Business

Let’s Make a Deal

Wall Street expects Trump presidency to unlock deal making.

Donald Trump’s victory last week is expected to open the flood gates on merger on acquisition activity in the stock market once he officially takes office in January, according to Wall Street dealmakers and corporate leaders. 

Trump’s victory is likely to loosen regulations on deal-making, with plenty of pent-up demand. 

“We know kind of where the world is headed in a Trump environment because we’ve seen it before,” said Jeffrey Solomon, president of TD Cowen, on CNBC’s “Money Movers” last week. “I think the regulatory environment will be much more conducive to economic growth. There will be lighter and targeted regulation,” Solomon added. 

He also mentioned how scaled-back regulation will be focused on certain areas that will interest (Benefit?) the Trump administration, as opposed to a broad adjustment of the entire landscape. 

Some have pointed to the scrutiny of the Biden administration in recent years as a reason why there’s been a chill on deal flow. High interest rates and soaring company valuations haven’t helped, either. 

Markets immediately rallied following the election victory, as the Dow Jones Industrial Average soared 1,500 points to a new record high on Wednesday, the day after the election.

It’s expected that the financial and pharmaceutical industries will get a lift under another Trump presidential term. Meanwhile, one M&A advisor, who spoke to CNBC anonymously, believes that Trump’s disdain for Big Tech companies might keep them on the sidelines in the next few years. These companies are typically active deal-makers.

Big Trouble for a Major Auto Maker

Nissan Cuts 9,000 jobs, goes into emergency mode.

Nissan is in full-scale emergency mode, as they’ve cut 9,000 jobs, slashed production capacity, and have sold off their stake in Mitsubishi Motors in an attempt to save the company. The CEO, Makoto Uchida, is also reducing his salary by 50%. This comes after the company suffered a net loss last quarter. They’ve now slashed the forecast for full-year operating profit by 70%.

This new reform is set to save the company about $3 billion, as Nissan also shuffles around some executives, such as chairman Guillaume Carter, who previously saw Europe, Africa, the Middle East, India and Oceania. He will now become the newly created chief performance officer. 

CEO Uchida was making approximately $4.3 million (657 million yen) before taking the now 50% pay cut. And Nissan’s elimination of 9,000 workers comes from its 133,580 global workstaff. 

Uchida is also looking to cut global capacity by 20%, bringing its production capacity to 5 million units worldwide. Nissan will also push back the launch dates of certain products, as they currently have 30 new or updated products in the lineup. The new dates will depend on market needs. 

Nissan will be selling off nearly a third of its 34% stake in Mitsubishi, which will free up an additional $482.7 million. Still, Nissan has stated that it should remain Mitsubishi’s largest shareholder, even after this sale. 

Nissan has been Japan’s third-biggest automaker, but, like many others, has really struggled recently in China. Its lack of hybrids has hurt the company in the U.S., as well. 

Around the Water Cooler:

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Tech

A Trillion Dollar Company

Tesla to the mooooooonnnnnnn.

What a week it was for Elon Musk. First, Donald Trump won the presidential election (Musk became a big Trump supporter), then Tesla surged 8% on Friday to extend the company’s market cap beyond $1 trillion. 

Coincidence? Probably not… as investors have bet on Musk (and Tesla) benefiting from the upcoming Trump administration. Maybe part of the reason why Musk became such a big supporter…?

Musk contributed more than $130 million to help Trump win the election, becoming one his most vocal promoters. And Trump had previously said he might cut the federal $7,500 electric vehicle tax credit. Those credits have helped to drive sales of Tesla vehicles historically. 

There has even been talk about Musk joining the Trump administration.

Overall, Tesla’s stock has rallied about 29% over the past week, after previously being up just 1% for the year. Overall, the stock is now up about 30% on the year. Tesla joins a handful of tech companies that are worth more than $1 trillion, such as Nvidia, Apple, Microsoft, Alphabet (Google’s parent company), Amazon and Meta.

Tesla had previously crossed the $1 trillion mark back in October of 2021. In its most recent earnings update, Tesla reported revenue of $25.18 billion and net income of $2.17 billion in the third quarter. 

What to Know:

🤖 Tech giants brace for AI revamp, antitrust pullback in Trump 2.0.

🦙 Meta’s Next Llama AI Models Are Training on a GPU Cluster ‘Bigger Than Anything’ Else

Politics

The Red Wave That Swept America

The GOP made gains in almost every demographic this election.

