By Tank Murdoch
(TNS) As Wall Street rebounded on Tuesday on surges by Tesla and an easing of fears over the impact on the global economy due to the spreading coronavirus, economic analysts turned their attention to the Iowa caucus results.
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While as of this writing the Iowa Democrat Party still had not announced the winner after botching the results due to a faulty app and a bad telephone system, according to officials, it appeared increasingly likely that Sen. Bernie Sanders, the Vermont socialist, was going to come out on top.
And while at first blush one might thing that would worry Wall Street analysts, they’re actually pleasantly surprised by a Bernie surge. What’s more, they think an eventual Sanders nomination will be a good thing for the markets, generally.
And why? Because they see him as being more easily defeated by President Donald Trump than one of the other candidates, especially Joe Biden.
The momentum of Bernie Sanders in the Democratic presidential field sets up a potential clash of polar opposites in November, one which Wall Street might relish.
A clash between President Donald Trump and the Vermont democratic socialist gathered more attention Tuesday amid reports that Sanders showed impressively the day before in Iowa and is pushing closer to the front of the Democratic pack.
“There is a lot of chatter that a Sanders nomination would roil markets, but there’s another way to consider that possibility,” Nick Colas, co-founder of DataTrek Research, said in his daily market note.
“Investors may assume that Sanders’ platform of radically remaking American society/commerce will not resonate with voters during a time of relative economic prosperity. That would make President Trump’s reelection more likely, preserving a market-friendly tone to government policy,” he added.
Just Tuesday, Sanders came out with what many Wall Street analysts see as another economy-killing proposal: Banning the energy-producing procedure known as “fracking.” The Hill reported:
A bill introduced last week by Sen. Bernie Sanders (I-Vt.) that Rep. Alexandria Ocasio-Cortez (D-N.Y.) helped craft would ban fracking nationwide by 2025, according to its newly unveiled text.
The legislation would immediately prevent federal agencies from issuing federal permits for expanded fracking, new fracking, new pipelines, new natural gas or oil export terminals and other gas and oil infrastructure.
This comes on top of Sanders’ call last summer to nationalize electricity production — put it all in government hands — as well as his support for Ocasio-Cortez’s multi-trillion-dollar “Green New Deal” and other limitations on capitalism.
CNBC noted further:
Stocks have been on a tear this week. While it’s impossible to tell how much the changing political dynamics tie into that (if at all), there’s clearly a sentiment across the investing community that a Sanders presidency, with its expected broadsides against wealthy Americans and big business, would be trouble for the market.
Wall Street, of course, has done well during the Trump years.
The Dow Jones Industrial Average has risen about 58% since Trump’s election. Anything that suggests status quo, then, would garner support from the Street.
“There’s enough of an analogy to hang your hat on,” Colas said in an interview. “People reject an old-school socialism-oriented politician in factor of, ‘Look, follow me. The future is bright and it can get brighter.’”
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