Treasury Secretary Steven Mnuchin believes the market has priced in expectations that President Donald Trump's administration and Congress will pass tax reform and that it won't be pretty if those efforts fail.
"There is no question that the rally in the stock market has baked into it reasonably high expectations of us getting tax cuts and tax reform done," Mnuchin said in the "Politico Money" podcast interview. "To the extent we get the tax deal done, the stock market will go up higher. But there's no question in my mind that if we don't get it done you're going to see a reversal of a significant amount of these gains."
The S&P 500 has rallied 20 percent since the Nov. 8 election through Tuesday.
Mnuchin also gave an "absolute guarantee" that Trump will sign a tax reform bill before the end of this year.
Trump has tweeted more than 20 times since the election extolling the market's gains.