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After defeating Nikki Haley in New Hampshire on Tuesday, Donald Trump He reaffirmed his position as the front-runner for the Republican nomination. As a result, business leaders are facing the possibility of Trump becoming president again, and investors are trying to gauge how that will affect their companies’ profits.
Perhaps unsurprisingly, this question comes up everywhere in economics.
On Blackstone’s quarterly earnings call Thursday, one analyst wanted to know whether the uncertainty over who would win in the expected matchup between Biden and Trump could freeze deal flow. (“Trading activity will become more tied to Fed activity,” said Jonathan Gray, the company’s president and chief operating officer.)
And on a conference call with financial services firm Bread, one analyst wondered out loud whether a second Trump administration could overturn proposed rules on credit card late fees. (“Hope is not a strategy,” responded company CEO Ralph Andretta.) And Jeff Arnold, CEO of digital health company ShareCare, said the election could threaten the Affordable Care Act. He answered a question at a press conference about whether or not he has sex. . (“At the end of the day, do you think he would be more interested in attacking the ACA or something else?” he said of a possible Trump presidency. “I think it would probably be something else.”)
The November elections are still months away, but executives certainly don’t want to talk about them. “Most business leaders are trying to stay as far away from politics as possible, especially in this presidential election year,” said Lori Esposito Murray, chair of the Conference Board’s Economic Development Committee.
But here are some of the key issues that are top of mind for them.
On some topics, neither President Trump nor President Biden have the answers that businesses want. In a Conference Board survey of about 1,200 executives, executives said the biggest risk is a rise in the national debt. Haley has made cutting government spending part of her campaign, but neither Trump nor Biden have made it a priority. “I don’t think there’s a particularly strong candidate on this issue,” Murray said.
Andy Laperriere, head of U.S. policy at Piper Sandler, said the impact on corporate taxes is likely to be less than in the second Trump administration, which signed a bill that cut the corporate tax rate from 35% to 21%. Stated. “I think just extending the individual tax cuts that are currently in place and set to expire at the end of 2025 will be a big enough challenge,” he said.
President Trump has vowed to transform trade, but how? Biden has maintained many of the Trump administration’s tariffs. He has restricted sales of some technologies to China and is considering new protectionist measures to help American companies compete with China. President Trump has proposed even more aggressive trade policies, including imposing a 10% tariff on all imported goods.
“There’s going to be a lot of uncertainty about how this is going to play out,” Laperriere said. “Will these 10% tariffs be applied across the board? Does he really have that authority? Is he going to do that? Is he just going to leave the World Trade Organization?” He added: “I think what investors should bet on is whether President Trump is serious about all of this.”
Climate incentives may be under threat. Congressional action would be needed to make major changes to Biden’s anti-inflation law, which set aside $370 billion in spending and tax credits for investments in renewable energy. Jeff Navin, who served as deputy chief of staff at the Department of Energy in the Obama administration and is a co-founder of the government firm Boundary Stone Partners, said that he was a former deputy chief of staff at the Department of Energy in the Obama administration and a co-founder of the government firm Boundary Stone Partners. Even if there is, like the Trump administration) said: ) was unlikely to spend the necessary political capital to do so. “I don’t see anyone campaigning about it,” he says.
Another factor that may make the IRA a lower priority for repeal is that most renewable energy investments go to red states.
Still, federal agencies under the direction of the White House could impede enforcement of the law, including withholding loans or changing eligibility requirements for grants. “They’re going to attack with supply after supply,” Navin said of a possible Republican administration. Some companies that benefit from IRAs face greater risks than others. “The politics of introducing clean energy generation are very different from the politics of solar manufacturing, and the politics of solar manufacturing are very different from the politics of electric vehicles,” Navin said. .
There is uncertainty in voting. In a Conference Board survey, geopolitical conflict ranks high on the list of top risks for U.S. executives. Wars in the Middle East ranked third, the war in Ukraine, which spilled over into a wider NATO conflict, ranked fifth, and mainland China’s occupation of Taiwan ranked sixth. “Both Biden and Trump pose a lot of risks to the market that we’ve never seen before,” Laperriere said. He added: “I think the risks are higher with Trump in terms of trade and geopolitical instability.”
Closer to home, President Trump faces multiple lawsuits and 91 felonies. He continues to make baseless claims that the election was stolen, which poses a different kind of risk to companies. “Democracy is critical to a free market economy,” Murray said. “They’re really intertwined.” — Sarah Kessler
In case you missed it
Jack Ma is buying Alibaba stock. The co-founder of the Chinese e-commerce giant is buying shares in the company, whose stock price has plummeted since its peak in 2020. Mr. Ma has largely disappeared from public life since his criticism of Chinese authorities prompted a regulatory crackdown on his empire and broader technology sector.
