Wall Street Reacts To Steve Mnuchin Choice For Treasury Secretary

Tyler Durden's picture

Following the news that Steve Mnuchin would be US Trasury Secretary, Wall Street analysts offered mixed predictions on which policies Donald Trump’s choice for Treasury secretary may pursue, as they have little to go on other than Mnuchin’s background with Goldman, buying/selling the former Indy Mac.

The prevailing consensus is that Mnuchin’s Wall Street past will lead to easing regulations, tax policies; but at the same time, Mnuchin may not help larger banks as he may focus on regionals and/or seek to distance himself from his GS/IndyMac past. For now optimism dominates, as banks gain, with the KBW banks index up as much as 2% to highest intraday since May 2008. Not surprisingly, Goldman Sachs is up as much as 3.5% to highest since Dec. 2007.

Earlier, Mnuchin said that FNMA, FMCC should exit government’s grip and didn’t mimic Republicans who’ve said FNMA, FMCC should be wound down or eliminated. As a result the stock of the GSEs has soared, with Fannie up as much as 32% to highest since Aug. 2014; Freddie up as much as 28%, also since Aug. 2014

Among Mnuchin's biggest fans, Carl Icahn had a glowing review of Mnuchin, and new Commerce Secretary Wilbur Ross:

Also not surprisingly, former Goldman CEO and former Treasury Secretary Hank :Paulson also applaued the pick of Mnuchin:

Others were more reserved. Here is a sampling of reactions:

FBR (Edward Mills)

  • Mnuchin’s Wall Street, banking background sends “strong signal” he’ll pursue “much less aggressive” regulatory, policy agendas, though little is known of specific policy positions
  • Likely “net positive” for financials as shows Trump’s willingness to pick individuals from industry who may change current financial policy; may foreshadow painting DoddFrank as drag on the economy, economic growth
  • Has “significant powers” related to FNMA, FMCC conservatorship; tenure as head of mortgage bond trading at GS, role at OneWest demonstrate “significant background” in mortgage industry

COWEN (Jaret Seiberg)

  • Positive for regional banks; cautious about influence on biggest banks, GSEs, as Trump adviser Steve Bannon (mega- bank critic, self-described “economic nationalist") may play bigger role on bank policy from White House
  • Nomination isn’t GS ‘‘revival"; cites Mnuchin’s ‘‘second career’’ distancing him from GS, including creating OneWest from IndyMac’s remains, selling it to CIT, which suggests he understands regional banks’ challenges; GS ‘‘lineage” might force him to be tough on mega banks
  • Notes Trump on campaign trail “ripped” Wall Street, vowed not to let Wall Street control the country, yet picked former GS partner as Treasury secretary, met Nov. 29 with top GS official, is expected to name another GS alumnus/SkyBridge’s Anthony Scaramucci as top Treasury deputy
  • Says Scaramucci “best known as the former Obama supporter” who once asked president when he’d stop bashing Wall Street
  • Cowen still worried about push to leverage capital from risk-based capital (supported by conservatives); watching for Trump nomination of Fed vice chairman for supervision; may give job to conservative to build goodwill with party; doesn’t see “quick deal” for FNMA, FMCC

KBW (Brian Gardner)

  • “Unorthodox” pick creates uncertainty about future policy as Mnuchin is “blank slate,” with broad experience in finance, who seems to have said or written little on financial regulation, tax policy
  • Too early to know whether selection will be positive or negative for financial services
  • Notes any Dodd-Frank changes will have to pass Senate, possible Senate Democrats filibuster; Mnuchin political skill in achieving compromise “remains to be seen”

HEIGHT SECURITIES (Edwin Groshans)

  • Mnuchin’s comments positive for GSE pfd, common shareholders
  • At the same time, est. FNMA would need to raise at least $190b of capital, FMCC would need $119b in order to meet minimum risk-based capital requirements -- which means no capital would flow to shareholders for a decade or longer
  • April 20, If Fannie, Freddie Holders Win, Need ‘a Lot’ of Capital: Height

