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Green shoots are back on Wall Street. But executives are being more careful about saying so this time around.

Collectively five of the biggest banks saw investment banking revenues climb 3.5% in the fourth quarter from the same year-ago period, thanks largely to stock and bond underwriting as opposed to advising on mergers and acquisitions.

Such fees were up 16% at Citigroup (C), 13% at JPMorgan Chase (JPM), 8% at Bank of America (BAC), and 5% at Morgan Stanley (MS). Only Goldman Sachs (GS) showed a decline, dropping 12%, but its revenues were still up 6% from the third quarter.

It was a welcome development at the end of a challenging year. But officials were cautious in how they described the renewed investment banking activity on conference calls with analysts. Last year some executives had to walk back their talk of “green shoots” after a hoped-for surge in deals failed to materialize.

Goldman CEO David Solomon on Tuesday described his view as “pretty optimistic” but noted that the firm continues to take a “cautious view.” Morgan Stanley CEO Ted Pick used the word “constructive” to characterize the year ahead.

Morgan Stanley's incoming CEO Ted Pick poses for a portrait in New York City, U.S., December 21, 2023. REUTERS/Jeenah Moon

Morgan Stanley’s new CEO Ted Pick. (Jeenah Moon/REUTERS) (Reuters / Reuters)

Bank of America CEO Brian Moynihan touted a “full pipeline” of potential deals but then noted that “the question is sort of when is the clarity.”

A lot is riding on a Wall Street revival in 2024. Banks will need to lean heavily on their investment banking operations this year if their trading results continue to slip and lending income falls while the Federal Reserve cuts interest rates.

While lower rates will help reduce deposit costs and could boost demand for new borrowings, they also mean that banks may not be able to charge as much interest on new loans. Higher rates turbocharged earnings for the biggest banks in 2023.

Even JPMorgan, which churned out an industry record of roughly $50 billion in net profits last year, warned that its lending income would likely go down each quarter during 2024 if the Fed cuts materialize.

For investment banking to pick up more in 2024, many things have to go right. Not only does the economy have to take off, but leaders of companies need to become a lot more certain about the future.

Wall Street is betting the spark will be the end of the Fed’s aggressive monetary tightening campaign as early as March.

One danger is that the Fed doesn’t act on that same timetable, or that inflation surges again, forcing the central bank to hold rates higher for longer. Another is that rates come down because a recession is raging.

No firm is more ready for a potential rebound than Goldman, which struggled through much of 2023 due partly to the worst year for dealmaking in a decade.

Its CEO, Solomon, has been under pressure to pull off a tricky retrenchment from consumer lending while refocusing the firm on its core strengths of trading, asset management, and investment banking.

“A change in Federal Reserve monetary policy may finally lead to a bonafide improvement in investment banking conditions which would provide a much-needed tailwind” for Goldman, RBC banking analyst Gerard Cassidy said in a note Tuesday.

Solomon told analysts Tuesday that “I do think you’re gonna see some more meaningful IPOs in 2024 and just across debt and equity issuance see more activity and more engagement.” Goldman, he added, “is incredibly well levered to this pickup.”

UNITED STATES - DECEMBER 6: David Solomon, CEO of Goldman Sachs, testifies during the Senate Banking, Housing, and Urban Affairs Committee hearing titled UNITED STATES - DECEMBER 6: David Solomon, CEO of Goldman Sachs, testifies during the Senate Banking, Housing, and Urban Affairs Committee hearing titled

David Solomon, CEO of Goldman Sachs. (Tom Williams/CQ-Roll Call, Inc via Getty Images) (Tom Williams via Getty Images)

Projecting the outlook for Wall Street operations can be notoriously difficult, since those results can fluctuate depending on the confidence of CEOs who are influenced by a variety of economic, geopolitical, and corporate uncertainties.

Trading, on the other hand, is driven mostly by volatility and whether trading desks choose to act on market swings. Such volatility can be wildly profitable or costly.

The five big banks with sizable trading desks saw equities and fixed income revenue decline in the double digits from the third quarter, particularly in fixed income trading.

Citigroup reported the widest declines, 19% from the year-ago period and 29% from the previous quarter.

“We’re seeing improved confidence among CEOs,” Citigroup CFO Mark Mason said Friday. “Of course, the timing for a robust recovery is uncertain,” he added.

Morgan Stanley is another firm hoping for a trading rebound in 2024 and continued momentum for investment banking.

Pick, who took over as CEO on Jan. 1, said the firm’s base case is a “benign soft landing” for the US economy.

If the economy weakens dramatically in the quarters to come and the Fed has to move rapidly to cut interest rates “activity levels and asset prices would likely be lower.” If inflation isn’t beaten back, higher interest rates for longer will keep the costs of capital expensive.

Those risks present some uncertainties at the start of 2024, he said. “We remain constructive on the year ahead.”

David Hollerith is a senior reporter for Yahoo Finance covering banking, crypto, and other areas in finance.

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