“I think investor perceptions will do something similar to that. The market will be shifting its odds pretty dramatically about who will be the Democratic nominee,” Laperriere said. “Sanders is much more of a risk to the market, but on the other hand, the perception is the odds of him beating Trump are low. Biden is less of a risk for the market, but the odds of him beating Trump are higher.”
Tom Block, Washington analyst at Fundstrat, said Iowa could determine which of party’s progressive candidates will be left standing.
“It appears Sanders is gaining momentum, and Elizabeth Warren is losing momentum. I think Iowa can be the defining moment for the race within the race,” he said. “If Joe Biden gets wiped out in Iowa that would be a negative for him, but if he’s competitive and they all bunch together, I think he can survive for another day.”
Block said Bloomberg only comes in to the race seriously if Biden falters. Markets see the billionaire Bloomberg as much more market-friendly than Sanders or Warren.
“The landscape has significantly changed. You never before had a Super Tuesday like this that has California, Texas and North Carolina. History is changing with this year’s primary schedule,” Block said. “I think the biggest outcome of these early first primaries is going to be deciding whether Bernie has captured the progressive vote, and what is Elizabeth Warren’s argument for staying in the race.”
Investors may find Sanders’ tax proposals less appealing than those of Warren. According to Cornerstone Macro’s analysis, Sanders would push the highest individual tax rate to 52% while other Democrats would raise it to 39.6%, from the current 37%. Under Sanders’ plan, the highest marginal tax rate would be 69.2%, compared with Warren’s 53.5%.
Source Article from https://www.cnbc.com/2020/02/03/if-bernie-sanders-wins-iowa-monday-and-gains-momentum-that-would-spook-the-stock-market.html
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