This Week in Finance: Wells Fargo, Bank of America, JPMorgan, and More

Also on the back of the Trump win, E*TRADE Financial Corp (NASDAQ:ETFC) popped 17.44% while Goldman Sachs Group Inc (NYSE:GS) rallied 15.9% this week. Traders bought E*TRADE hand over fist due to the anticipation that interest rates will rise faster than previously expected. Although the Federal Reserve is independent from the Presidency, Trump’s future use of fiscal policy levers to stimulate the economy (such as cutting taxes, increasing infrastructure spending, and trimming regulations) could increase inflation expectations, and thereby prompt the Fed to increase the Federal Funds rate faster as a precautionary measure. Trump could also eventually replace Chairwoman Janet Yellen once her term is up. E*Trade makes more money when interest rates are higher, all else equal.

Traders bought Goldman Sachs due to anticipation that capital markets activity will be more robust under a Trump Presidency. With less regulation, there could be more M&A. With lower corporate taxes, there could be more buybacks. With more opportunity on the Street, it’s not hard to see the smartest guys in the room benefiting. According to our records, 35 elite funds were long E*TRADE Financial Corp (NASDAQ:ETFC) at the end of June, down 4 funds from the previous quarter. Meanwhile, the number of elite funds with holdings in Goldman Sachs Group Inc (NYSE:GS) fell by 1 quarter-over-quarter to 68 at the end of June.

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