Self-proclaimed democratic socialist Senator Bernie Sanders is now the undisputed front-runner in the race for the Democratic presidential nomination, having come from behind to dominate the first two contests of the 2020 Democratic race – the Iowa caucuses and New Hampshire primary.
With the Iowa caucuses and New Hampshire primary in the rear window, Senator Bernie Sanders, who won the popular vote by a clear margin in both the first and second rounds in Iowa and a narrow victory in New Hampshire, is shaping up as the new Democratic front-runner, commanding attention from investors as they analyse how the stock market might fare if the Vermont senator were elected president, taking into consideration his socialist bent.
Democratic U.S. presidential candidate Senator Bernie Sanders speaks during a Get Out the Early Vote campaign rally in Santa Ana, California, U.S., February 21, 2020
His popularity is surging, as evidenced by a new national Washington Post-ABC News poll, which shows him leading by a huge margin, and strategists claim that markets are starting to display a growing undercurrent that a showdown in autumn between Bernie Sanders and “market-friendly” President Donald Trump could be potentially detrimental for stock prices.
Although the market’s strong run-up in 2020 evidences that investors are not yet exiting stocks over fears that Bernie Sanders might enter the Oval Office, the self-described socialist senator’s continued strong showing in debates and polls has generated concerns that Sanders’ surge is holding back market potential, claims UBS global investment strategist Jason Draho.
Speaking on Yahoo Finance’s The First Trade, the strategist said:
What Could Happen if Sanders is President
Market strategists have been sounding the alarm bell on Sanders, since the Vermont senator is perceived by most on Wall Street as “anti-big business, anti-stock market and anti-wealth creation”, and as such – ill-fitted for risk-taking in numerous asset classes, with the exception of gold and bitcoin.
A US presidential victory by the Vermont senator is potentially fraught with the possibility of higher corporate taxes being levied to cover the costs of his Medicare for All, single-payer, national health insurance programme and other social safety net plans, greater regulation around stock buybacks and corporate governance, believe strategists.
Concerns are also fuelled by speculations that a Sanders victory might result in the appointment of Elizabeth Warren as Treasury Secretary.
The US Senator from Massachusetts, who has been running for president of the United States as a Democratic candidate, is known for her list of policy plans that include creating a wealth tax, breaking up big technology companies, and rolling out proposals to transition to a “Medicare-for-all” system.
Billionaire investor Leon Cooperman, founder of Omega Advisors, a frequent critic of Bernie Sanders and Elizabeth Warren over the past year, claimed investors should be more worried about the long-term implications of a Bernie Sanders presidency for the stock market than about the coronavirus.
In late January, as investors were weighing which contenders might be better or worse for stock markets, some of the risks were highlighted during DoubleLine Capital CEO Jeffrey Gundlach’s inaugural Round Table Prime.
As Gundlach admitted, he believed there will be “a moment where the market has to try on the idea of Bernie for real,” he added:
Speaking in an interview on CNBC, on the sidelines of the Goldman Sachs Financial Services conference in New York City on 21 January, Howard Marks, co-founder of Oaktree Capital Management, said Donald Trump’s pro-business stance has made him an attractive president for financial markets.
US President Donald Trump during a visit to Bakersfield, California
Sourse: sputniknews.com
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