Where Wall Street Meets Trump
Howard Lutnick is mostly busy with his day job, muscling into the stiff competition among Wall Street’s trading businesses. But he’s also taking stock of a presidential election that he thinks will be “dead-heat close.”
Lutnick says there’s an army on Wall Street warming to former US President Donald Trump. The billionaire founder of Cantor Fitzgerald LP chalks it up to two things: regulation and immigration. That’s all people talk about at dinner parties these days, he says. Lutnick was part of a group of high-profile donors, including John Paulson, who earlier this month led a $50 million fundraiser for Trump in Palm Beach, Florida. Paulson is widely rumored to be a contender for a top spot in a potential second Trump administration.
Lutnick’s first television interview since then coincided with his major effort to compete in the futures trading market with behemoth exchange CME Group Inc. Every major Wall Street bank has poured funds into Lutnick’s venture, FMX Futures. (The billionaire made his fortune off creating new businesses that trade everything from Treasuries to stocks at the speed of light.)
So when the Cantor chief says he thinks the election will cause “big volatility” starting at the end of September, it’s both a warning and a business opportunity. Trading venues make money off large swings in the market. “October is going to be a crazy time because people won’t know what the heck is going on,” he says.
There’s at least one other reason to take stock of his view. Lutnick called a key market move this year: that interest rates would stay high because of sticky inflation. Investors now largely believe rate cuts won’t start until December, though Lutnick thinks the Federal Reserve will make one trim before the election.
“Not that the Fed is involved in elections, but September? I’m thinking September,” Lutnick says. “And it’s not really to move the economy, it’s to show off a little bit–the guy who’s employing you today will maybe give you a job again if he’s elected? Can’t hurt.”
(Lutnick’s comments came hours before a Wall Street Journal report that Fed Chair Jerome Powell’s job would be in jeopardy if Trump were to win the presidency, and that Trump’s advisers are thinking of ways to dent the independence of the Fed.)
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Lutnick, over time, has given substantial donations to both major political parties. Former Democratic presidents, including Barack Obama and Bill Clinton, have spent time at Cantor Fitzgerald events and spoken to the firm’s employees since leaving office.
When it comes to the Biden administration, Lutnick referred to the aggression of top officials this week alone to oppose business-friendly policies. Particularly, the Federal Trade Commission’s move to end noncompete clauses not only deals a large blow to a favorite protection for large corporations but also affects Wall Street businesses disproportionately, Ropes & Gray lawyer Douglas Brayley told us for Bloomberg TV.
(Brayley and other top lawyers warn the FTC’s move will be so heavily fought that it may never really see the light of day. And privately, at many top financial firms, executives are mulling how much easier life would be under less scrutiny from Trump.)
“The Republican Party is a less regulatory party,” Lutnick says. “An administration that’s more business-friendly probably is good for stocks, although you can’t say lately Joe Biden’s not good for stocks. The market’s doing perfectly fine, and stocks are doing perfectly fine.”
More on Wall Street
Loads of news ahead. To find this newsletter for Bw Daily, you can go here. Next week is a big Federal Reserve meeting and a jobs report, all of which will make our Real Yield show very interesting next Friday at 12 p.m. New York time. In the meantime, have a great weekend, get some rest, and let's do it all again next week. Tips and opinions are always welcome at [email protected].
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