Senator Kamala Harris, running mate of Joe Biden’s vice-president, has found herself popular with a major American institution: Wall Street.
Harris has aroused the enthusiasm of the investor crowd because of their perception of her as the moderate choice.
“She’s not Bernie Sanders or Elizabeth Warren. I think that’s what people worried about, ”said Stephanie Link, chief investment strategist at Hightower Advisors, referring to senators who were competing with Harris, Biden and others for the Democratic presidential nomination.
Ultimately, Wall Street and the financial markets want stability. As progressives, Warren and Sanders defended Medicare for All policies and fought for major reforms that would include to break up the big banks.
“We are talking about having European-style national health insurance, where the government takes over the health industry,” said Richard Sylla, professor emeritus of economics at New York University. “The drug companies and the people who run our private health care programs could be bankrupted by such a plan, so they don’t like it. ”
From Wall Street’s perspective, Link said, one of the best political scenarios would be for Biden to win the presidential election while Congress remains divided.
Most likely he would keep President Trump’s tax plan – which reduced the rate of companies from 35% to 21% – in place. “This is the status quo,” Link said. “And frankly, the market likes it.”
This desire for security, a Goldilocks financial story – neither too hot nor too cold – is a pattern we’ve seen in recent years.
On Election Day in 2016, markets started to dip as Donald Trump moved closer to victory as they bet on Hillary Clinton. Although they recovered within hours and increased throughout the following week.
Sylla said that historically Wall Street has tended to gravitate towards the Republican Party because it is seen as the “party of business.” He pointed out, however, that markets have actually worked better when Democrats are in charge, perhaps because Democrats are proposing policies that aim for full employment.
However, over time, Sylla noted, there has been a shift with Democrats, who are not exactly “pro-business” but “pro-politics which is good for business.”
“The two sides are similar in that they receive a lot of contributions from companies, a lot of help from businessmen,” Sylla said.
All things considered, Wall Street doesn’t want someone who is too extreme on either end of the spectrum.
“Wall Street itself is quite comfortable,” Sylla noted. “And if you’re comfortable enough, you don’t want people to come and rock the boat.”
Link said she was not sure Wall Street favors one party over another.
“I just know that as an investor I want profits to go up,” Link said. “Whoever it is, is fine with me. ”