Wall Street has been rallying since the election of Donald Trump as president. One of the best performing sectors so far has been financial service firms such as Goldman Sachs, which has led the post-Trump rally.
The runners up for biggest winners? JPMorgan and Bank of America.
That makes no sense if you believe that a soon-to-be-inaugurated President Trump is going to enact his platform when in office. The platform Trump and his team created at the Republican Convention in Cleveland last summer explicitly includes a plan to re-impose Glass-Steagall and break up the Too Big To Fail Banks.
Then-campaign manager Paul Manafort said the reason for the inclusion of the proposal in the platform was that breaking up the big banks would prevent the need for future bailouts. While the proposal was also likely made to win over Bernie Sanders voters, there is no doubt that the bank bailouts of 2008 infuriated Republican voters, leading, in part, to the Tea Party movement that helped Republicans retake Congress in 2010.
Why are the Too Big To Fail banks the big winners from a post-Trump rally? Re-imposing Glass-Steagall would undoubtedly hurt their profits.
The answer is Wall Street doesn’t believe Trump is going to actually deliver on his promises to the American people, that the platform was bullshit, and that no bank breakup is coming. Because if such a reckoning was forthcoming, the last places you would want to put your money would be Goldman Sachs, JPMorgan, or Bank of America.
Is that a reasonable belief? Well, given that Trump is nominating Goldman Sachs alumni for key positions in his administration such as treasury secretary and chief adviser, maybe Wall Street is on to something.
And if Wall Street is right, how do Trump supporters respond to this blatant betrayal?