BEACON ADVISORS

  • Trump expected to direct Mnuchin early in his term to designate China as currency manipulator; Mnuchin will be “heavily involved” in shaping tax reform package congressional Republicans will shepherd through legislative process next year
  • Reported choice of Scaramucci as deputy means neither of Treasury’s top 2 people will have had prior government experience

COMPASS POINT (Isaac Boltansky)

  • Mnuchin may be “comparatively moderate voice” on financial regulations vs other potential candidates like Rep. Jeb Hensarling or John Allison, who may have advocated for “far more draconian” Dodd-Frank rollback
  • Sees populist anti-big bank rhetoric reemerging as Mnuchin will join fellow Goldman alum, at least 2 billionaires in Trump’s inner circle; Trump may face pressure to renew populist “bona fides”

Source: Bloomberg

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Looney's picture

 

I don’t know about Mnuchin, but what’s the deal with David Petraeus’ going in and out of the Trump Tower?

Petraeus pleaded guilty to a charge of mishandling classified materials. He was sentenced to a two-year probation and a fine of $100,000.

Doesn’t it make him ineligible to hold any position with access to classified materials?

Now… Absolutely all Departments, including the Agriculture, Education, and Commerce, let alone DoD and the State, have classified programs, so… how exactly would Petraeus lead any of them?

Isn’t it like hiring a mute person as an Opera Lead Singer?   ;-)

Looney

MissCellany's picture

Agreed. On the other hand, could Trump be trolling with this one too? After all, Petraeus has "paid his debt to society" -- while Hillary has done much worse and paid no price at all...

auricle's picture

Petraeus, it's like hiring hillary's conservative twin. Trump will be seen as a hypocrite if he selects Petraeus to run anything.

Nobodys Home's picture

SOS....Let's get rid of the middlewoman and just have the CeyeA run the show directly.

Paul Kersey's picture

"Steve Mnuchin and Wilbur Ross will both help to do what American needs most – stimulate companies to invest." Icahn

Invest in what? Here's Icahn, one of the world's most ruthless corporate raiders, a blackmailer, greenmailer and corporate dismantler, telling Wall Street what "America needs most". America doesn't need another Goldmanite as Treasury Secretary. We've already had two other Goldmanites in that position, Ruben and Paulson, and they destroyed the American working man while making their fellow bankster buddies multi generational wealth (leaving over 300 million American commoners with multi generational debt). And yet, is if a Goldmanite Secretary Treasurer isn't enough, Trump has now given America a genuine Rothschild pirate, Wilbur Ross. America needs these guys like a crones disease sufferer needs a barium enema.

Jubal Early's picture

Appointing another gold grubbing jew at Treasury is all  the proof anyone needs that Trimp is a crypto jew or a shabboh goy.  Besides, he has all kinds of zollywood connections.  It is a sell out, and since this guy was Trumps campaign finance boss, this means Trump was in their pocket all along.  

IndyPat's picture

He joined late in Trumps campaign, but...yeah. Not good news, I don't care how you cook it.

The Wizard's picture

The mere endorsement by Paulson tells us how this pick was controlled by Goldman. The Don didn't want his loans tampered with. Pure blackmail.  Wake up America

Short history of the current use of Rothschild's derivative ridden fiat debt currency https://www.youtube.com/watch?v=CepGkyQP_xA

As the dollar continues its rise in a fictitious world, the question remains, what is the reference point for causing the dollar to rise. I believe the BRICS and most other countries are challenging the current dollar.

Greg Hunter interviews Paul Craig Roberts-Dollar Should Be Reduced Already to the Level of Toilet Paper https://www.youtube.com/watch?v=SEgmXmQbKfA
Nobodys Home's picture

Opera for the deaf. Fitting.

Mat Cauthon's picture

The two-year probation will be up soon for Petraeus.

Also, it doesn't necessarily mean the General will be up for any real administraive position.  Even Obama called for Petraeus to come to the White House for guidance AFTER he pled guilty to the misdemeanor charge.

The dude is just a walking think tank of military policy. 

