In the final few weeks of the US presidential campaign, Donald Trump warned that his rival, Hillary Clinton, “meets in secret with international banks to plot the destruction of US sovereignty.” Out on the trail, he suggested everyone from Goldman Sachs to the Federal Reserve were in on a conspiracy to keep America down.
But for all of his criticism of Wall Street before the election, under a Trump administration banks are in line for a bonanza. How can you tell? Since Trump won the vote, US bank stocks have rallied more strongly in the post-election, pre-inauguration period than for any other first-term president going back to Herbert Hoover.
On average, bank stocks have fallen by 2% at this point of the post-election period for first-term presidents going back to Hoover. Since Trump’s win, they’re up nearly 15%. That means a broad index of bank stocks is now up after Trump’s victory by as much as it was down after Obama won his first term, on the heels of Lehman Brothers’ collapse.
Both JPMorgan and Bank of America have seen their market cap jump by $30 billion each since election day on Nov. 8. Goldman Sachs has gained $10 billion over the same period. What gives?
For one thing, Trump’s economic transition team and purported cabinet appointees prominently feature current and former bankers. His financial policy proposals also imply far lighter regulation—a welcome development for an industry bedeviled by legal fines in recent years—starting with a scrapping of the Dodd-Frank Act. Aggressive tax cuts and infrastructure spending are also in the pipeline.
“Make Wall Street Great Again” doesn’t exactly square with Trump’s populist message, but then, he seems pretty comfortable with contradictions.