Wall Street Quietly Begins Warning About A Biden Presidency
Increased regulation and higher taxes would devastate the American economy.
Wall Street Quietly Begins Warning About A Biden Presidency
By: Sergei Klebnikov, Forbes, June 29, 2020:
With Joe Biden surging in the polls, Wall Street executives are preparing for a potential scenario where he becomes president—with some firms warning clients the stock market could take a hit.
Presidential Candidate Joe Biden Speaks In Lancaster On Health Care
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The former vice president has a 10-point advantage over the president, according to a RealClearPolitics’ average of national polls and opened up commanding leads in swing states like Wisconsin, Pennsylvania, Florida and Michigan.
Biden even topped Trump in fundraising last month, while Trump’s approval ratings—amid the economic fallout from the coronavirus pandemic—have plunged to 39%, near the lowest levels of his presidency, according to Gallup.
The main concern for Wall Street if Trump doesn’t win reelection is the likelihood of higher corporate taxes: In December 2019, Biden pledged to roll back Trump’s signature tax cut legislation, which massively boosted corporate profits.
While often expressing more moderate views in public, many wealthy executives and investors privately supported Trump for his tax cuts and deregulation efforts; As some now prepare for a Biden presidency, it’s a noticeable change of tone for Wall Street.
Much of the election’s impact on the stock market will depend on whether the Republicans retain control of the Senate—as Democrats would then be less likely to enact major economic changes.
Some finance executives and analysts are warning that if the Democrats sweep the White House and the Senate in November, increased regulation and higher taxes would be bad for businesses and could negatively impact the stock market.
[….]“A Republican sweep would be viewed as more likely to continue on current tax policy and deficit spending trends,” Morgan Stanley analysts said in a recent note. Major firms like Goldman Sachs have similarly cautioned that a Democratic sweep poses risks to profitability and dividends, which would lead to decline in the S&P 500’s earnings per share for 2021. Others, like Credit Suisse, believe that though a higher tax rate would be a headwind for the market, other Democratic policies would likely “remain supportive for the economy.”
Surprising factsThe stock market typically performs better when an incumbent is reelected, while it usually underperforms when the White House flips from Republican to Democrat, according to data from Bank of America. According to a recent RBC Capital Markets survey, the majority of the firm’s clients still believe that Trump’s reelection is a positive for the market, with 60% saying that a Biden presidency would negatively impact stocks……..
Source: https://gellerreport.com/2020/06/wall-street-quietly-begins-warning-about-a-biden-presidency.html/
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