Markets soar on Trump win as big banks rocket higher

Source: Politico | November 10, 2016 | Ben White

NEW YORK — Markets continued to defy grim predictions of a Donald Trump-induced selloff on Thursday, with the Dow soaring to new highs. The biggest winners in the post-election advance: Wall Street’s largest banks.

Stocks in some of the biggest financial firms in the world, including Goldman Sachs, Morgan Stanley and JPMorgan Chase are rocketing higher after Trump’s shocking win on hopes for a lighter regulatory hand and the big role that experienced Wall Street veterans could play in the new administration.

 

“The pre-election narrative was wrong,” said Christopher Whalen, head of research at Kroll Bond Rating Agency. “We all assumed we were entering an era of left-wing democracy. But now we have a pro-growth GOP president and a pro-growth GOP Congress and we have to completely reset the narrative.”

Shares in Goldman were up about 9 percent as of midday Thursday following the election. Morgan Stanley was up 10 percent and JPMorgan Chase nearly 9 percent, helping drive the broader market higher.

“Banks are rising because of the likely relaxation of Dodd-Frank and other banking legislation which has been expensive and burdensome,” said Douglas Kass, founder of Seabreeze Partners, who has written a book on the sector and covered it for decades. “And bank stocks right now are cheap and undervalued.”

The gains came as markets rallied back from a huge overnight selloff as Trump’s victory appeared increasingly assured Tuesday night. The Dow is now up about 2 percent since Trump’s win, defying warnings from academics and traders that his victory over Hillary Clinton would spark a market meltdown.

Big banks are performing better than the broader market for several clear reasons, experts say. Investors are no longer worried that an ascendant liberal wing of the Democratic Party, led by Elizabeth Warren, will impose tough new regulations including higher capital standards.

And Trump’s inner-circle of advisers is peppered with Wall Street executives not likely to push for a big crackdown on the financial industry. They include investor Steve Mnuchin, a former Goldman executive rumored for Treasury Secretary under Trump as well as billionaire investor Wilbur Ross and economist David Malpass, who worked at Bear Stearns for 15 years.

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