How Does Wall Street Feel About Trump Now?
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I'm Nancy Cook, a senior national political correspondent for Bloomberg News, in for Stephanie Flanders this week. Welcome to Trumponomics, the Bloomberg podcast that looks at the economic world of Donald Trump, how he has already shaped the global economy, and what on earth is going to happen next.

So this week, we're bringing the focus back from Europe and the Middle East and asking a question that centers around the mood on Wall Street. Are bankers still celebrating Trump's return? What does the way Wall Street is moving money tell us about their feelings?

With me from our offices in New York are our two star reporters from our finance team. Sridhar Najaran, our chief Wall Street correspondent. Welcome, Sri. I thought of you as soon as I wanted to do this story because we had so much fun together at the Democratic National Convention in August. And how different was the mood back then? I think I remember we were traipsing through that convention floor with all the balloons falling down. Unfortunately for the Democrats, that mood did not carry over into November. You are so right.

And then Hannah Levitt, who covers J.P. Morgan and Morgan Stanley and has been speaking with a lot of executives in the last few months. Welcome, Hannah. Hey, thank you for having me. Of course. So it's probably worth remembering we got an early read on how bank executives were viewing Donald Trump's return to the White House at the World Economic Forum in Davos this year. They were, for the most part, elated about the prospect of fewer regulations and more deals.

The consensus was a market-focused dealmaker was at the helm of the U.S. economy, and that would present a new era of opportunity with money to be made. So here we are roughly one month later, and how do finance executives feel now? And what can we learn beyond the rhetoric and more at the actual trades? ♪

Sri, why don't we start with you? If you want a good proxy for feelings and vibes on Wall Street, I think the best indicator is obviously the stock price for those individual companies and their firms. And if you look at what's happened since November 5th, since the night of the election, the

We've pretty much had a consistent charge up on some of the major stocks. Goldman Sachs, all-time high. J.P. Morgan, all-time high. The private equity stocks have also been climbing since November. So the feeling there, at least the immediate reaction to the result has been this will be good for big business. This will be good for big Wall Street. One of the points you just mentioned was dealmaking.

We've so far had about $560 billion worth of deals announced globally, quarter to date.

which is a decent number. But if I go back to Q1 2024, that number was $960 billion. That explains why when Wall Street executives were talking at a major financial services conference last week, one of the questions that analysts kept asking them was, you've all talked about this pickup in dealmaking. Why has it not really materialized? It feels slower than it should be. And the answer was truly, yes, it is slower. We're having a lot more conversations about

A lot of these dealmaking discussions are at the five-yard line. They've just not converted. You could have the gusher open any time. But it does go back to the idea that, yes, there are a lot of things about the Trump administration and the way they talk to big business and about big business that automatically generates the sense of enthusiasm and hope for these companies.

But there is also the Trumpian policy uncertainty that they have to deal with. When you have all the questions about tariffs and the tax policy changing one day to the other and, you know, Trump's attention span going from his one favorite subject to perhaps something else the next day and not trying which one will come through and which one will fall by the wayside. That does create a little bit of an obstacle for businesses, and they'll have to figure out a good way to navigate around that.

Hannah, you've been talking to a lot of executives. I wonder how they're feeling about that point that Sri brings up about the tariffs. You know, I know that they are excited about the possibility of lower taxes and less regulation, but the tariff policy, my reporting shows, it is really uncertain. And I wonder how executives are feeling about that. Yeah, totally. So I would say to Sri's point, there's still uncertainty.

broadly this palpable optimism. Various bank executives have described it as animal spirits and all of that. But it's a bit more caveated today than it was a couple months ago and even a few weeks ago before inauguration. And that really stems from just kind of all the uncertainty. And some of these executives, you know, whether it be bank executives or

you know, CEOs of companies that they bank and things like that. They need more certainty before they move forward with these strategic actions like, you know, deals or IPOs and all of that. And the tariffs are an element of that, you know,

I cover JP Morgan, as you said, and Jamie Dimon, the CEO there, said last month that tariffs, if they're properly used, can be effective to resolve things like unfair competition, national security, things like that. But they can also do damage if they're misused. And he's described Trump as a negotiator and said that tariff talk will get people to the table. But I think

there's a bit of a wait and see attitude as far as how all of that shakes out. Now, on the market side, though, these banks have these huge trading desks and it spells more of an opportunity on that. Market moves, volatility, that translates generally into banks making money on those trades. So

So that has continued. We saw some of that in the fourth quarter, and it seems like that's continued into the first quarter. And if I could quickly jump in, I'm thinking back to the time when Hannah and I first started working together about seven years ago now. There was this predominant concept, you know, when we talked about volatility in markets and how it impacted the trading desk, the markets, businesses of these big banks.

