The start of Trump 2.0 is not quite what Wall Street expected.
Dealmaking had its slowest month in January in more than a decade. A prized tax break for hedge funds and private equity firms came under threat. And big banks got grilled over whether they “debanked” certain customers.
These complications were not part of the plan when Donald Trump was elected in November, an event that set off a round of optimistic predictions about an M&A boom, looser rules and a more favorable approach to big Wall Street firms in Washington, DC.
Instead bankers ended January with the lowest number of announced M&A deals within the US since that same month in 2014, according to LSEG data.
Trump’s new antitrust cops also signaled in the administration’s second week that they weren’t going to give a free pass to big mergers by blocking a potential union between Hewlett Packard (HPE) and rival Juniper Networks (JNPR).
And new uncertainties surrounding the president’s tariff plans are leaving many businesses unsure about when to make big moves and what direction borrowing costs might take in the weeks and months ahead.
“The uncertainties that we see from a geopolitical standpoint of view, around tariffs are — is definitely creating a little bit of uncertainties that may dent the capabilities for us, for everybody to execute,” Sergio Ermotti, CEO of UBS Group AG (UBS), told analysts Monday while speaking at a UBS financial services conference in Miami.
Ermotti was also quick to point out that “it’s not 1 quarter or 1 month” that will determine the year.
And to be sure, January can typically be a slower time for new deals than other parts of the calendar.
The historically high level of corporate valuations may also be playing a role in a slower pace of dealmaking to start 2025, THL Partners co-CEO Scott Sperling told Yahoo Finance Live.
“That’s an unusual combination, and that, in and of itself, may have muted some of the financial returns that would be possible from certain types of M&A and certain types of deal doing,” Sperling told Yahoo Finance Live.
So far the downturn is not pulling down big bank stocks.
Since the beginning of January, JPMorgan Chase (JPM), Goldman Sachs (GS), Citigroup (C) and Wells Fargo (WFC), have risen between 12% and 15% as of Monday while Bank of America (BAC), and Morgan Stanley (MS) are up between 6% and 9%. All have outperformed major stock indexes in that period.
One big unexpected development for Wall Street in the early weeks of Trump 2.0 is a high level of political heat.