The FTC is pursuing Big Tech’s AI startup deals. Regulators announced they would investigate multibillion-dollar investments in OpenAI and Anthropic by Microsoft, Amazon, and Google. FTC Chair Lina Khan said close ties, even investments rather than acquisitions, can stifle innovation and harm consumers.
Netflix and WWE have a $5 billion streaming deal. The entertainment company has agreed to a $5 billion deal to broadcast WWE’s daily live show, Raw. Netflix co-CEO Ted Sarandos said the deal doesn’t mean the company will move into live sports like other technology companies. Separately, Vince McMahon resigned as executive chairman of WWE’s parent organization after being accused of sexual assault and sex trafficking by his former employees.
Could the two oil giants go to war?
A frenzy of deal-making by the oil giants this fall has thrust tiny Guyana into the spotlight, writes Vivian Walt in Dealbook. The South American country has vast oil reserves, and Exxon Mobil and Chevron, which report fourth-quarter results next week, are betting on a game-changer for the oil giants.
But suddenly those bets look riskier. Last month, Venezuelan President Nicolas Maduro sent some 6,000 troops to the Guyana border and declared they would occupy two-thirds of the country, including its oil fields. “We are warriors,” he declared.
Fearing a potential conflict, Britain moved warships closer to Exxon’s drilling site, and marine insurance company Lloyd’s added offshore oil facilities in Guyana’s special economic zone to its list of most dangerous shipping zones. President Maduro, who is up for re-election this year, said oil and gas exploration should begin “immediately.”
A military conflict in Guyana will have global repercussions. Schreiner Parker, managing partner for Latin America at consulting firm Rystad Energy, said the development of the country’s vast oil reserves 10 years ago was “the most important discovery of our time.” . He said that with existing discoveries alone, Guyana could produce more than 1.8 million barrels per day by 2033. That would make Guyana the world’s 11th-largest oil producer, tightening supply from OPEC powers such as Saudi Arabia and driving prices high.
An additional factor is that Guyanese crude costs less to produce than Russian crude or U.S. shale. The fuel is also less carbon intensive to extract, making it particularly valuable as governments and businesses ramp up their net-zero efforts.
Exxon has been scorched by geopolitics in the region before. In 2007, Venezuelan President Hugo Chávez seized most of the country’s reserves, sparking a years-long dispute in international tribunals.
The company is confident in Guyana. “We’re not going anywhere,” company spokeswoman Michelle Gray told DealBook in an email. Some experts say Maduro’s threats are likely simply an election-year stunt. “Any move to target Guyanese assets will ensure a very tough response from the United States,” said Helima Croft, head of global commodity strategy at RBC Capital Markets and a former CIA analyst. “Venezuela will also face significant economic consequences.”
But Guyana’s president is concerned. “We are not taking this for granted at all,” President Irfaan Ali told Dealbook from the capital Georgetown. “We are very concerned about the rhetoric of war that could destabilize the region,” he said.
More than a dozen exploration blocks in the country are under negotiation, which suggests companies are ruling out the possibility of war, Ali said. However, he added, “The threat of war is already impacting our insurance and transportation costs here in Guyana.” He met with President Maduro last month in an effort to ease tensions.
Guyana has taken a tough stance in negotiations with oil majors; It would collect a 10% royalty (as opposed to the 2% royalty under its current deal with Exxon) and add a new 10% corporate tax. And Ali is busy reining in expectations at home, where people dream of overnight riches. He said billions of dollars are needed for schools, health clinics, roads, agriculture and coastal communities to withstand climate change. The challenge is to convince people that although the country is currently rich, fiscal discipline is essential.
“We need to incorporate long-term thinking,” Ali said.
Famous analysts say it’s over
Richard Bove has been a bank analyst for 54 years and offers his views in straightforward terms, which doesn’t endear him to some of his targets. Now 83, Mr. Bove is retiring, bidding farewell to the U.S. economy and his colleagues, writes Rob Copeland of the Times.
“The dollar is no longer the world’s reserve currency,” Bove said. China will overtake the United States to become the world’s largest economy, he continued, but other analysts would disagree because China relies on its existing financial system. He said they were “priests praying to money” and would not criticize the system that made them wealthy.
Wall Street leaders were divided on their views on his comments. JPMorgan Chase President Jamie Dimon called Bove’s work “insightful.” Bank of America’s Brian Moynihan refused to speak to Bove for 10 years after he criticized his move into investment banking.
“I liked getting into trouble sometimes,” he said. “Lots of time.”
thank you for reading! See you on Monday.
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