Company Overview and Financial Performance - Piper Sandler Companies is a leading investment bank with over 60 offices and 1,800 employees[13] - The company's adjusted net revenues for the last twelve months (LTM) ending in the first quarter of 2025 were $1.6 billion[14] - Investment banking contributed $1.0 billion to the LTM 1Q 2025 adjusted net revenues[15] - Public finance generated $150 million in LTM 1Q 2025 adjusted net revenues[16] - Equity brokerage and fixed income contributed $220 million and $189 million respectively to the LTM 1Q 2025 adjusted net revenues[17] Strategic Investments and Growth - The company has consistently grown its platform through strategic investments, increasing adjusted net revenues from $599 million in 2015 to $1.59 billion in LTM 1Q 2025[22] - The average adjusted net revenues for 2023-2025* is $1.487 billion[26] - The average adjusted operating margin for 2023-2025* is 18.5%[28] - The average adjusted diluted EPS for 2023-2025* is $11.99[32] Market Position and Valuation - Piper Sandler is a top-ranked M&A advisor, having advised on over 1,030 M&A transactions worth more than $545 billion in the past 5 years[50] - The company's LTM revenue multiple is 2.9x, compared to an average of 4.3x for its peers[36] - Piper Sandler's public finance par value market share is 5.7% for LTM 1Q 2025[75]

Investment Rating - The report does not explicitly provide an investment rating for the industry or specific companies covered Core Insights - The recent US-China trade agreement is viewed as a tactical pause rather than a comprehensive resolution, indicating ongoing tensions between the two nations [2][4] - The agreement addresses critical dependencies in technology and resources, with China relying on semiconductor imports and the US dependent on rare earth minerals [4] - Economic forecasts suggest US GDP growth of 1.0% in 2025 and 2026, while China's real GDP growth is expected to slow to 4.5% in 2025 [2][5] Summary by Sections US-China Trade Relations - The trade agreement is limited and does not resolve fundamental disagreements, with US tariffs on China imports remaining significantly higher than at the start of the year [4] - Both countries are attempting to reduce dependencies, but progress is slow, with China investing in its semiconductor industry and the US seeking alternative rare earth supplies [4] Economic Outlook - The report anticipates that tariffs will lead to a rise in goods prices, affecting inflation rates, with headline PCE expected to rise to 2.9% and core PCE to 3.3% in 2025 [2] - The US faces a weaker growth outlook due to higher tariffs, which may pressure the dollar and Treasury yields lower, while creating uncertainty about future inflation [6] Market Positioning - Investors are advised to position for slower growth and uncertainty in US-China relations, with potential opportunities in currency and Treasury markets [6] - The report suggests that the current economic environment may lead to a steeper yield curve as longer-maturity yields reflect inflation uncertainty [6]

Investment Rating - The report does not explicitly provide an investment rating for the industry or assets discussed Core Insights - Uncertainty surrounding US tax and trade policy, along with significant US dollar weakness, suggests a potential global shift away from US dollar-denominated assets [1] - The cross-currency (XCCY) basis market can be utilized to gauge demand for US dollars and related assets, indicating a trend where investors show less interest in USD-denominated assets while favoring EUR and JPY assets [7][15] - The report anticipates that the tightening trend in the XCCY basis will persist until Federal Reserve rate cuts enhance the attractiveness of USD-denominated assets on a foreign exchange-hedged basis [16][97] Summary by Sections Executive Summary - In times of global market stress, investors typically seek safe haven currencies, with the USD historically reinforcing comfort in USD-denominated assets [8] - Post "Liberation Day" on April 2, 2025, the USD showed unusual depreciation against other currencies, raising questions about its safe haven status [11][68] XCCY Basis Market Dynamics - The XCCY basis reflects offshore demand for long-term USD funding and onshore demand for non-USD-denominated assets [7][14] - Recent movements in the XCCY basis indicate a reduced appetite for USD-denominated assets and an increased interest in EUR and JPY assets [15][16] - The report outlines key drivers of the XCCY basis, including supply and demand factors for both currencies, with negative spreads indicating a premium for borrowing USD [22][24] Key Drivers of XCCY Basis - Short-term drivers include USD liquidity, regulatory constraints, and demand for foreign assets, while medium- to long-term drivers focus on overseas asset demand and issuance-related factors [25][35][46] - The report emphasizes the importance of monitoring the XCCY basis as it provides high-frequency signals regarding foreign demand for USD and USD-denominated assets [65][77] Recent Market Observations - Following the announcement of reciprocal tariffs, negative CCY/SOFR basis swap spreads widened but quickly normalized, indicating limited investor flight to quality [78][82] - The report suggests that diminished demand for USD among offshore investors may be occurring, with US investors showing increased interest in overseas assets [85][96]

