Blackstone CEO Stephen Schwarzman is looking forward to the Donald Trump Presidency. He feels that Mr. Trump will make changes to America’s business regulations which will help improve the economy.
These changes, says Schwarzman, will help cause inflation to rise and lead to an increase in interest rates which he feels will help businesses. But why is this a good thing? Higher rates will help lenders like his Blackstone make more money, but they also make bonds more attractive to investors, pushing down the stock market as people move their money to the bond market. It also makes it harder for businesses to grow since it costs them more to borrow money whether directly from lenders or through the issuance of bonds.
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And higher interest rates may make the Dollar rise against other currencies and hurt U.S. exports as a result and cause the price of all imports to rise.
Schwarzman was recently named to head Donald Trump’s economic advisory forum, so his opinion clearly matters to the President Elect. He discussed the regulatory changes that Wall Street can look forward to once Donald Trump takes office.
According to Business Insider, Stephen Schwarzman said at a Goldman Sachs conference, “If you look at the architecture of the world, it’s going to change very substantially.”
And Schwarzman also expects that the Senate rule of reconciliation, which was used by the Democrats under President Obama and blocks filibusters, will allow the Republicans who control both houses of the Congress to push through a new tax policy.
“Both Republicans and Democrats have wanted tax reform but they couldn’t do it for ideological reasons, and now don’t have to worry about those ideological reasons because you get enough votes, you can just change the law, ” he said.
“We also have the ability, under reconciliation, to bring back all this trapped cash abroad. So that will probably come back into the US economy.”
When you read between the lines of what Stephen Schwarzman said, the outlook is definitely rosy for the people on Wall Street. But as far as Democrats are concerned, this is just more of the same old Republican economics.
