Trump Trade: Apollo CEO to be interviewed for Treasury Secretary role

Catch up on the top industries and stocks that were impacted, or were predicted to be impacted, by the comments, actions and policies of President-elect Trump with this daily recap compiled by The Fly: 

TREASURY SECRETARY: U.S. President-elect Donald Trump is scheduled to interview Apollo (APO) CEO Marc Rowan as well as former Federal Reserve Governor Kevin Warsh on Wednesday for the role of Treasury Secretary, Saleha Mohsin, Nancy Cook, and Annmarie Hordern of Bloomberg report, citing people familiar with the matter. Tennessee Senator Bill Hagerty, also a potential contender for a cabinet-level position, spent much of Tuesday with Trump, flying aboard the president-elect’s plane to a SpaceX rocket launch in Texas, according to the report. Rowan and Warsh were added to the list of contenders in recent days as Trump grew frustrated at infighting over the post.

ELECTRICAL INFRASTRUCTURE: According to media reports, Trump’s transition team plans to eliminate IRA’s EV tax credit, says Bernstein in a research note to investors. The likely plan would be to eliminate this tax credit as a part of a broader tax reform legislation, which would require an act of Congress to repeal. That said, there is plenty the Trump administration could do to slow the disbursement of these credits, including reclassifying leases as ineligible, the firm adds. Such a repeal would be the biggest headwind to distribution infrastructure spending, given EV charging tends to occur at home and a step change in an EV installed base was a tailwind for investment on the side of the grid, Bernstein notes.

The firm also believes that removing the EV tax credit would be a modest headwind to long-term electricity demand. Assuming electrical load growth declines from +1.7% to +1.5%, Bernstein estimates long term earnings growth algorithm shifts from 14% to 13% for Eaton (ETN), from 16% to 15% for Hubbell (HUBB), and from 15% to 14% for Quanta Services (PWR). All in, this change in would bring down the firm’s long term earnings power down by 3% for Eaton, 1% for Hubbell and 3% for Quanta Services. In Bernstein’s view, this risk is largely priced in as shares fell when news of the EV tax credit cut broke last Thursday.

MEDICARE ADVANTAGE PLANS: JPMorgan views President-elect Trump’s nomination of Dr. Mehmet Oz to be Centers for Medicare and Medicaid Services Administrator as a surprise pick to oversee Medicare, Medicaid and the Affordable Care Act Exchanges. While there is limited information to gauge the nomination from a policy perspective, the pieces of information indicate Oz would follow conventional Republican approach to running CMS, the firm tells investors in a research note. JPMorgan points out that in an interview with AARP in 2022 during his unsuccessful Senate campaign, Oz said that, “We can expand Medicare Advantage plans. These plans are popular among seniors, consistently provide quality care and have a needed incentive to keep costs low.” The firm sees this as consistent with its expectations that CMS under Republican control would support Medicare Advantage. This is favorable for companies like Humana (HUM), UnitedHealth (UNH), CVS Health (CVS) and Elevance Health (ELV), JPMorgan adds.

STOCK RATING CHANGES:

• Benchmark downgraded Jacobs (J) to Hold from Buy without a price target. The incoming Trump administration is likely to have an impact on investment decisions domestically and globally, the firm tells investors in a research note.
• Keefe Bruyette downgraded both Fannie Mae (FNMA) and Freddie Mac (FMCC) to Market Perform from Outperform with increased price targets of $3 and $4, respectively. Government-sponsored enterprise privatization could be on the agenda during the second Trump administration, but it would have to be done under the current Congressional charter, which would maintain the implicit guaranty, the firm tells investors in a research note.

OTHER NEWS:

• PyroGenesis (PYR) provided comments and analysis in response to investor questions about the impact from the upcoming change in U.S. leadership and potential change in policy direction. The company said that the potential benefits from President-Elect Donald Trump’s campaign promises, in particular the commitments to lower corporate taxation to stimulate business growth, reduce regulatory burdens and bureaucracy to accelerate project approvals, expand the energy sector to “unleash energy production from all sources, including nuclear,” are numerous and prescient, as America commits to a future of advanced manufacturing leadership, energy self-sufficiency, and supply chain protection.
• Palantir (PLTR) has added over $23B to its market capitalization since Trump was elected as U.S. president, with investors making the bet the government contractor will be among the biggest winners of enhanced federal spending on national security, immigration, and space exploration, Tabby Kinder of The Financial Times reports.