Matt Wolf
speaker
221 appearances
14 recordings
2 series
first heard Jan 2025
last heard Jun 2025
Matt Wolf’s voice in public audio — every appearance, attributed to the second.
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Appearances
As we look at the S&P 500 as of this recording, we're back down to 55, 45 or so, essentially erasing the gains that public equity markets have made since the Fed began cutting rates back in September. Sort of a coincidence, I guess, but Markets are back down. There's a bunch of factors for this. It's very important as companies look to raise potential IPOs.
A lot of sponsors, a lot of companies have been looking to 2025 to be the year that the window, the IPO window would reopen and there'd be another way to access capital. But, you know, falling indices are not a good sign. And they're coming down for, like I said, multiple, multiple factors. So really, maybe in no particular order, you know, 2024 is
we saw a lot of solid growth given kind of a weak comparison to 2023, right? So we saw gains in 2024 given the, again, the weak or typical easy comp of comparing growth, 24 over 23. Well now, you know, showing growth over 24 is a much higher hurdle. So there are some fundamental sort of growth issues with a lot of companies not meeting targets or revising targets.
And that's brought equity prices down, certainly. Another one would be the uncertainty around tariffs and which tariffs will go into effect at what magnitudes when. Nobody really knows. There doesn't seem to be sort of a cohesive strategy or roadmap on tariffs. to answer really any of those questions.
And we're seeing retaliatory tariffs across the globe on these, and that's creating a huge downward pressure on equity values and in equity markets, which will delay, deter, defer, cancel IPOs, certainly. IPOs generally need a robust
equity market you know the individual companies looking to go public will need obviously strong sustainable growth stories to sell investors but they also sort of need the uh tailwind of strong strong equity market strong equity valuations and they're just not there so we expect that you know companies will continue to look to private capital private equity private credit as they look to expand and navigate these challenges but um at least so far where we said as of this recording
Equity markets are down back to September, August of 24 lows. And that does not bode well for companies and investors that are looking to tap the, you know, an initial public offering in 2025.
Thank you, Chanel.
Yeah, great questions and ones we're talking about. hourly, right? I mean, I will say, like, I am no sort of policy expert by any stretch of the imagination. Maybe they're good, maybe they're bad in terms of policy. I don't know. All I know and what the data show are that it's, you know, creating a lot of uncertainty in
dealmaking and around investment decisions when there is no clarity or very little clarity on the breadth and depth and scope and frankly timing of tariffs. We've had many, many clients and sponsors take another look at deals, shelve investment, push things off because they're just waiting for more information. And we're seeing that uncertainty reflected in real time in the
in the tenure which has been on an absolute tear it's an it's an indication of the cost of capital right so we have not only do we have more uncertainty in the sort of overall business investing community and the deal making environment but the cost of capital is increasing right so the the cost of making the wrong decision is increasing and we have sort of the second and third order effects
that's really creating a lot of a lot of uncertainty and confusion and and you know again it's not for me to say whether they'll be good or bad i i don't know and i'm not going to comment on that all i know is that it's creating uncertainty which delays investment it makes it just makes it more difficult to get deals done i mean 100 and whether they're good or bad again the markets hate them inflation hates them the only people that like them are sort of
Absolutely. And I think the other thing that perhaps those in the administration may maybe take for granted is just the the lead time on making these investment decisions. And to your points, maybe some of these defensive tariffs will encourage manufacturers to move operations back to the United States. Maybe. Right. But they. That's a very expensive decision to make that has a lot of variables.
A lot needs to be thought through for any sort of executive, any operation, whether it's a farmer or even a consulting professional. Like, you know, whatever. Manufacturing doesn't matter what the business is. It's a very... expensive decision investment to move some centers of production and without certainty around, well, what are those future tariffs, future costs look like?
It's a leap of faith to make some of those investments, and we're not seeing many companies do that.
Absolutely, absolutely. Ultimately, the uncertainty, whether it's uncertainty from tariffs, regulatory uncertainty about the path of future interest rates, all of that uncertainty adds to the cost of making business decisions, whether it's where do you want to place a plant, where do you want to hire people, do you want to sell a division, do you want to buy a company?
All of that gets made more expensive through this additional uncertainty, regardless of the source. And right now, tariffs are a huge source of uncertainty for most executives, leaders, and investors that we're talking to.
Yeah, it's a great question. You know, if I knew exactly the future path of the tenure, maybe we would be having this conversation on my yacht in the Mediterranean, but I don't. So, you know, what we're expecting, though, is that this uncertainty will continue to drive yields higher because of the increasing term premium.
So investors have less certainty about future duration, future policy, future uncertainty in general. So that spread between kind of the natural rate of the 10-year and the traded observed rate will continue to widen and it'll continue to
you know, we're watching sort of some of the, well, depending on the analysts and the banks you want to read and look at, you know, that sort of upper limit of 477, 48, somewhere 475 around there is kind of, depending again on who you want to listen to, who you want to read, is sort of the upper bound, the marker, you know, past that is the,
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