Wall Street reads the Trump tea leaves
Before markets opened on Wednesday, Wall Street was scrambling to figure out what Donald Trump’s commanding win meant for business, including whom he would appoint and what they might do.
Here’s what Andrew and DealBook’s Lauren Hirsch have uncovered, including input from Kevin Warsh and Gary Cohn. (A caveat: It’s never clear how much influence anyone has with Trump at any given moment.)
How the second Trump administration might shape up: Lobbyists are already rushing to connect business executives with the Trump allies overseeing the transition. Heading that up are Linda McMahon, the former C.E.O. of World Wrestling Entertainment and a former Trump administration official, and Howard Lutnick, the C.E.O. of the brokerage Cantor Fitzgerald.
Another major figure is Warsh, a former Fed governor. He has a voice on positions dealing with finance and economics, DealBook hears. Wall Street and Washington have been speculating that Jay Clayton, the former S.E.C. chair, could be in line for Treasury secretary or attorney general. Two financiers who are also key Trump advisers, Scott Bessent and John Paulson, could also be up for Treasury. Bessent could also be in play for Fed chair, as could Warsh.
Another figure who has taken on an informal role is Cohn, Trump’s former top economic adviser, who has become a go-between for Wall Street and the president-elect, DealBook hears.
What could happen with deals: Corporate executives and rainmakers are wildly optimistic that the M.&A. business will open up under a second Trump administration. Expect more deals in industries including defense, energy and manufacturing.
There could also be more media and tech deals — that’s certainly the hope of executives like David Zaslav, the C.E.O. of Warner Bros. Discovery — but those may be decided on a case-by-case basis. (Remember that the Justice Department under Trump sought to block AT&T’s takeover of Time Warner.)
Executives working on already announced deals are feeling cheerier. Shares of Capital One and Discover Financial Services soared on Wednesday on hopes that their $35 billion transaction would finally be approved.
And long-running negotiations between the Saudi wealth fund and the PGA Tour over a pro golf tie-up may get a boost: “Given today’s news with what’s happened in America,” Rory McIlroy, the golf star, said on Wednesday, “I think that clears the way a little bit.”
One question: What will happen to pending investigations? Can Google and other Silicon Valley giants figure out a charm offensive that winds down antitrust inquiries (especially since Vice President-elect JD Vance has been a tech skeptic)? Will the Biden administration act on any pending national security reviews before Inauguration Day? And will Trump finally end government scrutiny of TikTok?
In other election news: The French trader who bet heavily on Trump on Polymarket, the political prediction market, scored a jackpot estimated at $48 million. And how Robert F. Kennedy Jr.’s potential role in the administration could reshape public health policy.
HERE’S WHAT’S HAPPENING
Stellantis lays off Jeep factory workers in Ohio. The company will cut about 1,100 jobs to improve efficiency and reduce inventory, as it struggles with the transition to electric vehicles. Stellantis was one of a trio of car makers to endure a bruising strike a year ago. Separately, a federal judge ruled that workers at an Amazon warehouse in Bessemer, Ala., should get a third opportunity to hold a vote to unionize.
Germany faces calls for a snap election after the ruling coalition collapses. Friedrich Merz, Germany’s opposition leader, has called for a vote of confidence in the government next week to pave the way for elections as soon as January. That comes after Chancellor Olaf Scholz fired his finance minister. The political uncertainty in Europe’s biggest economy adds to the country’s woes, as it flirts with recession and the threat of a new trade fight with Donald Trump returning to office.
Trump looms large over Thursday’s Fed meeting
Some excitement appears to be wearing off the Trump trade rally, with S&P 500 futures pointing to a modest open on Thursday ahead of the Fed rate-setting meeting.
The benchmark index hit its 48th record high of the year on Wednesday, with bank stocks leading the way. Investors are betting that President-elect Donald Trump will cut taxes and regulation, reversing a deal-making slump.
The big gainers include Elon Musk’s Tesla, Coinbase, the cryptocurrency exchange, and companies that manage private prisons. The big losers were companies connected to renewable energy and the green transition, such as Sunnova Energy International and First Solar, as questions swirl over the future of the Inflation Reduction Act.
But the bond market is flashing warning signs. The yield on the 30-year Treasury bond jumped 17 basis points on Wednesday, the biggest sell-off since March 2020, when the coronavirus pandemic roiled the markets. Bond traders are worried about rising deficits and the potentially inflationary and growth-straining effects of Trump’s tariff plan. They also question how the Treasury Department will fund more tax cuts.
What to watch for at the Fed meeting: The central bank is widely expected to cut its benchmark rate by a quarter percentage point. But analysts are unsure beyond that, as inflation and growth concerns weigh on the outlook.
Nomura economists wrote in a client note on Wednesday that they saw just one cut next year, as “tariffs are likely to be inflationary and negative for growth.” George Saravelos, a Deutsche Bank strategist, told clients on Wednesday that a spike in inflation could even force the central bank to raise rates next year.
