Trump 2.0 is not the start of what Wall Street expected.
It dealt with its slowest month in January in more than a decade. And a valuable tax cut For hedge funds and private equity companies became threatened. And big banks Has grilled About whether they were “debaned” some customers.
These complications were not part of the plan when Donald Trump was elected in November, an event that started round of optimistic predictions About M&A boom, loose rules and a more favorable approach to Big Wall Street companies in Washington, DC.
Instead bankers ended in January with the lowest number of M&A deals announced in the US since that same month in 2014, according to LSEG data.
Trump's new antifreeze cops too sign In the second week of the Ministry they were not going to give a free ticket to a large merger by blocking a possible union between Hewlett Packard (Hpe) and competitive female networks (Jnpr).
“The uncertainty we see from a geopolitical point of view, around tariffs – definitely creates a small amount of uncertainty that could give us the abilities,” Sergio Ermotti, CEO of UBS Group (Ubs), he told analysts on Monday when speaking at a UBS financial services conference in Miami.
Ermotti was also quick to highlight that “1 quarter or 1 month” will not determine the year.
And to be sure, January can usually be a slower time for new deals than other parts of the calendar.
US President Donald Trump speaks at the Oval Office on February 4. Reuters/Elizabeth Frantz ·Reuters / Reuters
The high historical level of corporate valuations may also play a role in a slower speed of dealing to start 2025, ThL Partners CEO Scott Sperling said Yahoo Finance Live.
“That's an unusual combination, and perhaps, in itself, calmed some of the financial gains that could be made of some types of M&A and some deals of deal doing,” Sperling told Yahoo Finance Live.
So far the decline does not pull down large bank stocks.
Since the beginning of January, JPMorgan Chase (Jpm), Goldman Sachs (Gs), Citigroup (C) and Wells Fargo (Wfc), rose between 12% and 15% from Monday while Bank of America (Pack), and Morgan Stanley (Ms) up between 6% and 9%. All have outperformed large stock indexes in that period.
One unexpected major development for Wall Street in the early weeks of Trump 2.0 is a high level of political heat.
First President Donald Trump faced the Bank of America in public (Pack) Brian Moynihan CEO at the World Economic Forum for a claim that earns traction in conservative circles: that customers are 'unleashed' for their personal beliefs or because they are part of the crypto industry.
Brian Moynihan, CEO of Bank of America, attends the 55th Annual Meeting of the World Economic Forum (WEF) in Davos, Switzerland, January 23, 2025. Reuters/Yves Herman ·Reuters / Reuters
The President also appeared to include JPMorgan Chase CEO Jamie Dimon in his conflict. JPMorgan and Bank of America are the nation's two largest banks. Both companies denied the allegations that they cut their customer services for personal beliefs.
“I don't know if the regulators were forcing that because of a biden or what, but you and Jamie and everyone else, hope you open your banks to Conservatives because what you're doing is wrong,” he said Trump at Moynihan during a question- AC-answer session.
The GOP kept attention on the debanking issue last week during hearings before Parliament and House committees. Democrat Senator Massachusetts Elizabeth Warren Even a sign of her support for the subjectsaying she agrees with Trump.
Banks are still optimistic, however, repairing that issue could eventually be positive for regulators to relax some of their requirements that force banks to shed some customers.
A press secretary at the White House, Karoline Leavitt, enters the room to hold a briefing in the White House. Reuters/Leah Millis ·Reuters / Reuters
They have argued that US rules as the Bank Confidentiality Act urge banks not to deal with customers who are considered a high risk-and that clearer regulation is needed in that front.
Industry lobbyists are pressing for that to happen. “An important part of the solution is to repair the regulatory structure,” a spokesman for the BPI bank industry advocacy group said in a statement to Yahoo Finance.
Lobbyists for the private equity and hedge funds industries may also be unexpectedly busy this year after the White House made it clear that Trump wants to close a tax cut called an interest deduction.
It allows investment managers to pay a lower capital gains tax rate on the income they receive from work as compensation. It is no small matter, with many capital gains subjected to taxes 23.8% while the rate for regular pay income can be twice.
“The President is committed to working with Congress to achieve this,” White House press Secretary Karoline Leavitt say Last week.
David Hollerith is a senior correspondent for Yahoo Finance involved in banking, crypto, and other areas of finance.
