Warren and Sanders’ tax plans have been scaring those on the right for several months, especially as Warren has risen to become the dominant candidate for the Democratic bid. But how much of a negative effect might her plans have on the market? The answer is probably not much, and if anything, it will be bullish for risk assets. Firstly, Warren’s plan will only touch the top 75,000 households in the country, so it is a niche focus. But secondly, because of the taxes imposed, ultra high net-worth families will need to be more aggressive in their asset allocation in order to continue to grow their wealth, meaning they will likely put more capital into risk-on investments.
FINSUM: This was quite a useful insight. It is hard to imagine Warren’s wealth tax being good for the market, but the logic of this argument (from Barron’s) seems sound.
Bernie Sanders is struggling to keep his positon as the third most popular candidate in the Democratic primary. Elizabeth Warren seems to have taken a lot of his platform and delivered it more succinctly and less cantankerously. However, Sanders is trying to one-up her and has just announced his own wealth tax plans. Bernie goes further than Warren with a tax that aims to cut net worth of America’s richest by half in the next decade. Sanders further commented on his plan, saying “billionaires should not exist”.
FINSUM: Whatever you think of this plan, we don’t believe this is ultimately going to help Bernie or the Democrats win the general election, as this is likely just too radical for most Americans.
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.
The first round of the second Democratic debate occurred last night, and it was full of fireworks. Candidates ramped up their attacks on one another, with most of the aggressiveness directed at Bernie Sanders and Elizabeth Warren for their Medicare for All bills that would create an entirely government-run healthcare system. Other candidates criticized the plan as “fairy tale economics”.
FINSUM: We again think that the debate last night showed why Republicans are most likely to win this election—many in the party recognize the need to play more toward the middle to win the race.