Joe Biden entered the 2020 presidential race with higher polling numbers than of his Democratic rivals, and at least one Wall Street firm believes he’s capable of beating President Trump.
That’s not cause for stockholders to celebrate, says Tony Roth, the chief investment officer at Wilmington Trust, which manages $84.9 billion in assets.
The former vice president may be the most electable of the Democratic candidates so far, which makes his bid “a real risk to the market expansion,” Roth told the Washington Examiner. “That expansion has been, in the last few years, extended in large part due to the regulatory and fiscal agenda of Trump.”
The longest in history, the current bull market has seen the blue-chip Dow Jones Industrial Average soar to 26,597, a nearly fourfold increase from its low in March 2009 following the global financial crisis.
In the two years since Trump’s inauguration alone, the index has climbed 26% to record highs as the White House loosened regulations on internet service providers and banks and pushed a massive tax cut for businesses. The broader S&P 500 gained 18% during that period, while the tech-heavy Nasdaq added 25%.
Any Democrat who wins the White House is likely to reverse Trump’s policies, however. And Roth believes Biden has a better chance than most because he’s a centrist who might appeal to swing voters more than progressives like Sen. Elizabeth Warren, who supports a wealth tax, or Sen. Bernie Sanders, a self-avowed socialist.
A long-time senator for his home state of Delaware, Biden placed first among 29% of people asked which Democratic candidate they would support, compared with 23% for Sanders and 8.3% for Sen. Kamala Harris of California, according to the most recent RealClearPolitics average of polls.
His campaign website advocates stronger labor laws, tax breaks for the middle class, and guaranteeing educational opportunities.
“This country wasn’t built by Wall Street bankers and CEOs and hedge-fund managers,” he said. “It was built by the American middle class.”
Should Biden win the Democratic nomination, Roth predicts a drop of as much as 10% in markets, followed by another 10% slide if he were to beat Trump in the general election.
While the current president himself has frequently taken credit for market gains and economic growth, telling reporters on Wednesday that the U.S. economy is “doing the best, probably, it’s ever done,” Democrats have generally rejected such arguments.
Unemployment, which reached a nearly 50-year low under Trump, began falling under President Obama after peaking at 10% in 2009 following the financial crisis. It had reached 4.7% in December 2016, Obama’s last full month in office, while the Dow Jones index had climbed more than 13,000 points from its 2009 low to 19,732.