The talk was always around whether it's good volatility or bad volatility. Funnily enough, I think in the last couple of years, especially with a lot of changes that have been made, banks have gotten themselves into a position where, and look, if there is a massive market correction, yes, they would also be affected because they're in the business of buying from one party and selling to another party. So if there are massive moves, they will be affected. But the businesses have been structured in a way that...

It's almost their ability to make money, their ability to transact, and the revenue is almost dependent on the volume and less so on the direction of markets. An up market obviously helps. So in general, if you look at this idea that you will have a higher uptick in volatility over the next few months, next few quarters, or perhaps throughout Trump term,

2.0, that will generally be good for a lot of these trading businesses. And for the biggest Wall Street firms, that is a big source of revenue. That is a major source of earnings for them. Absolutely. And I would just say JP Morgan, which has the biggest trading business on Wall Street, they had...

their highest fourth quarter trading revenue ever when they reported in mid-January. And so that's the level of momentum that executives have since described as continuing. And I was speaking to a bank executive earlier today, actually, who said market movements are generally good for Wall Street unless it's a shock. So I think that really sums up, you know, ratifies what Sheree was saying. And then I'm also curious sort of who are the Wall Street whisperers in the Trump White House movement?

I know a big complaint of the Biden White House was that they did not have a lot of connections to Wall Street. And so I'm wondering what you're hearing about those two things. Let me first start with the second part of your question, Nancy. So I think when we think about some of the key characters in the Trump orbit,

Susie Wiles played a massive role in sort of the campaign and now at the White House. She is perhaps one of the few people in that immediate Trump circle, in that immediate group of decision makers in Trump world, who's not that well known personally.

to Wall Street. She doesn't really come from that background. Not a lot of people have had time to build connections with her. But if you move past Susie Wiles, you look at the cast of other characters. Howard Lutnick, extremely well known to Wall Street. Scott Besson, creature of Wall Street, extremely well known to all the major players there. Even folks like Doug Burgum have been like big clients of firms like Goldman Sachs over the years. So there are enough

Folks in that orbit that you're very, very unlikely to hear the same complaint about this administration as you heard about the Biden administration about not having someone in there who would take their phone call, who would take a meeting with them. That's not going to be a problem.

In terms of what these folks are doing, what these players are doing, I was just thinking about a few memes that Hannah and I were swapping over the last couple of days about Jamie Dimon going down to Capitol Hill. And, you know, folks wanted him to comment on the dismantling of the CFPB, I think. And he said no comment. And then he pulled out this chart that he carries with him, his famous spaghetti chart that shows this...

wide array of regulators and the oversight they have over J.P. Morgan. That has been Jamie Dimon's pet peeve for a long time. And it's funny that it almost has a printed out slide that he carries with him every time he goes from New York to D.C. In fact, I know Hannah has some interesting color in the backstory of this chart. Well, yeah, he does. He does bring it with him. And it's funny because it was actually originally in his 2011 letter to shareholders that

So, you know, it's more than 10 years that he's had this with him. They call it the spaghetti chart kind of informally. And it has all these agencies and what they oversee and all the kind of interconnecting lines. And, you know, I'm looking at it right now. It's quite clear why it's called the spaghetti chart. But yeah, you know, the complaint on Wall Street over the years has been that

There are too many cooks in the kitchen, basically, on Wall Street oversight. And so, yeah, when the bank CEOs went to D.C. last week, it is not surprising to me at all that Jamie had this chart with him. One thing that I would like to think about, and it's something that maybe two of you can weigh in on, is I think

The biggest firms on Wall Street, the biggest banks, for instance, had gotten used to Jamie Dimon's 10-year-old beef aside with the regulatory agenda, had gotten used to this idea that they had to invest a lot for the regulatory needs, for the regulatory requirements. But effectively, what they did was also build this

wide, deep moat because most other people cannot come in and play on your turf if the cost of entering that business is prohibitively high. That has helped, especially when I think about the key trading businesses and some of the other key businesses that are two, three, four top players.

Everyone else sort of sits outside that mode. So they have benefited greatly from that. So if you have a rapid unraveling of the regulatory agenda, doesn't it in some way backfire for these biggest players? That's a wonderful point. Hannah, do you have any insight into them? The way that I've heard it described over the years is kind of death by a thousand cuts from the banks, which is perhaps a bit dramatic. But basically, if you go business by business and

There are companies, non-banks, that have been able to play in that realm in a big way, but not, you know, there haven't been new entrants to the kind of full-on big bank, systemically important category. So, yeah, I think it's kind of TBD how that all shakes out, you know, in a world where there's a lot of deregulation, which...

you know, lets the banks do more, but also lowers those barriers to entry. That's a great point. And just from where I sit in Washington, you know, having done a lot of reporting in the last week on Elon Musk's Doge efforts, so much of that group is staffed by, you know, tech people who I think do want to, you know, less regulation, but they also want to sort of upset established business and the status quo. And so that is quite interesting. I think that, you know, just the idea that it would make it easier for other companies to come in. One

One of you brought up Scott Besson, who is a former hedge funder and who is now Treasury Secretary. That's going to be such a key role this year as they think about cutting taxes again. I wonder how his tenure is being viewed so far by finance executives.

