Democratic Massachusetts Sen. Elizabeth Warren’s presidency could spell ruin for the stock market, analysts predict.
The stock market has already started to show negative impact from Warren’s campaign, analysts told Bloomberg, and her presidency could impact the stock market even further. The bank earnings season will begin October 15, the publication reports.
“Elizabeth Warren will be the overhang this earnings season,” wrote Jaret Seiberg, who works for the investment banking company Cowen, in a note to Bloomberg. If Warren does not secure the Democratic nomination, she will still “control financial policy in any Democratic administration.”
This will be “negative for big banks, private equity, payday lenders, debt collectors and servicers,” Seiberg said, adding that Warren’s negative impact on the financial services sector depends on whether Democrats are in the White House and the Senate.
“If the GOP keeps the Senate — which is likely — then there will be sharp limits on what she can achieve,” Seiberg said.
The Royal Bank of Canada’s Lori Calvasina worries that a Warren presidency combined with Democratic control of the House would be “extremely challenging for stocks.”
Warren’s “sheer multitude” of policy plans would leave “U.S. equity investors with few safe havens,” Calvasina told Bloomberg.
Warren has pushed a plan for the economy called “A Plan For Economic Patriotism” in which the Massachusetts senator promises to “pursue an agenda of economic patriotism, using new and existing tools to defend and create quality American jobs and promote American industry.”
“My Administration will pursue fundamental, structural changes in our government’s approach to the economy, finally putting American workers and middle-class prosperity ahead of multinational profits and Wall Street bonuses,” Warren says in her plan – then goes on to list a variety of “aggressive new government policies.”
But Calvasina added that “any pain from a Warren win is likely to be temporary.”
“Most of the sectors at high risk under a Warren presidency from a policy perspective (Financials, Energy, Health Care, Industrials) are already deeply undervalued versus the broader market,” Calvasina said.
Height Capital Markets’ Benjamin Salisbury emphasized the “importance for investors of monitoring which candidates survive the winnowing into the second tier as historically, half the Democratic nominees have come from fourth place or worse at this stage in the campaign.”
The analysts’ comments follow Warren’s Friday announcement of her campaign funds. Warren raised $24.6 million during the third quarter and said she has $25.7 million cash on hand, according to Politico. Her campaign was the only one to announce how much cash it had on hand, the publication reports.
Vermont Sen. Bernie Sanders, a Vermont Independent, was the only candidate to out-raise Warren in the third quarter, coming in at $25.3 million.
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