The future of Fed independence is also a big discussion point. Trump, who prefers low borrowing costs, has said the president should have more say in interest rates. And members of Trump’s inner circle have suggested that he would seek to sideline Jay Powell, the Fed chair. Fed watchers think a sudden shake-up at the central bank would be difficult, but that might not stop him from critiquing its every move.
The tech moguls who won the election
Among the most notable features of the 2024 race was the sheer amount of money that was poured in, much of that from the tech industry.
Those on the winning side, such as Elon Musk and cryptocurrency executives, got a big return on their electoral investments. Those on the other side, including the Democratic megadonor Reid Hoffman, have been left to lick their wounds.
Musk may have been Trump’s most consequential backer. The world’s richest man almost single-handedly funded a more than $175 million get-out-the-vote operation that since August knocked on nearly 11 million doors in battleground states, according to The Times.
Musk drew scrutiny, and pushback, for novel ideas including a million-dollar giveaway to registered voters in Pennsylvania and turning his influential X account into a pro-Trump megaphone. But he also leaned heavily on traditional tactics, such as bolstering early and absentee voting.
In return, Musk’s businesses are likely to see a big boost. And he asked Trump to hire some SpaceX employees to become top government officials, including at the Defense Department.
Crypto executives helped a slew of allies win. Three groups funded by the industry, including the Fairshake super PAC, spent about $135 million on more than 50 races, according to The Times.
An industry tracker said that as of Thursday, 261 pro-crypto candidates had been elected to the House, compared with 116 anti-crypto candidates. In the Senate, 17 pro-crypto candidates — including one who defeated Senator Sherrod Brown of Ohio, the chairman of the Senate Banking Committee and an industry skeptic — won, versus 12 anti-crypto candidates.
“We now have the most pro-crypto Congress in history,” Paul Grewal, the chief legal officer of the crypto exchange Coinbase, told The Times.
Who lost: prominent investors such as Hoffman, Laurene Powell Jobs, and Vinod Khosla, who had backed Vice President Kamala Harris. Others included Aaron Levie, the C.E.O. of Box, a cloud computing company.
Many of those Harris supporters spoke with cautious optimism about the future:
“I love America, and hope that the next four years will be our strongest yet,” Hoffman wrote on X.
“With a major push to remove unnecessary red tape and over-regulation in key areas, we could really have a century of crazy building, innovation, and acceleration,” Levie wrote.
The world braces for Trump’s return
Donald Trump has promised more tariffs and threatened to hammer companies that move operations out of the United States. The tough talk — and memories of his first term — has sent a shudder through capitals around the world.
Here are three places where Trump’s protectionist shift could be most keenly felt.
China: Trump has suggested that he’d increase tariffs on imports from China by at least 60 percent, adding to his first-term levies. That may have already forced a rethink in Beijing: Chinese lawmakers meeting this week to discuss economic stimulus measures could introduce a bigger program to cushion such a blow. Exports soared last month as manufacturers tried to get goods out before the tariffs hit.
But Chinese leaders think they can use Trump’s victory to reinforce their alternative narrative. They will argue that his win shows the United States is disrupting global stability, and that China is counterbalancing a global hegemon, Yu Jie, a senior fellow on China at Chatham House, told DealBook.
Europe: Governments worked with the Biden administration to try to contain China. But Beijing could try to split that front if America becomes more isolationist, especially as European multinationals still have big operations in China.
The European Union is bracing for turbulence and Goldman Sachs has cut European growth forecasts. The U.S. accounted for a fifth of the bloc’s total exports last year, and E.U. officials have reportedly gamed out a two-step strategy for Trump: discussions for a new trade deal, and targeted sanctions if those fail.
Germany shows the challenge. Its government is on the brink, and its economy is in a rut. German companies, including big car makers such as Volkswagen and Mercedes-Benz, have already pushed back against E.U. sanctions on Chinese electric vehicles. Calls to double down on China could grow louder with Trump in the White House.
Mexico: The country has drawn a lot of foreign investment, including from Chinese manufacturers looking to crack the North American market. But Trump has threatened to punish U.S. companies that move operations there. Can Mexico find another workaround?
THE SPEED READ
Deals
Blackstone agreed to buy Retail Opportunity Investments, a shopping center owner and operator, for $4 billion. (WSJ)
Private equity firms, including Advent International and Apollo Global Management, are reportedly weighing a bid for Reckitt Benckiser’s home care brands. (Bloomberg)
Elections, politics and policy
AstraZeneca said that the Chinese authorities had detained a senior executive amid an investigation into dozens of the company’s employees.
Canada ordered operations of TikTok to close in the country because of national security concerns. (NYT)
Best of the rest
This year is likely to be the hottest on record, and could be the first in which global temperatures consistently top 1.5 degrees Celsius over preindustrial levels, a zone at which experts said could lead to irreversible damage to Earth. (NYT)
The Malaysian businessman known as Fat Leonard, who was behind one of the biggest corruption scandals in U.S. military history, has been sentenced to 15 years in prison. (WSJ)
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The post The Wall Street Leaders Who Could Play a Role in Trump’s New Administration appeared first on New York Times.
