Elizabeth Warren is currently the only candidate that is really rising in the polls, and that is terrifying Wall Street. The far-left candidate has the most comprehensive plans to change the status quo of the financial system and she is gaining traction with voters. That is making Wall Street very nervous. Famed investor Leon Cooperman said he expected a year-plus long bear market with losses of 25% or more if either Sanders or Warren wins the election. Biden currently still leads Warren, but the gap is close, with his advantage down to 31% to 25% of Democratic voters.
FINSUM: Our own feeling on this is that Warren may have the momentum to win the bid, but that it will likely prove quite hard for her to win the general election, as her policies are very progressive for middle-of-the-road voters.
The US and China might be starting to realize that they really need each other. Each side is feeling the pain, and that is making a deal feel closer. China has seen a 47% rise in pork prices in the last year—a key form of disturbance to its population, and seems to want to resume importing US pork. Trump has just delayed a new round of tariffs as a measure of good faith before Washington and Beijing return to the negotiating table.
FINSUM: It is quite hard to ascertain the degree to which the US and China actually want to close a trade deal. China has grown so large and self-sufficient that it is big enough to get by on its own, which seems to lower its incentive to compromise. The US is in the same position.
So one thing is very obvious about Trump’s tweets—they can move markets. However, what is less well-known is that their frequency also has an effect on indexes. So how do markets fare on days when Trump is hammering out tweet after tweet versus days when he only pens a few? The answer is that more is worse. On days where Trump write 35 tweets or more there is a 9 basis point drag on markets versus days where he tweets 5 times or less, where there is a 5 basis point tailwind.
FINSUM: There is not much one can do with this info, but it is an interesting data point. How long before a new “smart beta” product comes out focused on this? Haha.
Whichever side of the political aisle you are on, the new polls coming out about the 2020 presidential election look misleading. A new Gallup poll released this week showed that Biden has a 54% to 38% lead over Trump. Furthermore, the poll found that any of the 5 top Democratic contenders would beat Trump in the election were they to win the bid. Additionally, 37% of voters reported that they felt the economy was worsening versus 31% who said it was improving, the first time recently that Americans have been pessimistic about the economic outlook.
FINSUM: The polls don’t seem to be doing justice to how close this election feels. They just don’t reconcile for us. That said, the numbers on economic sentiment are quite interesting.
It has been a bad week for President Trump and his reelection chances appear to have taken a hit, argues Bloomberg. The reason is that the events of the last week have hurt him in three key areas: suburban voters, rural voters, and industrial states. The massacres of the last week, and Trump’s reluctance to push tougher gun laws, will likely harm him in critical suburban areas, where Democrats have been taking votes. Additionally, on the trade war front, both rural voters and industrial states are likely to be upset at recent developments, which could wound the President further.
FINSUM: We think polls still aren’t doing justice to Trump’s chances, but we have to agree that the last week has not done him any favors.
While investors might not feel it right now, tariffs do have some upsides. The most direct one—revenue for the US Treasury. US Treasury income is surging because of the recent tariff hikes on Chinese goods. The rolling 12-month sum of customs duties collected by the Treasury (through the end of June) was $63 bn, almost double the sum of the same period last year. If Trump enacts another round of planned hikes on September 1st, the US will likely collect $100 bn in tariffs this year.
FINSUM: This is a good number, especially at a time of major government over-spending. However, it must be remembered that the large majority of this bounty will be eaten up by aid paid to US farmers as part of tariff relief efforts.