Do Markets Have to Worry About Kamala Harris?

SHE’S NOT A COMMUNIST, as Donald Trump claims, but Kamala Harris is a liberal Californian with an activist agenda. Do investors have to worry about her?

THE MARKETS SURE AREN’T WORRIED NOW, as stocks continue to surge despite the growing likelihood that Harris will win in November.

BUT THERE ARE ISSUES that the markets cannot ignore:

VIRTUALLY NO CONCERN – in either party – about the soaring budget deficit, which has driven U.S. debt up to $34 trillion.

A “TAX THE RICH” AGENDA from Harris that may top anything Joe Biden has proposed.

A TRUMPIAN TILT TOWARD TRADE protectionism: Hopefully the nation’s top economists will dissuade Harris on this, but she seems determined to maintain stiff tariffs.

THE KEY FACTOR is the likelihood that Congress will remain relatively gridlocked, with Republicans probably capturing the Senate while possibly losing their narrow control of the House.

A PRESIDENT HARRIS thus would be unlikely to get her agenda through Congress. Most legislation would require 60 votes in the Senate, which seems unattainable, and nominations of activists could stall as well. Harris would get one shot per year to pass a budget bill with a simple majority.

SHE ALSO WOULD HAVE AN OPPORTUNITY TO NOMINATE activists to the regulatory agencies, but if Republicans control the Senate – which looks likely – those nominations could stall.

WHICH BRINGS US TO THE ONE ISSUE that could worry the markets regardless of who wins the election – the staggering budget deficit. Neither Harris nor her adoring supporters in Chicago have even mentioned red ink.

TRUMP HAS BEEN VAGUE ABOUT THE DEFICIT: Both parties want to spend more; Trump favors spending cuts that have no chance while Harris wants more spending, paid for with tax hikes – and that could be a concern that might spook the markets.

SO WE HAVE TO CONCLUDE THAT all of the new spending proposed in Chicago may be an aspirational wish list, sure to be pared down or rejected on Capitol Hill. The markets may get this.

Related: Is More Volatility Expected From Here?

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