I think so far they have no complaints. Scott Besson's proved to be exactly what they thought he would be. They see him as a bit of a moderating influence in Trump world. Of course, that might not really win you a lot of kudos in Trump world itself. And Scott Besson will perhaps have to do more to prove himself in Trump's inner circle, make sure he's spending more of his weekends down in Mar-a-Lago instead of back at home in South Carolina. But for Wall Street and for markets in general,

Scott Besant was a choice that they all cheered, that they all welcomed. They realized this is someone who is business-focused, who is markets-focused, and they could get behind this pick. Scott Besant in that position is good for Wall Street. And when you think about the key proposals about taxes, lowering tax rates, yes, Scott Besant will champion that.

The question, though, is, is it going to be Scott Besant who makes sure that the tax cut policy actually makes its way through Congress? I don't know how much of a say in power he will have in that, especially when you consider a Congress where, especially in the House, the Republicans have a very, very slim majority. And you already seen that there are various factions to choose.

today's GOP that half the times they're battling the Democrats, but most of the times, in fact, a majority of the time they're battling their own different factions within the GOP. And they'll have to figure out a way to put forward a unified front. And that is important for Wall Street. I was just looking at some numbers before coming on here. When you look at pre-tax earnings at a Goldman Sachs, at a Morgan Stanley, that's about $20 billion a year. Let's say you can cut

corporate tax rates, their effective tax rate can go down by 5%. You know, I'm just making up a scenario which a nice round number like Donald Trump would prefer. That's about a billion dollars in savings. A billion dollars in savings is you could have a 20, 30, 40% slowdown in inflation

deal-making and therefore the fees that they make from that advisory business, one of the key components they've been talking about when they talk about this turbocharged deal-making environment. You could still have a big, massive slowdown there, and yet the savings from the tax cuts

could offset that. That's how important the tax cut agenda will be for these big banks. So they would hope that Scott Besson could work his magic. More importantly, they would pray for unity within the GOP ranks for that to come through. Howard Lutnick is the Commerce Secretary. He wanted to be Treasury Secretary, but Trump passed him over.

He has given him a powerful perch where he's in charge of all the tariffs. Howard Lutnick is a very familiar character to you all because he ran Cantor Fitzgerald. But what should Washington, D.C. know about the way Howard Lutnick operates as he sort of takes over a huge portfolio here? The most interesting dynamic about Howard Lutnick was how he almost

Dick Cheney himself in leading the hunt for the Treasury Secretary only to say maybe I would be the best Treasury Secretary. So the first few weeks, especially during the transition months, a lot of the talk in town was about this warring dynamic between Scott Besant and Howard Lutnick.

That's obviously not a good look in an administration that's so focused on these items of tariffs, taxes, deregulations and whatnot. You know that this person in the commerce seat and the person in the treasury seat have to work hand in hand. They've even been given this mandate of figuring out how to create the sovereign wealth fund. That also involves a lot of money.

Scott Besson and Lutnick working together. And I think Kevin Hassett's involved there as well. So more than how he operates on Wall Street, which again, he will say and do things that are generally appreciated by Wall Street. He is from New York. He's an old time fixture. He knows everyone in the city. So he knows all of Wall Street.

That all works just fine. In fact, much like Trump, he was also a one-time Hillary Clinton fundraiser, and now he's Team Trump, much like Donald Trump is now Team Trump after once being a Hillary Clinton fundraiser. But the fact remains that

Wall Street will have no issues with Lutnick. It's more whether Lutnick can navigate the dynamics of getting along with everyone in Team Trump, especially someone like Scott Besson, to be able to push through the agenda, the ambitious agenda that they need to push through.

in a way that does not rattle markets, in a way that also is fiscally responsible. You know, they talk about the ballooning debt burden, but when you think about the deregulatory agenda and the massive tax cuts that they're trying to push through, that's

