(Claire Russel, Liberty Headlines) Even though self-proclaimed Democratic socialist Sen. Bernie Sanders, I-Vt., is now the Democratic front-runner, Wall Street investors don’t seem worried—in part because they don’t think he can win, according to CNN.
Andrew Hunter, senior U.S. economist at Capital Economics, wrote in a recent note to clients that he remained the underdog as far as market forecasters were concerned—the only question is when he’ll fold.
“The lack of any stock market reaction to Sanders’ surge suggests that investors either still don’t believe he can win the Democratic nomination against the more centrist candidates or, alternatively, that Sanders will win the nomination but, in doing so, his lack of appeal to independents makes it even more likely that Trump will be re-elected,” Hunt said.
If Sanders continues to surge, there “might be a more discernible hit to market sentiment,” he added..
But right now, the markets are operating under the assumption that Sanders will lose the nomination and Trump will win the general election. Between 80 and 90 percent of participants at Goldman Sachs’s client conferences thought Trump will win reelection in November, the banking company noted in a recent report.
But not everyone on Wall Street is confident that November is Trump’s to win. Goldman Sachs’s chief economist, Jan Hatzius, said that no matter who the Democratic nominee is, the projections “indicate a considerably closer runoff in November than suggested by the widespread view among investors that President Trump is a shoo-in for reelection.”
Trump is the preferred candidate among investors: “Four more years of Trump means four more years of an overall business-friendly economic agenda of low taxes and light regulation,” explained The Week’s James Pethokoukis. “Both Trump and Wall Street share a critical common interest: They want the Dow industrials to keep on climbing.”
Even if Sanders did win the general election, most investors are confident that a divided government would prevent Sanders from radically changing the economy.
“For Medicare-for-all or a wealth tax to become reality, it would require Democrats to sweep the presidency and both houses of Congress, and it would require them to assemble either a large-enough majority to avoid the Senate filibuster or a committed-enough majority to triumph in a bare-knuckled procedural fight,” JPMorgan told its clients.
