U.S. investment banks have just disclosed record quarterly results, helped by a surge in trading activity around the U.S. election and an increase in investment bank deal flow.

traders in JPMorgan Chasefor example, there has never been a better fourth quarter After seeing revenue jump 21% to $7 billion, Goldman Sachs The equities business generated $13.4 billion in revenue for the year—also Record.

For Wall Street, it’s a welcome return to the type of environment traders and bankers crave after a quiet period at the Fed. interest rate hike as it battles inflation. Boosted by the Fed’s easing mode and the election of Donald Trump in November, JPMorgan, Goldman Sachs and Morgan Stanley Easily reach the top expect for this quarter.

But the majestic machine that keeps Wall Street humming is just getting started. That’s because U.S. companies have mostly taken a wait-and-see approach in recent years when it comes to acquiring rivals or selling themselves amid regulatory uncertainty and rising borrowing costs.

According to reports, this is about to change Morgan Stanley CEO Ted Peake. Peake and Goldman Sachs Chief Executive David Solomon said banks are seeing a growing backlog of merger deals, buoyed by confidence in the business environment, including hopes of lower corporate taxes and smoother merger approvals.

Peake said on Thursday that Morgan Stanley’s trading pipeline was “the strongest it has been in five to 10 years, and probably longer.”

Capital market activity, including debt and equity issuance, began to recover last year, rising 25% from depressed levels in 2023, according to Dealogic. But without normal levels of M&A activity, the entire Wall Street ecosystem is missing a key driver of activity.

Peake explained that for investment banks like Morgan Stanley, multibillion-dollar acquisitions are at the “top of the waterfall” because they are high-margin deals that “have a multiplier effect across the entire organization.”

That’s because they create demand for other types of transactions, such as large loans, credit facilities or stock offerings, while creating millions of dollars in wealth for executives who need professional management.

“The last piece is what we’ve been waiting for, which is the merger ticket,” Pique said, referring to the contract governing the merger deal. “We’re excited to roll this out to other parts of the investment bank.”

Another engine of value creation on Wall Street in recent years has been the IPO market, but that market will also pick up, Solomon said. Tell Wednesday, an audience of tech investors and employees.

“There’s been a meaningful shift in CEO confidence,” Solomon said earlier in the day. “Sponsors have substantial order backlogs and there is an overall increase in deal interest, supported by an improving regulatory environment.”

After a few lean years, Wall Street’s dealmakers and traders should be in for a profitable period.