Core Insights - The article compares Goldman Sachs (GS) and Moelis & Company (MC), highlighting their distinct business models within the investment banking industry, with GS being a global financial giant and MC being a focused advisory-driven boutique [1][2]. Goldman Sachs (GS) - GS maintains a leadership position in global investment banking, particularly in M&A advisory, equity, and debt underwriting, with a 24% increase in IB revenues in 2024 due to a rebound in corporate financing activity [3]. - However, GS experienced an 8% decline in IB revenues in Q1 2025, attributed to market turmoil and uncertainty over monetary policy, though its leading position in deal-making suggests enduring client trust [4]. - The firm is strategically exiting lower-margin consumer finance businesses to focus on high-return sectors like investment banking and trading, including ending its partnership with Apple on the Apple Card and Apple Savings account [5]. - Goldman Asset Management aims for aggressive growth in private credit, targeting a portfolio of $300 billion by 2030, reinforcing its long-term growth potential [6]. Moelis & Company (MC) - MC demonstrates resilient performance driven by its high-quality advisory platform, achieving a 10% compound annual growth rate (CAGR) over five years despite revenue declines in 2019, 2022, and 2023 [7]. - The company is well-positioned to benefit from structural tailwinds in M&A and capital advisory, with elevated corporate debt levels driving demand for restructuring services [8]. - MC's business is diversified across various sectors and geographies, with no significant client concentration, and has advised on over $5.1 trillion in transactions since inception [9]. - MC projects a 42.4% year-over-year earnings growth for 2026, significantly outpacing GS's projected 13.1% growth, and offers a higher dividend yield of 4.64% compared to GS's 1.92% [10][22]. Performance and Valuation Comparison - Over the past year, GS shares gained 38.7%, while MC shares increased by 7.5%, both outperforming the industry average rise of 33.1% [11]. - GS is currently trading at a forward P/E of 13.26X, higher than its five-year median of 10.16X, while MC trades at a forward P/E of 25.65X, above its five-year median of 20.16X [14]. - Both companies have dividend yields exceeding the industry average, with MC having a notable edge [16]. Estimates and Growth Potential - The Zacks Consensus Estimate for GS indicates a revenue rise of 3.8% and 5.1% for 2025 and 2026, respectively, with earnings growth of 9.6% and 13.1% [19]. - In contrast, MC's estimates reflect a revenue increase of 2.8% and 20.9% for 2025 and 2026, with earnings growth of 0.6% and 42.4% [20]. - MC's advisory-driven model aligns well with the rising demand for restructuring services, indicating significant long-term potential [21][22]. - Despite trading at a premium valuation, MC's market capitalization of $4.4 billion compared to GS's $188.3 billion suggests more room for growth [23].

June 13, 2025 05:00 AM GMT US Economics Weekly | North America Weakness still lies ahead This week's inflation data showed no clear signs of a tariff push, but we expect higher goods inflation in coming months. Slower core services may give the Fed confidence that the inflation pickup will be transitory. With higher inflation ahead, weaker consumption growth is still in front of us. | M | | | | --- | --- | --- | | | | Idea | | June 13, 2025 05:00 AM GMT | | | | US Economics Weekly North America | Morgan Sta ...

Asia Insights Economics - Asia ex-Japan China: Credit growth remained steady in May despite disappointing loan growth New aggregate financing (AF) came in slightly below the market expectations, with outstanding AF growth unchanged. The downside surprise to consensus was aqain primarily driven by much weaker-than-expected new RMB loans, with the growth rate of outstanding loans dropping again and reaching another historical low. Again, we think the sharp slowdown in loan growth was mostly driven by the ongo ...

Investment Rating - The report does not explicitly state an investment rating for the industry, but it suggests a neutral stance on basis exposure due to weak near-term demand outlook and macro uncertainties [36]. Core Insights - The demand for conventional MBS is muted, with overseas investors likely holding a similar amount of conventionals and Ginnies, contrary to common assumptions [3][25]. - CMO issuance has significantly increased, representing approximately 34% of MBS issuance year-to-date compared to just 9% in 2020-2021, indicating a shift in market dynamics [9][18]. - The GSEs may expand their investment portfolios, which could bridge the gap until bank demand returns, potentially tightening mortgage basis [30][36]. Market Recap - Rates have rallied sharply due to weak inflation and jobless claims, with CPI and PPI coming in below expectations [10]. - Mortgage spreads have not tightened consistently due to opportunistic buying from marginal buyers, particularly overseas investors [21]. Demand and Supply Dynamics - The report highlights that overseas investors have been quieter this year, impacting the demand side of the equation [21]. - Servicing transfer volumes have decreased, but in-the-money loans tend to have faster speeds post-transfer [9]. - The GSEs' retained portfolios have a significant gap compared to regulatory caps, which could lead to increased investment in mortgages if the GSEs focus on generating earnings [30][31]. Investor Composition - The estimated composition of conventional MBS holders includes 26% Fed, 33% US Banks, 10% Overseas, 27% Money Managers, 1% GSEs, and 3% REITs [27]. - For Ginnie MBS, the composition is 17% Fed, 37% US Banks, 31% Overseas, and 15% Money Managers [29]. CMO Issuance Trends - CMO issuance has averaged $32 billion per month this year, driven by demand for floaters as investors seek to minimize duration risk [18]. - The report notes that CMO issuance levels have decoupled from overall MBS issuance, which remains muted [21]. Regulatory Considerations - Potential changes to LLPAs could tighten the credit box for existing low-credit borrowers, benefiting the prepayment profile of credit-impaired stores [44].