It was quite the victory for the Republicans, as President Donald Trump won all five of the swing states. He became the first Republican to win Bucks County since the 80’s and is still the only republican to win Wisconsin in the last 40 years (doing so twice). Trump also won Robeson County in North Carolina, which is home to the state’s largest Native American population, swinging the vote by nine points. He lost New Jersey by only five points, four years after President Biden beat him by 16-points. 

Trump surprised many with how decisive his victory was, after many thought this race would be historically close (or even favor Vice President Kamala Harris). 

Furthermore, Republicans also won control of the U.S. Senate and the U.S. House of Representatives, making it the majority party across the federal government, as a “red wave” swoops across the nation. 

The Republicans won the US Senate 53-46 and the House 213-203. Previously, the Democrats controlled the Senate 51-49.

Ballotpedia defines “wave elections” as the 20% of elections where the president’s party lost the most seats during the last 100 years (50 election cycles). The last “blue wave” was in 2008, following Barack Obama winning the presidential race over the late Republican U.S. Senator John McCain. 

With a red wave, Republicans will be able to act on policies that are important to them - such as the strict(er) enforcement of immigration laws and border security, heavy tariffs on imported goods and conservative educational policies. Following the victory, Trump called it “the greatest political movement of all time” and that a potential red wave would provide “an unprecedented and powerful mandate.”

Big Pharma is Scared

Robert Kennedy Jr. is ready to send shockwaves through the Food And Drug Business and Make America Healthy Again.

Donald Trump has promised to “Make America Great Again” and, now, RFK Jr. is promising to “Make America Healthy Again.” RFK Jr., who was thanked in Trump’s victory speech, is expected to hold a senior role in the Trump administration in the health department, causing the pharmaceutical industry to tremble in fear. 

A senior executive from the healthcare sector told the Financial Times that RFK Jr’s influence on policy would be “awful on a lot of levels.”

Trump said about RFK Jr.: “He wants to do some things and we’re going to let him do it.” Trump said he shouldn’t touch the oil and gas industries, but “other than that, go have a good time, Bobby.”

RFK Jr, a healthy looking 70-year-old, steers clear of harmful chemicals widely employed as additives and preservatives in popular foods found in our supermarkets. It’s no secret that our food isn’t the healthiest, especially compared to other (European) countries.

RFK Jr. has been especially critical of Yellow Dye No. 5 in the past, a product made from petroleum and can be produced more cheaply than natural food colorings. “That’s just one of at least 100 chemical poisons that our health agencies allow into our children's food,” Kennedy has said previously. 

He’s also been very critical of the combination of ulta-processed foods and a sedentary lifestyle, which, in his opinion, has brought on a lot of western diseases. These illnesses included morbid obesity, diabetes, asthma, early onset colorectal cancer and more.

While this all sounds good, RFK Jr. has also attracted much criticism over his vaccine skepticism and his support of some trendy anti-science foods, like raw unpasteurized milk. He’s also vowed to eliminate fluoride from drinking water (which does have at least one benefit: fighting cavities).

What will his impact look like? Well, one person close to the first Trump administration said that “RFK is going to blow up.”

Around the Hill:

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👍 Trump will not go after his political opponents, Jim Jordan predicts.

Finance

Trump Effect Being Felt World Wide

Europe braces for Tougher competition under Trump.

The hope of a second Trump presidential run is that it’ll mean good things for this nation’s economy. However, in turn, it might spell bad news for Europe, whose banks have been struggling with profitability and weak economies. And now, a Trump victory has boosted US bank shares, building an even tougher task for European banks to attempt to close the earning gaps with this country.

Lenders in the euro zone and Britain have been hobbled by poor profitability and weak economies ever since the 2008-2009 global financial crisis, while U.S. banks have soared in value and stolen market share. And now, with Trump resuming office, many are expecting a deregulated landscape in the U.S., allowing them to further pull away from their European rivals.

Up until last week, European shares WERE outperforming U.S. peers, however, the Trump victory has turned the tables. JP Morgan, Goldman Sachs and Morgan Stanley shares all soared following the victory, while the STOXX Europe 600 Banks index was down more than 1% last week.

"The expectation is simple: deregulation and tax cuts in the U.S. contrast with Europe's strict oversight and low-interest-rate grind," said David Materazzi, CEO of Italy-based automated trading platform Galileo FX. "If U.S. banks get the expected policy support, they could ramp up loan volumes and optimize capital in ways that Europe's banks just can't match right now," Materazzi added.

Since early 2010, European banking shares have fallen 10%, while U.S. lenders have more than tripled.

From the Street:

🔪 Federal Reserve is set to cut rates again while facing a hazy post-election outlook.

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