Bloomberg Out, Huge Plus for Biden; Wall Street Transaction Tax Introduced
Author: Greg Valliere
March 6, 2019
SEVERAL INTERESTING DEVELOPMENTS YESTERDAY, mostly obscured by the all-out war between Donald Trump and investigators, and by a tense standoff in the House over an anti-Semitism resolution. Here goes . . .
SENSING A VERY NARROW LANE, Michael Bloomberg, 77, announced yesterday that he will not seek the presidency. We thought he could win the general election but not the nomination; Bloomberg’s conservative positions on Wall Street, deficits and police made him a pariah among the party’s progressives (who aren’t shy about taking his money).
THIS IS A HUGE PLUS FOR JOE BIDEN: The moderate path is virtually wide open for him; John Hickenlooper and Amy Klobuchar don’t have the firepower to stop the well-funded former Vice President. His main challengers seem to be Bernie Sanders, who’s quite unpopular with the party’s establishment, and Kamala Harris, who may need more seasoning. The wild card, hard to handicap, is Beto O’Rourke.
SO THE CLEAR FAVORITE FOR THE NOMINATION appears to be Biden, 76, who has been vacillating. Like every candidate, he has his flaws, but Biden has the strongest argument: he has a plausible chance of winning Pennsylvania, Michigan and Wisconsin, three states that helped propel Donald Trump to the White House in 2016.
WALL STREET TRANSACTION TAX: Progressive activists, led by the ubiquitous Alexandria Ocasio-Cortez, have introduced legislation to impose a transaction tax on Wall Street trading. It would be 0.1% per trade, which doesn’t sound like much, but it would raise $777 billion over a decade, proponents claim.
THE FINANCIAL SERVICE INDUSTRY believes this is a revenue grab aimed at electronic trading and, if enacted, could eventually move higher than 0.1%. So the lobbying against this proposal will be fierce; the proposal could pass in the House but has virtually no chance in the Senate. You can be sure this will be a rallying cry in the 2020 election.
ALARMING DEFICIT NEWS: Data for the first four months of the fiscal year, released yesterday, showed red ink at $310 billion, up a staggering 77% from the same period last year. The Trump tax cuts are getting most of the blame; receipts were down 2%. But spending rose by an eye-popping 9% as Washington abandons any pretense of caring about deficits.
FEDERAL RESERVE ON HOLD: Interesting speech yesterday from Boston Fed President Eric Rosengren, a moderate who’s an FOMC voting member this year. He said it could be “several meetings” before the central bankers have a clear idea of the economy’s direction; he cited uncertainties such as trade and slower growth abroad.
OUR GUESS is that a rate hike — or, less likely, a rate cut — won’t be on the table until the July 30-31 meeting . . . or the Sept. 17-18 session. This dovish outlook comes as Donald Trump resumes his sniping at Chairman Jay Powell; in his marathon speech last weekend, Trump lashed out at Powell, partly because the dollar is too strong, Trump indicated.
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