Wall Street Is Unprepared for a Dem Sweep
I spent a good chunk of yesterday calling all over Wall Street getting people's take on the election. One thing I think learned is that many financial pros are pretty blasé over the prospect of getting a Democratic president.
Take a potential Hillary Clinton presidency, for instance. As Alec Phillips, political analyst at Goldman Sachs, told me, "There is still the assumption that her administration would be similar to the Clinton administration" in the 1990s.
You can pore over the speeches and agenda of Clinton and Barack Obama all you want. But consider this: Last night's Super Tuesday results may not have picked a Democratic nominee, but they once again showed how fired up and ready to go Dem voters are. Turnout was massive. The same goes for fundraising. Obama took in $32 million in January alone.
Neither the Big Money crowd nor the Mr. Market crowd has fully priced in the prospect of a Democratic president and a heavily Democratic Congress. A total electoral blowout could result in (1) healthcare reform that is more heavily tilted toward government control than is currently suggested by the candidates' proposals, (2) greater than anticipated tax increases, including a doubling of the capital-gains-tax rate and a surcharge on wealthier Americans—in addition to a rollback of the Bush tax cuts.
Wall Street may not have come to this realization yet, but it will, says my guy Dan Clifton over at Strategas Research:
Although still early in the election cycle, we do not believe investors are focused enough on the U.S. Senate races. Legislation usually takes 60 votes to pass in the Senate and currently the Democrats hold 51 seats. However, the Republicans are defending 22 seats in 2008, compared to just 12 for the Democrats. Of these seats roughly seven Republicans are vulnerable to defeat, while only two incumbent Democratic Senators are in tight races. Furthermore, the Democrats have a near 3 to 1 cash-on-hand fundraising advantage. If the Democrats get close to controlling 60 Senate votes, the investment implications will be significant as traditional post-election headline risk will translate into real risk.
Tags: Democrats | presidential election 2008 | Wall Street
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Reader Comments
Please have correct facts
John F. Kennedy is one who said "A rising tide lifts all boats". Stop rewriting history to justify your leftism with the Kennedy myth.
Wall Street and the Fascist Left
The Democratic Party of today is different from any other Democratic Party in US History. It is solidly anti-business and pro-huge malignant growth government. That combo can never be good for Wall Street or anybody else except the corrupt politicos who run the machine, and the rich moneybags who benefit, like George Soros.
"The $3 trillion Bush proposes spending in 2009 would be the first time that milestone has been reached. Bush also presided over the first budget to hit $2 trillion, in 2002. It took the government nearly 200 years to reach the first $1 trillion budget, which occurred in 1987 during the Reagan administration."
Good thing we had a conservative in office and conservatives in the majority in both houses of Congress. Anybody who says the Democrats are going to be bad for markets, and/or Federal finances is totally full of crap.
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