Rhett72's picture

Rules are for the little people.

order66's picture

So in other words:

"I believe that Steve Mnuchin has what it takes to continue to preserve the profits of Goldman, their peers and clientele at the expense of everyone else."

 

Ghost of Porky's picture

Just like he did for One West. Preferentially drained $50 milliion from Relativity Media just before they tanked.

 

Can't wait to watch him drain the treasury.

Dr. Engali's picture

Well that settles it. If tanks in the streets Hank Paulson likes him, you know we are in a heap of trouble. 

chunga's picture

Any news of Deez Nutz demanding a re-count?

Bay of Pigs's picture

It does settle it. Wall Street is calling the shots. Nothing will change.

moonmac's picture

Hank Paulson’s right hand Munchkin during the Wall Street bailouts will run a hot economy causing the cost of living to rise even more along with asset values while poor American workers struggle to survive with the continued debt fostering policies of ultra low interest rates which will cause our nation to become even more divided economically creating an up swell of socialism which always leads to tyranny.

Raymond K Hessel's picture

What are you babbling about? Kashkari was Paulson's right hand man. Mnuchin was no where near Paulson back then.

1777's picture

Fill the Swamp!

Let her Go!

LMAO...

Dr. Engali's picture

Bend over America. I hope we at least get a reach around this time.

Son of Captain Nemo's picture

"Bend over America. I hope we at least get a reach around this time."

Dr. E

All I can tell you is that Donald Trump and all the new minion(s) from the "Tribe" he's bringing on-board better be the only one(s) "begging" for the reach around when "Dakota Pipeline Unhappy" visits Washington D.C.!

Let's hope the American people finally call it for what it is and take matters into their own hands!

1777's picture

When the announcement comes I am disavowing my support for him!

He must be returning favors to all the people he borrowed from....King of Debt!

Hugh G Rection's picture

AaaaaJewwwww!  Excuse me, had to sneeze.

Yeah, super pick.  Now make sure to put 9/11 coverup mayor Jewliani in your cabinet.

Mena Arkansas's picture

Hank Fucking Paulson.

There's a ringing endorsement.

1777's picture

No matter who we vote for the same cretaceous characters are at the trough...

*goes down to the basement, grabs pickfork and torches*

Shizzmoney's picture

I wish I could bet somewhere that "Will a Jew be Nominated for Secretary of the Treasury? - Yes".

Granted, the odds would be at -10000000000000000000000....but it's also free money

chrsn's picture

Oh well.  We were taking a big fucking risk no matter who won the election

crazybob369's picture

Like most here I am more than a little disheartened by The Donald’s cabinet picks. However, I am a realist and didn’t really buy into the whole drain the swamp thing (why would a crocodile want to drain a swamp?). The whole Trump v. Hitlery choice was simple: the status quo, or the status quo with a fast track to WWIII. Easy choice.

mendigo's picture

It seems Trump is focusing on connected people in the hope that they can get things done at the expense of principle.

Might work.

I think Romney is too much to bear however. Maybe he will hire him just for the satisfaction of firing him in a humiliating manner.

Consuelo's picture

 

 

"Easy choice."


Hit the wall at 60 mph.

 

Hit the wall at 100 mph.

 

At what speed are you more dead...?

 


crazybob369's picture

I see it as more of hitting the wall at 20 miles an hour vs 200 miles an hour. The first might hurt a little, the second will kill you.

nakki's picture

Just your average Billionaires fighting for the little guys. What was it that the Donald said about hedge fund guys? Is there any CB that Goldman guys don't run? 

quadraspleen's picture

Problem: Mnuchin ain't gonna jail any bankers.

Reaction: What the actual fuck?

Solution: Jail Mnuchin instead                                                                                                                  

silverer's picture

Not Mnuchin's job to jail bankers. Right now, the job to jail bankers belongs to Obama's appointee, Loretta Lynch, who, to the best of my knowledge, is actively working on suing US states that don't offer quadrasexual bathroom facilities.

