How Treasury Pick Can Rally Stocks

THE lefty smear apparatus is about to take aim at maybe the most vulnerable of President-elect Donald Trump’s cabinet choices: Treasury Secretarydesignate Steven Mnuchin, who will no doubt face withering questions about his life as a greedy hedge-fund manager and owner of a bank that foreclosed on homes after the 2008 collapse.

But if he’s smart, he’ll redirect his confirmation hearings to a subject Team Trump should be talking more about — a clear and concise pro-growth agenda to cut taxes and reduce regulations. That is, after all, what led to the post-election stock-market surge in the first place, and it’s the real reason so many corporate CEOs have been pledging to keep or expand jobs in the United States.

Unfortunately, Trump has been spending more time playing the thin-skinned Twitter-obsessive and less time on the economy.

The stock market surged after the Nov. 8 election on the prospects of a pro-growth president reversing eight years of Obamanomics. But in recent weeks the rally has stalled as Trump and his team have spun their wheels on nonsensical fights with Hollywood liberals and trade-war threats.

The Dow has failed to hit the 20,000 mark after coming close several times. In fact, since the beginning of the year, stocks have declined while bonds have risen, as investors began to fear Trump has put his growth agenda on the back burner.

Mnuchin can change all that at Thursday’s hearings — even if he’ll first have to survive a vigorous attack on his Wall Street background.

Democrats will howl that he made gobs of money at the bank that liberals love to hate — Goldman Sachs — trading mortgage bonds, which were at the heart of the 2008 crisis. New York Attorney General Eric Schneiderman is investigating some of the supposedly sleazy practices at OneWest Bank, which Mnuchin bought during the crisis on the cheap and later sold for a significant sum.

Also, get ready for plenty of testimonials from alleged victims of the bank’s abuse under Mnuchin’s leadership — people who took out OneWest mortgages on homes they ultimately couldn’t afford and then faced foreclosure. A TV ad featuring one of those alleged victims has already been made.

Of course there were real victims of the 2008 crisis, including people who were lied to about the terms of their loans. But the vast majority of home foreclosures occurred because people gambled during a bubble when banks were more than willing to make loans for homes people couldn’t afford.

More important will be Mnuchin’s answers on Trump’s economic policy and the need to reverse the Obama malaise. Yes, the unemployment rate has gone down under the soon-to-be former president, but that’s also because people have been dropping out of the job market.

Jobs are plentiful for computer coders and Walmart staffers, but well-paying middle-class work is disappearing. Mnuchin, I am told, understands this. He also gets that despite the recent pull-back in stocks, the market’s burst of post-election exuberance was rational — if Trump carries through on his tax and de-regulation plans.

Just look at all those CEOs showing up at Trump Tower pledging to keep jobs in the States. Sure, corporate honchos love facetime with the incoming president, so they’ll say anything for good p.r. And, yes, some of their recently announced job plans were baked in before the election.

But my sources tell me plenty of those new jobs being touted by companies like Bayer, AT&T and others are the result of the executives believing that Trump will do the opposite of President Obama by cutting their costs so they don’t have to move overseas and can hire more here at home.

Mnuchin is in many ways a blank slate politically. But he has a reputation as a sharp businessman who knows that lower taxes and fewer regulations are the ingredients for job growth.

He also knows, I’m told, that trade wars, tariffs on imports and a weak dollar to spur exports might sound good on the campaign trail, but they usually end up hurting rather than helping economic growth.

So far, Trump’s Cabinet isn’t stocked with yes-men. Let’s hope Mnuchin follows that trend. And that Trump listens to him.