‘Dancing in the street’: Wall Street’s titans can’t wait for Trump 2.0

The day after the presidential election, JPMorgan Chase CEO Jamie Dimon picked up his phone for a call he had hoped not to make.

Dimon, who had privately supported Vice President Kamala Harris and boasted to associates he hadn’t spoken to Donald Trump in years, was now in the position of calling the president-elect with congratulations and an offer to help in any way. Trump didn’t pick up, forcing Dimon to leave a message on his voicemail, according to two people with knowledge of the call.

Donald Trump shaking hands with JPMorgan CEO Jamie Dimon in 2017. Credit: Andrew Harrer

The snub — and a subsequent missive from Trump on social media that Dimon would “not be invited” to be a part of his administration — did not dampen the banker’s enthusiasm. Dimon said a few days later that his industry was “dancing in the street” over Trump’s win and incoming Republican majorities in the House of Representatives and Senate.

These days, it seems that everyone who is anybody on Wall Street — to say nothing of a whole lot of nobodies — is amped up for Trump’s return to the Oval Office. In interviews, bankers, lawyers, investors and corporate executives with a wide range of political views said that despite mixed opinions on Trump’s proposed policies overall, they see in his administration the greatest possibility for a boon to the business world in a generation or more.

In part, they’ve been won over by the president-elect’s picks of a fairly run-of-the-mill collection of Republican stalwarts for economic and financial regulatory roles. They expect this Wall Street-heavy crowd, such as Paul Atkins, a longtime lawyer for investment firms who is Trump’s pick for Securities and Exchange Commission chair, and Howard Lutnick, a billionaire investment banker, as the commerce secretary designate, to focus on rote conservative causes like lighter financial regulation and lower taxes (or at least a continuation of tax cuts set to expire).

With Trump 2.0, there does seem to be something for everyone in the financial arena.

Notably, the rosy outlook sidesteps some of the nonconformist economic ideas — namely tariffs on all imports to the United States — that Trump has pledged. It also takes as a given that the president-elect will continue to save his most provocative political picks for bureaucracies such as the FBI that financiers see as unrelated to their world.

For now, those risks are taking second place to cold, hard opportunity. One prominent investment banker asking for anonymity because he’s not authorised to speak publicly on the matter, pointed out that amid Trump’s posturing, there is profit to be made: His bank was seeing an uptick in interest from corporate clients looking to purchase expensive, complicated financial instruments that reduce the risk from changes in the price of currencies.

The client receives financial stability, while the investment bank generates fees.

With Trump 2.0, there does seem to be something for everyone in the financial arena: For bankers like Dimon, high on the wish list is the loosening of looming capital requirements, known as the “Basel III endgame,” that they say would reduce the amount of money they have available to lend, and ultimately profit. International regulators have argued that the proposed rules are needed to prevent another financial crisis.

CEOs with big pay packages contingent on rising stock prices are heartened that Trump, as he did in his first administration, is again agitating for lower interest rates, which generally propel financial markets higher by incentivising risk-taking.

Interest rates are set by the Federal Reserve, not the president directly, and they’re already on the way down. Still, Trump has shown no compunction about publicly insisting that the central bank keep rates low, despite a tradition that presidents generally steer clear of direct pressure on the Fed.

Lower rates would also be a boon for mergers and acquisitions, initial public offerings and other cogs in the Wall Street moneymaking machine, which were jammed up during the past four years in the aftermath of the pandemic and under a Biden administration that had attempted to clamp down on big companies trying to get bigger.

When Trump appointed a former technology lobbyist, Gail Slater, to lead the Justice Department’s antitrust division, he said he expected her to “facilitate, rather than stifle,” the corporate world, language that would not have been out of place in the Reagan deregulation movement.

And perhaps no one is more elated than cryptocurrency investors and venture capitalists, who embraced the once-bitcoin-sceptic president-elect and are hoping to be permitted to register and market new coins to ordinary investors. The price of bitcoin, a proxy for the hopes of the industry at large, recently touched $US100,000 and has shot up nearly 40 per cent since the election. The S&P 500 is up 6 per cent since then.

As ever with Trump, whose decision-making can be tough to predict, handicapping the chance of a long-term financial windfall from his time in office can be similar to reading a Rorschach test in which the same image can seem different depending on the viewer.

It’s easy enough to craft an argument for why financial optimism may be misplaced: Trump has talked up spending plans that would balloon the national debt and the imposition of tariffs and a renewal of tax cuts that could exacerbate inflation. A tightening of the US labour market caused by mass deportations of immigrants could also cause a spike in wages as companies are forced to compete aggressively for workers.

And heady times for Wall Street are often followed by economic troubles. The financial services industry has traditionally thrived right up to the brink of collapse, such as before the bursting of the internet bubble in 2000 and the mortgage market in 2007.

There was widespread exasperation among the finance set late last month when Trump threatened to impose a 25 per cent tariff on goods from Mexico and Canada. Wall Street hates uncertainty and a bubbling trade war between two of America’s largest trading partners would bring that in droves.

And yet not long after that threat, many financiers reached deep for a reason to focus on the positive by passing between one another a letter from January to investors from Trump’s Treasury secretary pick, Scott Bessent, which described tariffs as less important than they may seem because they would be “on the table but rarely discharged.”

A spokesperson for the Trump transition did not respond to a request for comment.

To Trump 2.0 converts like Ken Griffin, the billionaire founder of the hedge fund Citadel who didn’t donate to the president-elect’s campaign, the tariff talk may well just be a starting point, rather than a serious pledge.

The president-elect “comes from a field — real estate — where the norms of negotiation are often different,” Griffin said last week at the DealBook Summit in New York. Amazon’s founder, Jeff Bezos, sounded a similarly conciliatory optimistic tone toward Trump’s administration at the event.

This article originally appeared in The New York Times.

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