That will have an impact on the deficit. So how do you offset for all of that? It will require a lot of careful planning with the rank and file of the GOP in Congress, with the various administration members and the various cabinet members. That's the dynamic that Lutnick will have to be focused on because that will be a difficult needle to thread. Steve Mnuchin was Treasury Secretary in Trump's first term, and Wall Street executives are

liked him then, and they looked back fondly on his tenure. You know, he was there the whole time. He was seen as kind of a steady presence in that world. And it's someone who they recognize, and that goes a long way. And so I would say that with both Besson and Lutnick now, it's a similar dynamic. I'm so curious to see how Lutnick fares, because just as a political reporter, he made a bunch of Trump people, you know, on the politics side of things, quite angry during the transition when he

sort of ran roughshod over things and put his own name up for treasury secretary. So I am, I asked because I am really watching sort of how he operates in a political environment. One final question, and Hannah, I want to go to you first. I am curious, you know, there's so much political geo instability right now. You know, we are trying to figure out what's going to happen with the end of the war in Ukraine as

Trump thinks about that. It's very uncertain what his relationship with Iran will be like. He has said that he wants all the Palestinians to leave Gaza. There's just a lot of big foreign policy questions right now. And I'm wondering if that concerns the finance executives that you speak to at all and just sort of how they're factoring that into their plans for the next year or so.

Yeah, it absolutely does. I think the way that that translates to the business side of things or one of the ways that that translates is, you know, when you look at deals like M&A and the cross-border aspect of that, our cross-border deals getting done. And we were talking earlier about the post-election euphoria. That continued, but I was speaking to a bank executive last week who was describing it as U.S. firms are waiting for the dust to settle. So, you know, that euphoria hasn't been immediately translating. But in Europe,

there was apprehension immediately post-election that has turned a bit more into how can we get in on U.S. economic growth. And then, you know, in Asia, especially China and Hong Kong, there's a sense of it's not as bad as it could have been in the early days and weeks. So I think that as you're looking across kind of the different regions, there are different perspectives

expectations and then reactions to, you know, the things that are happening as they happen. But it is there is still broad sense that it's early days in this administration and people are kind of waiting to see how things shake out.

I would go back and look at the world economic order and say perhaps since the 2008 financial crisis. If you look at different parts of the world, Europe massively struggled. Africa is still a growth story but has now not hit the breakout phase. Middle East has been a bright spot. There have been strong emerging economies in Asia which have had their stumbles once in a while. But in general, over the last decade or so, the American growth story in some ways has been unparalleled.

And perhaps that leads to this assumption that America is an island unto itself and what happens in the rest of the world doesn't.

necessarily affect the country. And you could assume that in an America first focused administration, that is the predominant thought. But I feel that the world is way too interconnected, that you can't just overnight snap your fingers and say, you know, each one to himself. That will be very difficult.

So from that perspective, when you think about how the geopolitical situation is playing out worldwide, if you have a scenario where you're

enemies remain your enemies and you turn your allies into your enemies. Cue Canada, cue European Union and the big speech from JD Vance at the Munich Security Conference over the weekend. You suddenly start to distance all of those players who've been your allies, who've been part of, you know, enabling, helping your growth story.

then it does reach a situation where it starts to worry markets, it starts to worry the big investors, and it starts to worry the big firms. That is one reason why Jamie Dimon's almost been like a broken record for the last half a decade talking about how the geopolitical risks in the world today are the biggest risks faced by the world. To an extent, it almost feels like he's been talking about these dark clouds on the horizon without any real follow-through on that.

But he's not wrong. Not a lot has to go wrong for things to turn in the absolute wrong direction. And that will be a cause for worry. And at that time, you can forget about the cheering on of dealmaking and tax cuts and deregulation. You'll have much scarier things to worry about. What's one thing that you think the listeners should know just about Trump and the Wall Street relationship that we haven't talked about yet? He lives and dies by the market. He judges himself by how the markets perform. So...

He might be wedded to a policy, but it almost feels like if the market gives it a very negative reaction, the sense is that Trump will backtrack. And that is something that Wall Street executives have almost been taking solace in, right?

you know, in recent weeks and probably will continue to do so. Maybe almost taking it for granted. Let me caveat that by saying that is the assumption on Wall Street. In the second Trump administration, where he seems more untethered from prior norms,

It's not entirely clear to me that that still will remain his guiding philosophy, but at least Wall Street thinks and hopes and believes that still remains the guiding principle about Donald Trump when they think about Donald Trump. That's a great point. I do think the stock market was sort of his primary form of polling in his first term. But I think you're right. I think he is a more self-assured leader now and fairly confident in how he's moving. And so you're right. I'm not sure...

Sort of if that if the stock market and how it's performing will be a checks and balances on him this time. Sri, thank you so much for joining us. This was wonderful to have you. Always great chatting with you, Nancy. And Hannah, thank you so much. It was great to speak with you from New York. Yeah, thank you for having us. Thanks for listening to this week's Trumponomics from Bloomberg. It was hosted by me, Nancy Cook. I was joined by Sridhar Najaran and Hannah Lovett.

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