Wall Street’s Deal Desk in Decline: Investment Banking’s Longest Drought Since 2014
Snapshot
Wall Street’s “back office”—powered by mergers & acquisitions and capital markets—is bogged down. For over three years, investment banking has failed to reach 25 percent of top bank revenues, hitting its worst stretch since 2014 .
Macro Forces at Play
• Elevated interest rates & geopolitical tensions are boosting market volatility.
• Paradoxically, while volatility boosts trading revenue ($31 billion forecast), it suppresses strategic transactions like M&A and IPOs ($7.5 billion forecast) .
C-Suite Pressure
Bank executives face mounting pressure as advisory revenues remain depressed. JPMorgan, for example, may see a 30% drop in quarterly net income, weighed down by weak banking activity and muted one-off earnings .
Investor Perspective
- Trading is profitable but cyclical: Fixed-income and equities benefit short term.
- Banking is valuable but dormant: Long-term growth depends on regulatory clarity and stable geopolitical trends.
- Stock reaction: Goldman’s share rally suggests belief in eventual banking comeback .
Catalysts to Watch
- A renewed wave of equity issuance in late 2025.
- Geopolitical calm reducing volatility, making M&A deals more feasible.
- Favorable policy/regulatory updates that rejuvenate capital markets.
Final View
This is Wall Street in transition: trading is the engine now. But unless the deal pipeline reignites, investment banking—once a pillar of high-margin profitability—may remain on a long cold streak.
