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"Warren’s rise in the polls was highlighted in bold face in a worry list compiled by David Rosenberg, the chief economist and strategist at Gluskin Sheff. While investors should be concerned about trade and China, along with a litany of global concerns, “the No. 1 issue should actually be the rising prospect of an Elizabeth Warren presidency, coupled with the House [of Representatives] staying Democrat and the Senate flipping that way,” he wrote to clients.
Warren, while declaring herself a capitalist to draw a distinction from Sanders, an avowed democratic socialist, “has made it very clear that she is no friend of the equity market,” he continues. And the Massachusetts senator has a point, Rosenberg adds. One of the biggest bull markets of all time created tremendous wealth—some $27.4 trillion since the low of March 2009, by Wilshire Associates’ calculations—but failed to deliver on facilitating capital investment, as textbooks teach. “On that file, she does have a leg to stand on,” he contends.
Adding to the rising prospect of a Warren nomination, the market also has to deal with the impeachment inquiry for President Donald Trump and its impact on his chances of reelection. And if the economy slows sufficiently to push up the unemployment rate, his odds would fade further.
Moreover, impeachment would likely make the already unproductive Congress even more so. Issues such as a vote on the USMCA trade deal, drug pricing, and the like probably would remain stalled. The impeachment proceedings also “all but ensures that we are going to see a de facto tax INCREASE on the corporate sector come 2021,” MacroMavens’ Stephanie Pomboy alertly points out.
The end of provisions such as immediate expensing would be equivalent to a seven-to-eight percentage point increase in the statutory tax rate. “YIKES!!,” she comments. “Yeah, I know 2021 is a lifetime away. But if you are a CEO, you’re going to start factoring in that change in 2020, which, it bears reminding, is just three months away.” All of which will weigh on the already deteriorating profit outlook, she concludes.
The bottom line for next year’s presidential race is that it seems increasingly likely to pit Trump, the stock market’s No. 1 cheerleader, against Warren, “a cheer-less leader,” as Rosenberg dubbed her, who favors higher marginal tax rates, hikes in capital-gains and dividend levies, plus a wealth tax, to help pay for Medicare for all. Some choice."
https://www.barrons.com/articles/wall-streets-optimism-sinks-as-elizabeth-warrens-star-rises-51570199807
