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Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.
Wall Street bosses thought they were getting the “art of the deal” when Donald Trump won the US election. The reality looks more Jackson Pollock than Rembrandt. Asset managers, in particular, have been pummeled. The combined market capitalisation of Blackstone, Apollo, KKR, Carlyle, TPG, Ares and Blue Owl is almost 40 per cent down, a $200bn loss from its post-election peak.
In part, that is a result of the M&A boom that never was. In the weeks after Trump’s election victory last November, the stocks of investment banks and private capital managers roared in hopes that M&A would finally kick off. Wall Street bosses such as Blackstone’s Stephen Schwarzman and Goldman Sachs’ David Solomon cheered what they believed was coming deregulation from a president who was unapologetically pro-business.
Financial plutocrats are, instead, dealing with an almost unprecedented global trade war. Uncertainty means fewer deals, fundraisings and financings, which will hurt the transaction fees, management fees and incentive profits that drive banks’ and asset management firms’ revenue and earnings growth. The recent market rout has exacerbated that effect. Morgan Stanley analysts on Monday pushed out their expectation of “normalised” capital markets from 2026 to 2028.
But a deal drought is only one worry. Another is that America’s dominance of capital that flows from across the globe — not by cargo ship but through computer screens — could become a victim of Trump’s nationalism.
For decades, US groups have dominated the financial landscape. A consistent trade deficit in goods — $900bn in 2024 — means a corresponding demand for dollars that has helped create a large US-centric financial services industrial complex. Between 1990 and 2020, American manufacturing jobs shrank from 18mn to 13mn, while financial services grew from 5mn to 7mn.
To the extent that trade barriers reduce the US’s deficit, there will be fewer dollars sloshing back in. And in a more inward-looking world, sovereign wealth funds in Asia, Scandinavia and the Middle East could think more carefully about wiring their cash to Manhattan — no matter how much spreadsheet-jockey talent is concentrated on Park Avenue. Worse, executives are starting to worry that tariff-hit foreign governments may come to dislike US-based funds buying their national assets.
Financial advisory and private capital firms were trading at between 30 and 40 times 2025 earnings in the wake of the November election. Many had grown substantially in headcount in the past five years. They had also paid generously, expecting seismic growth in transactions and funds managed. For an idea of the excitement, just think that private credit titan Blue Owl went in a few years from relative obscurity to a $40bn market capitalisation in January.
America is unsurpassed in creating Blue Owls. But the wingspan of such firms — should the planet become a series of closed economies — is set to be severely cramped.