Donald Trump ‘s decisive victory to regain the White House could serve as a “regulatory game changer” for Wall Street banks, according to Wells Fargo. Equity analyst Mike Mayo wrote early on Wednesday that a second Trump administration could yield “more free markets, less harsh oversight,” while also reducing regulatory risk. He views Trump’s return to the White House as a tailwind to the banking sector in general, but also pointed to Goldman Sachs as a specific beneficiary due to a forecasted uptick in deal activity. GS YTD mountain Goldman Sachs stock. Trump secured a second term by penetrating the so-called Blue Wall and winning Wisconsin and Pennsylvania. “More free markets imply that investment banking revenues have a chance at exceeding 2021 levels over the next few years,” Mayo said. “The idea of a capital markets super-cycle seems possible (albeit not a base case), [especially] given the level of pent-up demand, dry powder, and likely more certainty in deals getting approved.” Banking stocks were broadly higher in trading Wednesday. Shares of Goldman Sachs surged more than 12%, while peers Citigroup , Bank of America and Wells Fargo all gained more than 7% each. “The chance for more loan growth seems higher now that the election is behind and corporates are likely to have a more ‘risk on’ attitude,” Mayo continued. “This is a key debate given that more loan growth can lead to more [net interest income], revenue, and EPS growth.” The analyst also noted that Trump’s plan for lowering the U.S. corporate tax rate could be a “wildcard” that also benefits the banking sector.