Kirk2NCC1701's picture

Thanks to GOP Pence and "Trump Whisperer" Jared, all of Trump's picks ensure a situation where he becomes 100% Dispensible, should the need arise,  i.e. of he pulls a JFK and goes rogue.

Why do you think that GOP Elite are now OK with him?

"GROPE & CHANGE", baby. GROPE & CHANGE.

Told ya this last week.

 

p.s. You can sign up early for the Victory Tour. You have to pay for the Kool-Aid though. Nobody chants for free.

pps. HH was right about his Litmus Test FAQs.  And although I too drank the Trump-Aid ("Orange you glad Juice"), I now choose to 'pass' on drinking any more.  Just like many choose to pass on his steaks and university.

Consuelo's picture

 

 

Aw man...  

 

Why'd you have to ruin the party...?

Lostinfortwalton's picture

Well, Goldman Sachs is up 8.21 points so far today, or 3.87% today alone, 22.05% for the year. Is this a great country or what?

general ambivalent's picture

Hahaha, 'Let's wait and see.' Fuck all you stupid cucks.

NoWayJose's picture

One of the anal-ysts still thinks there is a filibuster possible. Do you really think a Goldman/Soros stooge won't get through? And besides - Harry and the Dems changed the rules so that the Senate can cut off filibusters with a simple majority!

Miss Informed's picture

A filibuster of mindless human cattle. No way José.

Oberst-Gruppenfuhrer's picture

Do not misread this pick.  Do not get emotional.  Remember Trump knows, my friends.  He knows a lot.  Pick the jew.  He will have their government all-seeing eye construct now gazing upon (((them)))!!  This is a chessmaster at work.  With a jew still in place, Trump & Co will now just see how deep and widespread the tentacles go.  MUHAHAHAHA!   #MAGA  #draintheswamp

Kirk2NCC1701's picture

I also told you months ago, that Trump is

1. The LAST HOPE for positive change via the Ballot Box

2. The FINAL PRETEXT for "Pretend & Extend" white washing of "This Old Outhouse", and new Air Freshener every 4 years.

3. After Trump, it will be time to (a) get out the "Made In USA" bulldozer, (b) tear down this Outhouse, and (c) start over.

 

Look at the bright side: for now you at least will have your 2nd Amendment, to... "Buy Low, Aim High"... in case there are "Crooks in High Places" (veiled reference to the book).

silverer's picture

Steve Mnuchin may need more Secret Service protection than people realize. Trump picked him for a reason. And it wasn't to put Goldman Sachs in charge of the government.

Lucky Leprachaun's picture

If you know that why don't you give us the reason he did pick him then?

Son of Captain Nemo's picture

I wonder what Mr. Mnuchin as Treasury Secretary will have to say when he has to "print moar" DEBT to keep "Apocalypse Now" intact https://southfront.org/media-hypocrisy-in-aleppo-civilians-flee-from-reg..., https://southfront.org/russian-air-defense-troops-put-on-alert-due-to-uk...

Along with the propaganda "peanut gallery" at Langley that greases the skids that keep it rollin right along!...

I know BUT Donny wants peace with the Russians NOT war!!!

Coldfire's picture

Hey P-P-Paulson, f-f-fuck off you s-s-stuttering b-b-bohunk. Go back to your cave. Asshole.

U4 eee aaa's picture

To Goldman scum,

It seems you have weaseled your way into yet another US administration and usurped power even though you have not been duly elected by the American public. You seem to have convinced yourself that the American seat of power is your personal plaything

You have refused to repent of your corrupt ways, your treachery (because I am sure you threatened Trump in some way to let your boy into the hen house|), your thieving and destruction of America

THIS. MEANS. WAR.

I an openly declaring spiritual war in the presence of these witnesses on your corrupt bank in the name of the Tea Party, US and world patriots and all reasonable facsimiles.

I am, this day, as a born again Christian calling on the Lord God of this creation to honor, empower and be the primary driving force of this declaration of war against your organization in order to rid its corrupt influence from political and financial influence over the innocent citizens of America. To the praise and glory of God

Be GONE foul, CORRUPT group in the name of Jesus!