Trump’s Return: Wall Street’s Gamble on Deregulation and Deal Fever

Wall Street's Love-Hate Relationship with Trump's Second Act

Now that Donald Trump has pulled off a political comeback that would make a soap opera proud, Wall Street seems to have shed its reservations. The financial titans who once kept Trump at arm’s length are now tripping over themselves to offer their support, eager for a slice of whatever tax cuts and deregulation the new administration has in store.

From the once-stoic Gary Cohn to hedge-fund managers like Scott Bessent, a who’s who of finance heavyweights are pivoting hard. Many are vying for those coveted advisory or cabinet posts that come with insider influence—and, presumably, some tasty fiscal benefits. After all, nothing says "dealmaker" like a freshly cut corporate tax rate.

The Goldman Touch... Again?

Remember when Trump, in his first term, promised to “drain the swamp” and free Washington from the grip of Wall Street insiders? Yeah, about that... It seems the siren call of Goldman Sachs alumni like Cohn has proven too irresistible, with Cohn now seen as a key “Trump ambassador” to the financial sector. The phone lines are burning up with hopeful calls from executives eager to influence policy and perhaps secure a cozy government position.

Howard Lutnick of Cantor Fitzgerald, meanwhile, is channeling his inner headhunter, assembling names for top posts in the administration. It’s a veritable conga line of financiers suddenly happy to align themselves with the former president, perhaps seeing this as a once-in-a-decade opportunity to set policy agendas that favor the Street.

A Bull Market for Dealmakers?

The markets wasted no time in expressing their joy: the day after Trump’s win, U.S. stocks surged by $1.62 trillion. That’s a lot of zeros, even for Wall Street. The general expectation is that Trump’s second term will herald a flurry of mergers, acquisitions, and leveraged buyouts—especially with talk of scaling back regulations. The whispers are already circulating about replacing the current FTC chair, Lina Khan, with someone friendlier to Wall Street interests.

However, this euphoria isn’t without its caveats. While the dealmaking crowd is salivating over the prospect of more relaxed antitrust enforcement, not everyone is entirely on board. For one, the notoriously unpredictable Trump could still throw in a curveball (or two), and his vice president, J.D. Vance, has been known to take a more populist, interventionist stance. It’s anyone’s guess whether this administration will actually stay as hands-off as Wall Street hopes.

A Pragmatic Embrace, with a Touch of Unease

Let’s be clear: Wall Street isn’t necessarily in love with Trump the person. It’s Trump the policymaker who has their hearts aflutter. After all, the calculus is simple—Trump’s promise of tax cuts and deregulation is music to the ears of those looking to revive the deal flow that’s been sputtering under high interest rates and tighter regulations.

Yet, not everyone is sipping the Trump Kool-Aid. While heavyweights like Blackstone’s Stephen Schwarzman and Paul Singer are back in the fold after a brief dalliance with other candidates, there’s a lingering wariness. Trump’s penchant for tariffs and his erratic foreign policy, especially toward China, could send markets into a tailspin if he decides to escalate trade tensions. And let’s not forget the cautious optimism masked by the anxiety of what Trump’s “20% chance of blowing everything up” could mean for the markets.

The Bottom Line

Wall Street, it seems, is willing to look past Trump’s chaotic past for a shot at another era of economic expansion—provided he doesn’t break too many dishes along the way. As one former bank CEO put it: the benefits might outweigh the risks, but those risks are anything but negligible. Trump’s populist streak could clash with Wall Street’s agenda, and if he starts tossing around 60% tariffs on Chinese imports, the celebratory mood could turn sour fast.

​Still, for now, it looks like the Street is ready to roll the dice. Whether this second honeymoon will last longer than the first remains to be seen—but one thing’s for sure: Wall Street knows how to bet, and they’re betting big on Trump 2.0.