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

buckstopshere's picture

Trump meeting with Petraeus was an opportunity to pick his brain about national security even if Petraeus was never a serious contender for State.

Raymond K Hessel's picture

Mnuchin will be a great asset in the administration. He's like Trump in that he rubs shoulders with insiders but isnt one.

 

Indy Mac proves that. 

The reason he went Hollywood was to get away from such an over-regulated mess that is the mortgage industry.

He's not in the tank for Wall Street. I remember the execs at Goldman were happy to see him leave.

Trust me, this is good.

Raymond K Hessel's picture

Hey! You know what would be great?

If you're a Cass Sunstein troll, an Alinskiite who wishes for the demise of capitalism, please by all means, carefully write down your concerns on a clean sheet of paper. Neatly fold it and gently place the letter in an envelope. Carefully address it and make sure it is sealed.

Then bend over and shove it in your ass on your way to Canada.

Canada. The land where people go to live like an American but can't stand being one.

 

roadhazard's picture

Who ate the red off your candy, son.

Clint Liquor's picture

Treasury Secretarys are required by law to sell all for their financial assets and put the proceeds in a blind trust. Because this is a forced sale the proceeds are tax free. It was reported that Hank Paulsen saved $60 million in taxes from his sale of Goldman stock.

Mnuchin looking to do well with market at all time highs.

medium giraffe's picture

Triggered! 

Bonus false dichotomy.

 

My work here: done.

 

Bay of Pigs's picture

Medium Giraffe is a solid poster. Your personal attack is uncalled for. This guy is from the Vampire Squid and you are defending him like he is a choirboy. Maybe you need to get a grip, open your eyes and lower your lofty expectations?

WTFRLY's picture

Fuck Trump, it smells like Israel in here already

Holy hand grenade of Antioch's picture
Holy hand grenade of Antioch (not verified) Bay of Pigs Nov 30, 2016 12:51 PM

 

<---Will act in the interests of 'THE TRIBE' first & foremost.

<--- Will be the first... EVER... to break the mold, and strive to work to better the interests & lives of average joe American deplorables.

 

"You'll get [m]nuch-in' & like it"

~Judge Smails

King Tut's picture

Happy Chanukah, Goldman Sachs Bitchez!

Bay of Pigs's picture

Seriously? Indy Mac? Wow bro...

Mountainview's picture

Expect Treasury debt restructuring! Too much debt worldwide, will Mnuchin dare to act first (Japan and Euroland would follow without hesitation)

1777's picture

So he leaves the barrel of pit vipers and goes to hollyweird, and you call all that GOOD?

Trust me, this is good.

ROTFLMAO....

 

Raymond K Hessel's picture

He goes to an industry that is barely regulated and money flows like water. Like software.

What should he have done with his life? Medicine where insurance regs and the FDA keep people from sick?

Or stay in financial markets where people like Pelosi and Barney Frank scream at you for not lending to poor people because you're racist and then slam you for a bottomfeeder for trying to collect on loans the borrowers should never have been given in the first place? If these banks didn't make those fucked up loans, Frank threatened to have them audited every year until they did. 

But that never came up that Alinsky Social Club did it?

Paul Kersey's picture

Raymond, does your girlfriend still force you to shave her back? Tell us the real reason you are trolling for these goldmanite banksters. I'm guessing it has nothing to do with Alinsky, Marx, Che or Trotsky, and more to do with some kind of sycophantic love for the money changers.

Mountainview's picture

Goldsachs provides excellent traineeship in US and world finance. It's not left nor right, it's like mechanics, there are Ferrari engins and GM engins..

HenryKissingerChurchill's picture

Oh YES because GoldSachs build Ferraris...

GoldSachs do "God´s work"for the goys

Mountainview's picture

No Ferraris but they learn you all trick's of modern finance. A plus for the man at the Tresor. We don't have to like but we can?t ignore the facts.

U4 eee aaa's picture

You say that like it's a good thing

Jubal Early's picture

The reason he went to Zollywood was because he has as many tribal connections there as he had at Goldman, where is pappy got him his job.  He was sent there to learn the ropes of the family business:  the tamudic mafia. 

Holy hand grenade of Antioch's picture
Holy hand grenade of Antioch (not verified) Jubal Early Nov 30, 2016 12:44 PM

He'll advocate a 'STRONG JOOBUCK POLICY'

Snípéir_Ag_Obair's picture

http://newobserveronline.com/jews-boast-of-owning-hollywood-but-slam-gen...

funny that no one even tried to argue the New Observer article was inaccurate or false... it simply noted that Jews did not object to several admissions by Jews but cry 'antisemite' at non jews.

and google stepped in because Organized Jewry is terrified of their power, and ETHNONEPOTISM being exposed to the cattle.

http://www.timesofisrael.com/google-steps-in-to-stop-jews-running-hollyw...

but here's the real point- its not that Hollywood is run by Jews... Jews have **kept it Jewish run* for decades, and the only claims about race are that there are too many 'whites' - a category which Jews include themselves in (like race/religion) depending on polemical needs.

how do you preach diversity but maintain stunning over-representation?

well it helps to have a racial supremacist mythos that excuses hypocrisy.

worth a read - http://www.counter-currents.com/2016/05/calling-for-a-nazi-social-justic...

Jubal Early's picture

Unless Trump breaks up the Zio-media nothing is going to change.  The indications are that he is more likely to go after "fake-news" than ruin his cronies monopolies, and his zio-family and zio-cabinet will cheer him on.  Pedophile is the new terrorist.

Paul Kersey's picture

"
Mnuchin will be a great asset in the administration.". "Trust me, this is good."

So it's good that We've got a Goldmanite running the economy, who served up a multi-billion dollar payday for Soros and John Paulson, subsidized by the U.S. taxpayers? Sorry, I don't trust you. We've already had two other Goldmanite Secretary Treasurers, Robert Rubin and Hank Paulson. Trust me, that wasn't good. By the way, the phrase, "trust me", is Wall Street for "fuck you".

Snípéir_Ag_Obair's picture

it's not good. not at all.

the man is a master at Babylonian Money Magick, and is more of the same but worse.

Potemkin metrics conceal the economic necrosis between the coasts...

JRobby's picture

IndyMac was a particularly shitty shit show.

Silky Johnson's picture

Ray Kessel , you're a major cunt. "Trust me"? Get fucking wrecked with your Orange glasses and GS issued yarmulke.

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.

buckstopshere's picture

Mnuchin was chosen because of his expertise in government securities and mortgage-backed securities and connections with the banking elite and Hollywood and, above all, his loyalty to Trump during his presidential campaign.

We shall see how he does.

Trump went through several campaign managers during his run for the White House. He may go through Cabinet members just as quickly.

1777's picture

The people he's considering says his campaign 'promises' were all talk!

More of the same folks, higher debt, more spending and the rich will have a great 4years.....same old song and dance...