As the dust settles after the US election last week, returning president Donald Trump is starting to assemble the team that will manage his second administration.
The incoming cabinet includes controversial appointments like congressman Matt Gaetz as attorney general, Florida Senator Marco Rubio as secretary of state and former congresswoman Tulsi Gabbard as director of national intelligence.
But the move most likely to raise eyebrows on the capital markets – at least until a replacement for SEC chair Gary Gensler is announced – is that of Elon Musk as head of the newly-created Department of Government Efficiency.
No matter what you think about Musk and his headline-grabbing antics, it’s a concerning appointment for a few reasons. First of those is that it might just be a joke at our expense, given that the new department’s acronym (DOGE) shares a name with a gag cryptocurrency beloved by the Tesla founder, Dogecoin.
Second, the new post will see the billionaire team up with venture capitalist Vivek Ramaswamy, once a presidential hopeful himself, known also for his views on making the capital markets ‘anti-woke’. Trump has promised that Musk and Ramaswamy ‘will pave the way for my administration to dismantle government bureaucracy, slash excess regulations, cut wasteful expenditures, and restructure federal agencies’. It’s a cause that sounds noble but is not really something where either man has much experience.
Third, and most tellingly for Tesla’s shareholders, is that Musk’s new job will likely dilute his attentions even further. You might think that a focus on cutting red tape would have good synergies for the electric car maker, allowing it to concentrate on technological innovation and double down on its investment into, say, driverless vehicles if certain regulations were relaxed (Tesla’s autopilot feature is currently being probed by the National Highway Traffic Safety Administration, for example). Any influence the Tesla CEO has in Washington is likely to push for federal, rather than state-by-state, legislation in such areas.
‘Now he’s also at Trump’s top table there will be renewed concern about the potential for messy decision-making at his companies,’ says Susannah Streeter, head of money and markets at Hargreaves Lansdown, who adds that the mogul has ‘taken multi-tasking to a whole new level’. Since buying Twitter – apologies, X – investors have endured Tesla’s price rising or falling depending on how distracted Musk appears.
That’s to say nothing of SpaceX, where Musk has already tried to jostle top employees into senior government roles and offered a solution to outgoing president Joe Biden’s stalling plans to expand broadband into rural communities. Should Trump give him the green light, there could be another lucrative set of contracts on offer.
But will any accusations of favoritism – let alone preferential treatment – see Musk land in hot water? Potentially, but not until he’s made a killing in the meantime. As Streeter puts it: ‘Claims of preferential treatment have the potential to end up in court, but the litigation road is notoriously long and difficult, giving Musk’s business empire plenty of time to benefit.’
What do you make of Trump’s new cabinet? Do you anticipate big changes in the capital markets? Let us know, either via LinkedIn or email us at [email protected].
Laurie Havelock
Laurie has been part of the IR Magazine team for more than a decade, starting out as a reporter and research editor before becoming editor in 2023. He was previously acting business editor at the i newspaper and deputy business editor at The Daily...
