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Daily briefing - 11 November 2016

President-elect Donald Trump met Barack Obama yesterday in the White House and the short video record of the public event, though understated, is sure to become famous. Mr Trump speaks in tweetable part-sentences: "He explained some of the difficulties, some of the high-flying assets and some of the really great things that have been achieved." Obama watches on grimly, as if the whole eight years of his presidency had been a waste of time. Sources around Trump have been briefing that he will surround himself with capable advisors, including Jamie Dimon as Treasury Secretary. In May this year, Mr Dimon told Bloomberg Markets that in the current atmosphere it would not be "politically feasible" for a banker to become Treasury Secretary, and he said he didn't expect to see a banker in treasury for ten years. Mr Dimon was, of course, assuming that Mrs Clinton was going to win.

Wells Fargo stock is bouncing back on news that a Trump presidency would roll back regulations on banking. In this scenario, Wells' troubles were caused by 'unduly harsh' regulation. This is rewriting history, for Wells was clearly the architect of its own downfall. However, as we've reported in the last two days, Elisabeth Warren and the Consumer Financial Protection Bureau will likely be targeted by a Trump administration. Bloomberg writes: "The Consumer Financial Protection Bureau — the agency that extracted the biggest fine over the accounts from Wells Fargo — could get new leadership and see its authority and enforcement efforts curtailed. The regulator, championed by Senator Elizabeth Warren of Massachusetts, is among targets Trump has identified for possible changes — a positive for large retail banks, Jefferies analyst Ken Usdin wrote in a Nov. 9 note to clients." Senator Warren seems ready for the fight: "If Trump and the Republican Party try to turn loose the big banks and financial institutions so they can once again gamble with our economy and bring it all crashing down, then we will fight them every step of the way," she said. Ms Warren and Mr Trump do have some common ground. She said she will support him on reintroducing the Glass-Steagall Act.

Reuters reports: "U.S. banking sector shares on Thursday surged to levels not seen since the midst of the 2008 financial crisis, pushing the Dow to an all-time high, while technology shares sank as Wall Street rearranged its bets to benefit from Donald Trump's presidency". Alarm is spreading in countries such as Ireland, which is home to many American technology companies, on news that Mr Trump intends to slash US corporation tax and attract companies such as Apple and Intel back to the United States. There's also speculation that a Trump administration will see all things fintech and Silicon Valley as mortal enemies. While the Obama White House has welcomed fintech boosters such as Brett King, fintech may get a cold shoulder from Trump.

Readers of these daily briefings will recall that we flagged a Trump victory several weeks ago — partly due to the breadth of mainstream media explaining why it could not happen. Unfortunately, and dangerously, many reporters rely on a narrow range of commenters with fixed notions, and then, following a 'shock' result, spend months explaining why 'nobody predicted it'. Think Brexit, for example. Have a read of this post about how Facebook saw it coming.

Philip Monks, CEO of UK challenger bank Aldermore, says that the bank is now generating capital organically and will look to pay a debut dividend next year. Aldermore was one of only two UK banks, along with Close Brothers, that Lafferty Bank Quality Ratings rated as a four-star bank in its European 100 set of banks. The FT noted that, as he announced third-quarter results, Mr Monk said: "Next year we will be able to have a conversation at the board as to what to do with the excess capital, which will depend on the economic conditions at the time." Citigroup bank analyst Ian Sealey said that Aldermore would face headwinds next year but was taking market share in its main activities. "Their loan growth is quite defensible", he said.

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