The victories this week in New Hampshire’s primary by Donald Trump (Republicans) and Bernie Sanders (Democrats) put two of the candidates in the lead that most likely to spook Wall Street.
Trump has been viewed very critical by the financial community due to his unpredictability and off-the-cuff remarks about mexicans or religions for instance.
Many in the financial community compare Trump with former Italian Prime Minister Silvio Berlusconi. Brian Gardner, director of Washington research at Keefe Bruyette and Woods summarized this view. ‘There are similiarities in a larger-than-life persona, huge egos. Both are media creatures, very populist. Short on substance, long on style’ he said in a interview with the business-channel CNBC.
On the other hand, self proclaimed socialist Bernie Sanders – who took 60 percent of the vote over Hillary Clinton – is a pain for money managers, because he wants to create new social programs with a tax on financial transactions.
Making Wall Street and corporations ‘pay their fair share,’ as Sanders likes to put it, is a key part of his presidential platform. To pay for his proposal to make public colleges and universities tuition free, Sanders plans to tax Wall Street speculators. To pay for his 1 trillion USD infrastructure bill, Sanders would make corporations pay taxes on profits stored in off-shore tax havens.
Well, it’s still a long way to the final nominations in the summer and the elections in the fall. And the fascinating rise of two anti-establishment candidates in both political parties may change America quite a bit. For the moment, this possible changes are not yet viewed as an oppurtunity, but an uncertainty in the financial community.
This incertainty on top of the already existing problems on Wall Street (earnings, oilprice, China etc) will most likley drag down stocks and bondyields further over the next time.
America might change his face with a President Trump or Sanders, but the country will not loose it’s unique ability to overcome challenges and find pragmatic solutions.
And there is still another possibility Wall Street would like to see. That the two extreme candidates Trump and Sanders would lure businessman and former New York Mayor Michael Bloomberg to enter the race for the White House.
Bloomberg has a proven record as businessman and political executive and with an estimated fortune of 35 billion USD is independent for sure. He is most likely the best solution for America in this time of uncertainty. Update: Michael Bloomberg is not running for USA Presidency in 2016.