Episode summary
Wall Street Poised for Bonus Increases in ‘Year of the Bank’ | Bloomberg Intelligence
Bloomberg Intelligence
· · Hosts: Paul Sweeney, Scarlet Fu · Guests: Katherine Doherty, Michael Halen, Geetha Ranganathan, Kunjan Sobhani
Summary
Wall Street bonuses look set to rise for a third straight year as dealmaking and trading volumes improve. A Bloomberg News finance reporter said Johnson Associates sees incentive pay for investment bankers up 10% to 20% or more from a year earlier, helped by a long-awaited M&A comeback, stronger equity underwriting, and volatile markets that have boosted trading desks. She also said the outlook could soften if the second half of 2026 weakens, but for now firms are talking about flat headcount rather than layoffs because AI is making staff more efficient.
Restaurant earnings were a mixed picture. A Bloomberg Intelligence restaurant analyst said McDonald’s is leaning hard into value with aggressive promotions to defend traffic, even as sales growth is expected to slow after strong comparisons. He said Shake Shack is facing elevated beef inflation, but management is offsetting that with labor efficiencies and a push toward better productivity and more sales growth.
In media, a Bloomberg Intelligence US media analyst said Warner Bros. Discovery is seeing weakness in linear TV but strength in streaming and studios ahead of the Paramount Skydance acquisition. She also said Peloton has made progress on profitability, though demand remains the main problem. A semiconductor analyst said Arm Holdings is gaining momentum in data center and AI, but smartphone weakness and supply limits keep the story volatile.
Key takeaways
- The reporter said investment banking bonuses are projected to rise 10% to 20% or more, with M&A advisory and equity underwriting leading the gains.
- The reporter said Wall Street executives are describing headcount as flat, with AI boosting efficiency more than cutting jobs so far.
- The restaurant analyst said McDonald’s is using unusually aggressive discounts, including $1.50 sausage McMuffins and $3 breakfast meals, to defend traffic.
- The restaurant analyst said Shake Shack expects beef inflation to moderate to high single digits in 2026, but still sees pressure on margins.
- The media analyst said Warner Bros. Discovery’s streaming unit produced $1.3 billion last year and could approach $2 billion this year.
- The semiconductor analyst said Arm’s AI server CPU opportunity could still scale even after management held its revenue outlook at $1 billion because of supply uncertainty.
Notable quotes
“right now the projections are looking pretty rosy. And that's because the long- aaited comeback of deals”
“we had a quarter where they really reported strong numbers when it came to IBIDA when it came to free cash flow”
“they guided uh revenue for their new AI server CPU chip to 1 billion of revenue in the fiscal 28 which is really proxy for fiscal 27”
How the episode opens
Bloomberg Audio Studios podcasts, radio, news. You're listening to the Bloomberg Intelligence Podcast. Catch us live weekdays at 10 a.m. Eastern on Apple CarPlay and Android Auto with the Bloomberg Business App. Listen on demand wherever you get your podcast or watch us live on YouTube. The most widely read stories on the Bloomberg
Always about Wall Street bonuses. Absolutely. — You need readership. Oh my god. I need readership this month or this quarter or this year. Write a story on Wall Street bonuses.
Yeah. Well, we have one today. It's uh Wall Street poised for bonus increases in year of the bank.
So, you can bet a lot of people are clicking on that story. Katherine Dhy is the author of that story. She's our Bloomberg News finance reporter.
Katherine, it is only May, but the folks you talked to say that there's been some banner deals in the first part of the year that has led them to conclude already that it's going to be a big big year for bonuses.
That's right. And we should caveat by saying it's still early in the year, so things could change, but right now the projections are looking pretty rosy. And that's because the long- aaited comeback of deals.
You've started to see that come through. We do have the big banks. They have just reported their first quarter.
The second quarter looks to be pretty steady. Uh so if the second half of the year takes a turn for the worse, that could change these projections. But right now, it looks like the payout, especially for M&A advisory, equity underwriting quite strong.
And as we've been talking about the volumes that you've been seeing across equities and fixed income as far as trading goes, those traders that are facilitating the buying and selling are also poised to see a pretty hefty payout uh if things continue as they as they've been going.
From the episode’s captions: roughly the first two minutes, lightly cleaned. Keep watching on YouTube →
Topics
- year of the bank bonuses
- investment banking dealmaking
- restaurant earnings
- media acquisition talks
- arm royalties smartphone slowdown
Companies and tickers mentioned
- MCD
- SHAK
- PTON
- ARM
- Johnson Associates Inc.
- McDonald’s Corp.
- Shake Shack
- Warner Bros. Discovery
- Peloton Interactive Inc.
- Paramount Skydance Corp.
- Arm Holdings Plc
Watch the episode
Summary, takeaways and quote selection by Octagon. Quotes are short excerpts; the full conversation is in the episode.
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