The “mini Super Tuesday” results are in from yesterday’s six primaries, and Joe Biden has taken an even more commanding lead. The biggest prize he won yesterday was Michigan, giving him a very strong lead heading into next week’s primaries, which includes Florida. He is almost untouchable at the point, but a win in Florida—which is forecasted—would make his advantage insurmountable.
FINSUM: Two thoughts here. Firstly, Sanders is the most successful non-winning candidate ever. He changed the party and galvanized the center, which ultimately led to his losing, but transformed the vision of the party. Secondly, Biden is more dangerous for Trump. He has the right middle-of-the-road policies and demeanor to attract moderates and those whose eyes might be wavering from the president.
Wealthy people living in the US may have a natural apprehension to the idea of Bernie Sanders becoming president. The self-described socialist aims to greatly raise taxes and redistribute wealth as is common in socialist agendas. However, to get some context on how Bernie’s policies may actually play out, it is useful to look at the only functioning socialist democracies in the world—Scandinavia. What is very interesting about the Scandinavian countries is that they actually have the highest percentage of billionaires per capita in the world. The same also applies for those with a $100m net worth or more, and even those with $30m or more.
FINSUM: These countries have the highest percentage of wealthy per capita by a wide margin, so it appears socialist democracy does end up having some wealth concentrating effects.
Bernie is a long, long way from the White House. He has not even won his party’s bid. Yet, his odds of winning the Democratic ticket, and thus his effect on markets are growing. The reality is that even if you think Trump is likely to win the election, Bernie is probably going to have a big effect on markets this year because of how tight polls are likely to be. With that in mind, here is some advice to protect your portfolio. Analysts are still working through how Bernie might impact specific sectors, but there is one area where all agree he will be devastating—defense. Bernie favors heavy cuts to the defense budget—a position unique to him among the Democratic field of candidates. Therefore, selling defense companies or buying puts on the defense sector seems smart. Such puts are still quite cheap, so not a bad time to prepare.
FINSUM: If Sanders wins the bid he is going to have a stronger impact on markets every week (provided the polls stay close). Best to start thinking about this now as it may be a theme for the rest of the year.
An adviser to the World Health Organization has put out a very worrying forecast. He thinks that coronavirus may end up infecting two-thirds of the globe. The forecast is based on studies of the virus’ transmissibility, which has been on display in China. The prognostication also comes after rising evidence mounts that Beijing is falsifying, or at least underrepresenting, the number of cases reported. Scientists have found very odd and near-impossible correlations within the data China is releasing on this virus.
FINSUM: We don’t think China is being fully honest about the extent of cases, which then amplifies the transmissibility of the virus.
Bernie Sanders’ 2020 bid for the presidency is starting to take on some very familiar patterns. In particular, his campaign is starting to look a lot like his rival Donald Trump’s campaign from 2016. Consider that Bernie is largely a party outsider who has widely been shunned by the Democratic mainstream. On paper his rivals seem more electable, but as they squabble with each other he has built grass roots momentum and taken some of the biggest early election events. Even as he rises, those in his own party worry about his actually winning the bid.
FINSUM: It is eerily familiar. Will it be a similar outcome?
Trump won his impeachment trial and his approval rating is higher than before it. But as we wind towards the election in November, an Achilles heel might be appearing for Trump. That weakness is that many of the states who supported him—indeed those that actually sealed his victory—are actually doing worse economically than they were when they elected him. In other words, the spoils of the current economy have not flowed into much of Trump country. This is especially true across the rust belt states of Ohio, Pennsylvania, Indiana, Wisconsin, Iowa, and Michigan. All of those states can turn Democratic in any presidential year (some are reliably Democratic)—swing states.
FINSUM: This could be Trump’s weakness in the election—that the blue collar boom he references might not have reached enough of the critical part of his base.