Jim Cramer examines Wall Street’s reaction to Trump Treasury secretary pick

CNBC's Jim Cramer reviewed the market's reaction to President-elect Donald Trump's latest cabinet pick, hedge fund manager Scott Bessent.
Cramer said Wall Street demonstrated a belief that the potential Treasury secretary will be a prudent force in the administration.
"What matters is that this treasury secretary designate is a serious person, not unlike Steven Mnuchin before him," he said "And those who believed Trump couldn't get a dollop of rigor in the cabinet — well, they've been proven wrong."

CNBC's Jim Cramer on Monday reviewed investors' reaction to President-elect Donald Trump's latest cabinet pick, hedge fund manager Scott Bessent. His takeaway is that Wall Street believes the potential Treasury secretary will be a prudent force in the administration.

"What matters is that this Treasury secretary designate is a serious person, not unlike Steven Mnuchin before him," he said "And those who believed Trump couldn't get a dollop of rigor in the cabinet — well, they've been proven wrong."

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While the market initially celebrated Trump's win as a step towards corporate deregulation and lower taxes, investors grew concerned at the possibility of high tariffs, Cramer said. But the averages soared on Monday, with both the Dow Jones Industrial Average and the S&P 500 hitting new records during the session. Cramer also pointed out that Treasury yields fell, with the 10-year sliding to about 4.28% when investors were worried about it hitting 4.5% a few days ago.

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According to Cramer, some are impressed with Bessent's qualifications — he worked for billionaire George Soros and ran his own hedge fund — and his three-pronged policy plan. Bessent has advised pursuing a so-called 3-3-3 initiative, modeled after the "three arrows" policy implemented by former Japanese Prime Minister Shinzo Abe, who helped pull Japan's economy out of stagnation. Bessent's plan includes cutting the deficit by 3% of the gross domestic product by 2028, growing the economy at a 3% rate and producing three million additional oil barrels per day.

Cramer suggested the deficit reduction plan makes sense, and he called the 3% growth target a "Goldilocks story," that could gradually shrink the deficit without harsh spending cuts. He was fairly skeptical about the oil initiative and called it a "pipeline dream."

"Call it the firmament — not Wall Street, but the firmament," he said. "That's where Scott Bessent, the Treasury Secretary designate, comes from, so the fence sitters and skeptics are jumping on the Trump bandwagon as if the president elect said, 'higher stock prices and lower taxes for all.'"