Main Street leans toward Sanders, Wall St says Trump
NEW YORK: Vermont Senator Bernie Sanders may be surging in the polls ahead of Super Tuesday, but some on Wall Street have made their own conclusions on what November will bring: four more years of President Donald Trump. Ninety-five percent of participants in a Deutsche Bank survey of investors, economists and other market participants released earlier this month said Trump, a Republican, was either “extremely likely” or “slightly likely” to win the general election.
Those results contrast with some wider recent polls cited on RealClearPolitics, which show any Democrat beating Trump in a presidential contest, although top contenders have a bigger lead. The latest Reuters/Ipsos poll, conducted Feb. 1925, showed Sanders with a seven percentage-point lead over Trump in a hypothetical general election matchup.
The sharp mismatch in expectations could stoke market volatility if Wall Streeters are wrong and a Democrat emerges victorious - especially if that winner is Sanders, whose promises to break up big banks, take on drug companies and essentially abolish private insurance in favor of a single government-run plan have unnerved some investors. Many on Wall Street were unprepared for Trump’s win in 2016, which was followed by sharp swings in asset prices.
“As an investor, I look at this and say the market’s nightmare scenario is that Bernie or Elizabeth Warren wins the election,” said Phil Orlando, chief equity market strategist at Federated Investors, in New York. “That’s not our base case ... but it’s a concern,” he said.
Warren’s policy proposals, like Sanders’, have also jangled nerves on Wall Street. Investors will be looking ahead to next Tuesday, when 14 states will cast ballots and Sanders could build an overwhelming advantage if he captures the lion’s share of the available delegates.
Those primaries come as the markets are gripped by concerns over the economic fallout from the spreading coronavirus outbreak, with the number of cases beyond China accelerating rapidly. US stocks were extending the week’s losses on Friday and were on track for a 7th day in the red after the S&P 500 on Thursday confirmed its fastest correction in history. Orlando said Sanders’ rise in the polls also contributed to the recent sell-off. Some investors noted that continued volatility in markets or an economic downturn could wear away at Trump’s support. While the market gyrations are likely to drown out some of the potential impact from next week’s voting results, some corners are already feeling the effects of Sanders’ recent success. — Reuters