Yahoo Finance Kevin O'Leary explains why Wall Street is starting to come around on Donald Trump ahead of the US election
Ark Invest CEO Cathie Wood isn’t known for her politics, but during a recent interview with finance YouTuber Kevin Paffrath, the super investor offered insights into her perspective on the upcoming U.S. presidential election.
In a now-deleted clip that was posted on Paffrath’s X page, Wood recounted a discussion she had about the candidates with her three children.
“As I’ve said to them, ‘Look, I am going to vote for the person who's going to do the best job for our economy,’” Wood told Paffrath. “I am a voter when it comes to economics, and on that basis, [Donald] Trump.”
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She further explained that American economist Art Laffer “describes the first three years of the Trump presidency as the best in U.S. economic history, not the last one because of COVID, and I would agree.”
In a follow-up video posted to YouTube, Paffrath explained Wood feared her words were being misinterpreted and asked him to remove the interview clip. He obliged.
“She asked me to mention that her beliefs are more nuanced,” he also noted on X. “I believe this means there’s more to a vote than economics.”
Media outlets that reached out to Ark Invest and Wood for comment did not immediately receive a response.
Nonetheless, the clip caught the attention of many in the finance world, including “Shark Tank” investor Kevin O’Leary.
During an interview on Fox Business, when asked about Wood’s perspective on Trump, O’Leary highlighted a change in Wall Street’s sentiment.
“Only 12 months ago, you would have never had Wall Street executives endorsing Trump,” he said. “They have now understood what his policies are going to look like versus what they have already, and they're starting to make decisions exactly on that.”
Are taxes a driving force?
O’Leary’s words are reflective of a recent Politico report that put a spotlight on several Wall Street titans doing an about-face on Trump, as several prominent figures have now endorsed the former president.
Blackstone CEO and co-founder Stephen Schwarzman — who once described Jan. 6 as “an affront to the democratic values we hold dear as Americans” — announced in May that he will support Trump in the 2024 election with a “vote for change.”
Billionaire hedge fund manager John Paulson is also apparently backing the former president. Paulson hosted a fundraiser for Trump at his Palm Beach, Florida, residence in April. According to the Republican National Committee, the event raked in over $50.5 million.
O’Leary believes that tax policies can be an important factor for Wall Street tycoons when choosing their preferred presidential candidates. He then illustrated the differences in corporate tax policies between the two candidates.
“Tax rates matter. I mean, you heard Trump talk 15 to 21%, add three to four [percent] for each state, you kind of get into the range of, say, 21 to 24, 25% all-in for U.S. corporate tax,” he said. “That's sort of middle-of-the-road-ish on competition.”
During his time as president, Trump lowered the corporate tax rate from 35% to 21%. The Washington Post reported that his team has discussed lowering it even further, possibly down to 15%, should he win back the office.
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Meanwhile, President Joe Biden has proposed setting the corporate tax rate at 28%, a move that O'Leary believes would diminish U.S. competitiveness.
“If you go to 28 and add 4% to that, you are the most uncompetitive country in the G7,” O’Leary stated bluntly.
He added that the “Cathie Woods of the world” are concerned with attracting capital to their funds, making the corporate tax rate a significant factor for them.
'It's a killer'
O’Leary also addressed another pressing issue in America — food price levels, which he described as “a killer.”
“The food inflation — the 32% since pre-pandemic prices on proteins like chicken and steak — that's a killer. It's a killer, because everybody sees it every day,” he explained.
Food prices have risen significantly in America over the past few years. The food index in the consumer price index (CPI) was 259.83 in December 2019 and has climbed to 329.12 today, an increase of 27%, according to the Federal Reserve Bank of St. Louis.
To be sure, overall headline inflation seems to be easing up. In May 2023, the CPI saw an annual increase of 3.3%, while remaining flat from the previous month, per the Bureau of Labor Statistics.
O’Leary has previously expressed concern about the impact of inflation and wages on the restaurant industry.
Seafood restaurant chain Red Lobster and fish taco chain Rubio's Coastal Grill have both filed for bankruptcy, each citing rising minimum wages as a factor putting pressure on their operations.
O’Leary is not optimistic that inflation will be resolved before the election, stating, “It's tough out there, and that's not going to get fixed by November, unfortunately.”
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