Wall Street is forecasting a better backdrop for companies that want to go public. That’s promising news for two portfolio names in very different industries. January was the best month in nearly two years for initial public offerings, according to Goldman Sachs’ IPO Issuance Barometer. The metric, which indicates how conducive the macro environment is for IPOs, rose to 119 last month. This marked its highest level since February of 2022. A score of 100, for context, is the average rate for IPOs. Goldman attributed January’s strength to a monthslong decline in bond yields as the market at the time had been forecasting many more Federal Reserve interest rate cuts this year than the central bank itself was projecting. More recently, yields have ticked up as stronger-than-expected economic growth and cool inflation data continued to pour in, and the market got less dovish. Tuesday will be the latest test of the “will the Federal Reserve cut rates sooner, or later” when the consumer price index is released before the opening bell. While lower rates can stoke the IPO market, fewer rate cuts because the economy remains strong with cooling inflation should still be viewed as favorable. This would be the good news is good news scenario. “We expect the U.S. economy will continue to grow, the nominal 2-year UST yield will decline modestly, and valuations will remain elevated relative to history,” the Goldman analysts wrote in a research note last week. “If soft data improve to match the hard economic data and equity investor pricing of economic growth, it could lead to a further increase in our IPO Issuance Barometer in coming months.” Case in point, high-profile companies like social sharing forum Reddit , fast-fashion retailer Shein, and e-commerce and payment processing giant Stripe are all said to be in talks to go public in 2024. Here’s a breakdown of how our Club holdings Morgan Stanley and Danaher would benefit from more IPO activity. MS YTD mountain Morgan Stanley…
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