Ever since Election Day, JPMorgan Chase CEO Jamie Dimon has been Matthew McConaughey cool about the whole Trump thing, riding around Wall Street in his Lincoln MKC telling everyone to just chill out. Economic populism? Sounds OK to him. Tear up Dodd-Frank? OK, maybe not the direction he’d go, but sure. Muslim travel ban? NBD—J.D.’s got your back. Indeed, the closest Dimon’s come to crossing the president is banning his employees from using Twitter, although he does allow them to keep abreast of any market-moving 140-character bloviations from 1600 Pennsylvania on their Bloomberg terminals.
Alas, Jamie’s faith that the Trump tsunami will at least briefly lift all boats before smashing them to pieces on the ocean floor appears to be waning. Just a month after telling clients that the president-elect’s tax and infrastructure plans who prove a boon to mid- and small-cap companies, JPMorgan’s having some second thoughts.
“Instead, it seems like global trade is his number one focus from the start, something which in our opinion adds downside risk to our 2017 outlook,” Eduardo Lecubarri, J.P. Morgan’s global head of small and midcap strategy, wrote in a note to clients Thursday. “We worry about big short-term shocks to the global economy at this stage of the game….”
“President Trump and [U.K.] Prime Minister May seem determined to rip up what the world considered established rules of engagement in global trade at a time when the world’s economy is deeply invested in globalization,” Mr. Lecubarri said. “But the market is turning a blind eye to risk…we find this concerning [as] 2017 is arguably the year with the biggest political risk of the last 20.”
Dan Loeb is not worried. Sure, he only managed half the return of the S&P 500 last year, but that was because his abusive former lover was still in charge and had put the kind of investing Loeb does “on its deathbed.” Loeb isn’t at all sure that the guy who replaced him will make things better in the general sense, but he’s definitely going to make things better for people like Dan Loeb.
"While America may or may not be made great again, there is no question that the rules are literally being rewritten," Loeb wrote. "We do not plan to trade the tweets but we expect an increasing number of real and, even better, fake dislocations to create some extremely rewarding investing opportunities."