Core Viewpoint - The Concerned Stockholders of Ionic Digital Inc. are advocating for change in the company's board of directors following a Delaware Court ruling that found the current board breached its fiduciary duties, leading to a new nomination of two candidates for the upcoming election [1][2][3]. Group 1: Court Ruling and Board Nomination - The Delaware Court of Chancery ruled that the Ionic board breached its fiduciary duty by reducing the board size to entrench itself during a proxy contest [2]. - The Concerned Stockholders have re-nominated Mike Abbate and Oliver Wiener for two Class I Board seats at the 2025 annual meeting scheduled for July 2, 2025 [3]. Group 2: Misleading Claims and Stockholder Rights - The Concerned Stockholders aim to correct misleading statements made by the current board, emphasizing the need for transparency and accountability [4][5]. - The current board's claims of conflicting interests with stockholders are refuted, asserting that the primary goal is to create stockholder value and generate liquidity [5]. Group 3: Candidate Qualifications - Mike Abbate and Oliver Wiener are presented as highly qualified candidates with extensive backgrounds in capital markets, corporate finance, and the cryptocurrency sector [3][11][12]. - Oliver Wiener has over two decades of experience in investment banking and has founded a private equity firm, bringing significant expertise compared to the incumbent board [8][12]. Group 4: Financial Transparency Issues - The current board has been criticized for failing to provide standard financial disclosures and has not released any data regarding costs and expenses over its existence [9]. - The Concerned Stockholders highlight the lack of transparency regarding payments to investment banks engaged by the company, raising concerns about financial management [9]. Group 5: Call to Action - Stockholders are urged to reject the current board's proxy card and support the election of Abbate and Wiener to restore transparency, accountability, and liquidity to Ionic [10].

Investment Rating - The report suggests a bearish outlook on the USD and recommends selling USD while buying curve steepeners [9][13][53]. Core Insights - The report indicates that the consensus view aligns with a weaker USD and a steeper yield curve, but the expected magnitude of these moves is significantly larger than what the consensus anticipates [9][13]. - It is projected that the USD will weaken by approximately 9% on a DXY basis and that the US Treasury curve will steepen by around 100 basis points over the next 12-18 months [13][20]. - Investor positioning is currently cautious, but supportive fundamentals and strengthening sentiment suggest a favorable environment for the recommended trades [9][13]. Summary by Sections G10 FX Strategy - The report highlights that while a weaker USD is a consensus view, the extent of the weakening is underpriced, with only a 15-25% chance assigned by the market to reach the forecasted levels against major safe-haven currencies [3][31]. UK Rates Strategy - The report notes the closure of a long position in SFIZ6 due to a recent rally in front-end rates, but identifies an attractive entry point for upside option structures given low implied volatility [4][26]. Japan Rates Strategy - The focus is shifting from the Bank of Japan (BoJ) to the Ministry of Finance (MoF) regarding long-end issuance and quantitative tightening (QT) pace, which may influence market dynamics [5][30]. US Rates Strategy - The report discusses entering 2s10s CPI swap steepeners, as the TIPS breakevens curve has steepened, indicating potential for further widening based on financial conditions and inflation expectations [6][36]. General Market Dynamics - The report emphasizes that recent USD declines are primarily driven by reduced investor appetite for USD exposure due to policy uncertainty rather than concerns about US growth [17][20]. - It also notes that the USD discount reflects a negative policy premium associated with uncertainty around US trade and fiscal policy [18][19].

Investment Rating - The report does not explicitly provide an investment rating for the industry discussed Core Insights - Oil prices have rallied sharply, and the forward curve has shifted, indicating potential for higher prices depending on disruptions in oil flows [46] - Developed Markets (DM) may not experience significant impacts on core inflation from rising oil prices, while Emerging Markets (EM), particularly Asia, are more exposed [46][12] - Asia's oil burden is currently lower than historical averages, and inflation and current account balances are benign, suggesting that oil prices need to rise sustainably above $85/bbl for central banks to delay rate cuts [18][46] - The report draws parallels between current economic conditions and the early 1990s, suggesting defensives may continue to perform well in European equities [46][25] Oil Market Analysis - The disappearance of contango beyond month 6 indicates a significant shift in oil market dynamics [5] - A $10 increase in oil prices is estimated to lead to a 0.4 percentage point increase in Asia's headline inflation and a -0.4 percentage point impact on GDP [14][16] - The report emphasizes that oil prices will need to rise above $85/bbl in a sustained manner to influence central bank policies in Asia [18][20] Credit Market Insights - High Yield (HY) Energy has seen a strong rebound since early May, with HY Energy trading wider compared to the broader HY market [39][42] - The report recommends a defensive investment strategy, focusing on higher quality assets within the HY Energy sector [44][46]