Late last week, the CEO of Citigroup, one of the country’s largest banks, laid out why the stock market and corporate America are just fine with President Donald Trump despite his volatile nature: because tax cuts outweigh Trump tweets.
Michael Corbat discussed the megabank’s first-quarter results in a call with analysts on Friday, explaining why he remains calm despite White House-generated uncertainty. “The volatility we see from morning tweets, or stances that vary from time to time — I wouldn’t say the world is numb or numbing to that, but the positive things that happen are overwhelmingly that,” he said.
In other words, despite concerns about a possible US-China trade war, Trump’s volatile reactions to special counsel Robert Mueller’s Russia investigation, and the potential for escalating conflict in places such as Syria and North Korea, December’s Republican-passed tax cuts are keeping things peachy on Wall Street and in the C-suite.
According to the Wall Street Journal, Citibank’s effective tax rate — what it actually pays — dropped from 31 percent to 24 percent between the first quarter of 2018 and the first quarter of 2017. Wells Fargo’s rate went from 27 percent to 19 percent, and JPMorgan’s went from 22.7 percent to 18.3 percent. (The GOP tax bill cut the standard corporate rate from 35 percent to 21 percent — you’ll notice none of these companies were paying the higher rate before either.) Bank profits are significantly higher this quarter than the same time last year in large part due to the tax bill.
Some of Trump’s antics, such as his trade threats and attacks on Amazon, have made investors a bit more nervous lately, but by and large, the richest Americans and companies are happy. The broader US economy is strong, and they got what they wanted out of Trump and the GOP, which makes it easy to ignore the president’s wild Twitter activity.
The day Corbat made his statement, Trump called former FBI Director James Comey a “LEAKER & LIAR” and “untruthful slime ball” on Twitter, said “tremendous pressure is building” for his border wall, attacked former FBI Deputy Director Andrew McCabe, and said Russian collusion allegations are made up by a “den of thieves and lowlifes.” Citibank, on the other hand, reported a year-over-year profit increase of 24 percent.