatives contracts Source: Comptroller of the Currency. 27

28 Major Wall Street banks have reduced derivatives credit exposure Quarterly: Q Q Source: Comptroller of the Currency. 28

29 Derivatives trading can account for billions in Wall Street gains and losses Source: Comptroller of the Currency. 29

30 Trading revenues from cash instruments and derivatives as share of gross revenue Source: Comptroller of the Currency. 30

31 Banking industry has changed dramatically Annual: Source: FDIC. 31

32 Bank failures reached 140 in 2009 Annual: Source: FDIC. *through March 19,

33 Number of problem institutions reached 702 in 2009, exceeding $400 billion in assets Annual: Source: FDIC. 33

34 Market volatility now below historical average VIX Index (Daily), January 2, 1990 April 16, 2010 Source: Bloomberg. 34

35 U.S. Real GDP expanding as economy recovers Quarterly: 1990Q1 2009Q4 Sources: BEA, NBER. 35

36 U.S. economy beginning to add jobs Monthly: Jan Mar Source: BLS. 36

37 U.S. unemployment rate improving Monthly: Jan Mar Source: BLS. 37

38 Home prices may have touched bottom Quarterly: 1988Q1 2009Q4 Sources: S&P/FiServ, NBER. 38

39 U.S. household assets up 9 percent from bottom in Q Quarterly: 1999Q1 2009Q4 Source: Federal Reserve. 39

40 U.S. household net worth beginning to rise Quarterly: 1995Q1 2009Q4 Source: Federal Reserve. 40

41 2009: first time on record that total U.S. household debt fell year-over-year Annual: Source: Federal Reserve 41

42 2009: first time on record that total U.S. household debt fell year-over-year Annual: Source: Federal Reserve. 42

43 American consumers reluctant to take on additional debt Monthly: Jan Feb Source: Federal Reserve. 43

44 Does trough in consumer credit signal end of Great Recession? Monthly: Jan Feb Sources: Federal Reserve, NBER. 44

45 Households now deleveraging Quarterly: 1980Q1 2009Q4 Source: Federal Reserve. 45

46 U.S. commercial paper market still in free-fall Monthly: Jan Mar Source: Federal Reserve. 46