The next economic cycle will see an increase in mergers and acquisitions (M&A) and equity underwriting, Brad Hintz, senior analyst at Sanford Bernstein and former CFO at Lehman Brothers, told CNBC on Wednesday.
"We are seeing that equity underwriting is coming back. We are seeing leverage loan activity has picked up—that's a very good sign for the private equity piece, which of course is very good for the street," Hintz said.
"In terms of the numbers, we'll see announced M&A going up more rapidly than completed M&A—Q2, Q3 we'll see M&A activity beginning to come in. And that's really going be the story, which is the next wave," he said.
M&A equity underwriting is the early cycle investment banking wave, it's here, Hintz said.
"You're seeing it terms of activity and it ties very much into the economy is coming back and therefore corporate executives are pulling the trigger," he said.
"I don't think we should take anything from trading in Q4. Trading is going to be lackluster. We will have half-a-quarter of reasonable fixed income trading. And then the rest of the quarter they went on an early Christmas vacation," Hintz said.
"In terms of the fundamentals...compensation is gonna be a big issue. Are we seeing constraint on the part of the brokerage firms? I expect that you will. I expect that you'll see comp ratios down—that will be positive for them," he said.
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