The start of Trump 2.0 is not quite what Wall Street expected.
The agreement experienced its slowest month in January in more than a decade. Precious tax relief for hedge funds and investment capital companies has been threatened. And the big banks have been grilled to find out if they have “uninformed” certain customers.
These complications were not part of the plan when Donald Trump was elected in November, an event that sparked a series of optimistic predictions on an M&A boom, loose rules and a more favorable approach to large Wall Street companies in Washington , Dc.
Instead, bankers have finished January with the lowest number of mergers and acquisitions announced in the United States since the same month in 2014, according to LSEG data.
The new Trump antitrust cops also reported in the second week of the administration that they were not going to give free pass to the big mergers by blocking a potential union between Hewlett Packard (HPE) and Rival Juniper Networks (JNPR).
And the new uncertainties surrounding the president’s pricing plans leave many companies that do not know to make large movements and what direction the borrowing costs could take in the weeks and months to come.
“The uncertainties that we see from a geopolitical point of view, around prices, are certainly uncertainties that can make us the capacities, so that everyone runs”, Sergio Ermotti, CEO of UBS Group AG (UBS ) told analysts on Monday at a UBS Financial Services conference in Miami.
Ermotti also quickly stressed that “it is not 1 quarter or 1 month” which will determine the year.
And to be sure, January can usually be a slower moment for new offers than other parts of the calendar.
“It is not surprising that a month and a half after the elections, you do not see a flood of reactive things to this. I think it will resume during the year, “Goldman Sachs CEO David Solomon said on Tuesday’s CEO of mergers and acquisitions during the same event.
President Donald Trump speaks in the oval office on February 4. Reuters / Elizabeth Frantz ·Reuters / Reuters
The historically high level of business assessments can also play a role in a slower rate to start 2025, the SPECT Sperling partners said in Yahoo Finance Live.
“It is an unusual combination, and which, in itself, may have attenuated some of the financial yields which would be possible of certain types of mergers and acquisitions and certain types of agreement,” Sperling told Yahoo Finance Live.
Until now, the slowdown has not reduced the actions of large banks.
Since the beginning of January, JPMorgan Chase (JPM), Goldman Sachs (GS), Citigroup (C) and Wells Fargo (WFC), have increased between 12% and 15% on Monday while Bank of America (BAC) and Morgan Stanley ( Ms) increased between 6% and 9%. All of them surpassed the main stock market indices during this period.
A great unexpected development for Wall Street in the first weeks of Trump 2.0 is a high level of political heat.
The first president Donald Trump publicly confronted the CEO of Bank of America (BAC), Brian Moynihan publicly, at the World Economic Forum for a complaint that is gaining ground in conservative circles: that customers are “ disconnected ” for their convictions personal or because they are part of the cryptographic 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 seemed to include the CEO of Jpmorgan Chase, Jamie Dimon, in his confrontation. JPMorgan and Bank of America are the two largest banks in the country. The two companies have denied the claims they cut their services to customers for personal beliefs.
“I do not know if the regulators have forced this because of Biden or what, but you and Jamie and everyone, I hope you open your banks to the Conservatives because what you do is bad,” said Trump in Moynihan during a question and answers.
The GOP kept the spotlight on the question of debancation last week during the hearings in front of the committees of the Senate and the Chamber. Massachusetts Democrat Senator Elizabeth Warren, even pointed out her support for the subject, saying that she agreed with Trump.
Banks are always optimistic, however, that the resolution of this problem could ultimately prove to be a positive for them if the regulators relax some of their requirements which oblige banks to lose certain customers.
The White House press secretary Karoline Leavitt enters the room to hold a briefing in the White House. Reuters / Leah Millis ·Reuters / Reuters
They argued that American rules such as the bank’s secrecy law discourages banks from dealing with customers considered high -risk – and that there must be clearer regulations on this front.
Industry lobbyists are pressure for this to happen. “An important part of the solution is to repair the regulatory structure,” said BPI, a spokesperson for the defense group of the banking industry, in a press release in Yahoo Finance.
Lobbyists of the investment capital industries and hedge funds could also be occupied unexpected this year after the White House clearly indicated that Trump wanted to close a tax allegiance known as the interest deduction.
It allows investment managers to pay a tax rate of lower capital gains on the income they receive from their work in compensation. It is not a small business, with many capital gains subject to 23.8%, while the regular salary income rate can be double.
“The president has committed to work with the congress to do so,” said the White House press secretary Karoline Leavitt last week.
David Hollerith is a main Yahoo Finance journalist covering the bank, crypto and other areas in finance.
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