Wall Street bets on Washington policy plays
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Investors usually expect companies to focus solely on increasing shareholder value. Now, companies are increasingly seeking an additional goal: pleasing the White House.
Why it matters: Policies from Washington are Wall Street's new buy signal.
State of play: The Trump administration is funding its ambitions through deals with corporations rather than through the legislative process.
- The U.S. and Taiwan agreed to cut tariffs and secure about $250 billion of Taiwanese investment, led by TSMC expanding chip fabs in Arizona, in exchange for tariff relief.
- The administration holds equity stakes in companies like Intel, Trilogy Metals and a "golden share" in U.S. Steel as part of its industrial policy.
- The administration has now completed its first sale of Venezuelan oil worth about $500 million, and it will control these sales "indefinitely."
Zoom out: In its 2026 outlook, JPMorgan encouraged clients to invest in "strategic industries" that Washington feels are critical to the future of the country.
- Industrials, materials, energy and technology are clear priorities for the administration amid a push for deglobalization, Stephen Parker, global strategist at JPMorgan, tells Axios.
- Those sectors have already become market winners. Returns for the basket of stocks JPMorgan looks at in "strategic industries" have doubled over the last six or nine months, with "more room to run," Parker says.
- The earnings boost is driven not just by fiscal spending, but also by corporate spending, as companies work alongside the White House.
- JPMorgan is investing $1.5 trillion in these critical industries.
Threat level: "This is stimulus without a bond auction — and someone still pays," Mark Malek, chief investment officer at Seibert Financial, writes in a note to clients.
- President Trump is getting companies to pay for his agenda rather than tapping the Treasury and raising the deficit, a tough pill to swallow for the Milton Friedman free-market capitalists of the stock market.
- Regardless, investors broadly seem to have accepted the command capitalism framework from Trump and are aiming to profit from it.
Follow the money: The risk that comes with this trade is any misalignment between what's good for companies and what's good for the White House.
- Oil executives, for example, were not exactly jumping to invest the $100 billion Trump is seeking to rebuild the Venezuelan energy infrastructure since they have been burned by similar deals there in the past.
- After Exxon CEO Darren Woods told Trump Venezuela is "uninvestable," Trump said he "didn't like" the response. Exxon stock still rose last week.
- JPMorgan acknowledges this is the big risk here but doesn't see it as a broad issue that will stop the momentum driving these sectors higher.
The bottom line: Wall Street is taking trading cues from Washington.
