Carl Icahn’s view on Dodd-Frank Wall Street Reform
Carl Icahn said in a CNBC interview that changes in various policies are necessary in order to boost economic growth (IWM) (IWF) (SPY). Donald Trump is also focusing on policy changes that could bring economic growth and create jobs. Carl Icahn said that he is favoring most of Trump’s proposed changes, but that he doesn’t favor others like the abolition of the Dodd-Frank Wall Street Reform Act.
The proposed abolition of the Dodd-Frank Wall Street Reform and Consumer Protection Act could be a boost for financial stocks (XLF). The law aims to reduce the risks that led to the 2008 global financial crisis. However, the act has adversely affected the profitability of financial firms.
Carl Icahn thinks there is no need to roll back this reform. He thinks that rolling back the reform could cause some volatility in the financial sector. However, the financial sector movement shows a different picture. Between November 8 and November 15, 2016, the Financial Select Sector SPDR ETF (XLF) rose nearly 10.8%. The rise in the financial sector could be correlated to the possible abolition of the Dodd-Frank Wall Street Reform Act.
The financial sector saw a huge uptick after the announcement of the election results. The cyclical sectors have also shown large upticks during this period. Read Cyclical or Defensive: Where to Look after Trump’s Win to learn more. Trump’s plans for huge investment in infrastructure development have led the rally in industrial sectors. The Industrial Select Sector SPDR ETF (XLI) rose nearly 5.6% during the same timeframe.
In the next part of this series, we’ll analyze Carl Icahn’s prediction on economic growth.