Our Monthly Update on the 2020 presidential race: Here Comes Elizabeth Warren
Author: Greg Valliere
August 15, 2019
YOU THINK THERE ARE PROBLEMS NOW? The disastrous trade war and inconsistent Federal Reserve policies have hammered global markets, and now there’s a fresh concern for investors to contemplate: there’s a plausible case that leftist Sen. Elizabeth Warren could win the presidency.
WE DON’T EXPECT AN IMMINENT RECESSION, because monetary and fiscal policies are on steroids; consumers and the labor market are still in good shape. But anxiety over a slowing economy, gun violence, and racial tension is taking a toll on Donald Trump, whose job approval rating is near record lows.
DESPITE A VIEW ON WALL STREET THAT TRUMP is the clear favorite to win re-election, his prospects have slipped in recent weeks. We make him the underdog to win again in Pennsylvania, Michigan and probably Wisconsin — and if only those three states flip, Trump could fall just short of 270 electoral votes.
SO THE DEMOCRATS’ NOMINATION IS WORTH WINNING, which explains the enormous focus on Iowa, where there’s a clear trend: Joe Biden is losing altitude. His gaffes, nearly daily, are nothing new for him; taken individually they’re relatively innocuous, but collectively they’re a problem, and he’s starting to look like a very vulnerable front-runner. Here’s our monthly rundown:
The field: There are lots of interesting candidates — John Yang, Michael Bennett, Tim Ryan, etc. — but most of the field will drop out by Christmas, hoping to win a Cabinet position in the next Democratic administration. There are only seven candidates who have a chance —
7. Pete Buttigieg: He was the hot new candidate in the spring, but the bloom is off the rose. Mayor Pete has racial problems back home, and he simply hasn’t gained much traction in Iowa. He has plenty of money and may stay in the race into 2020, but the nomination he’s aiming for is in 2024 or 2028.
6. Julian Castro: Finding his voice, gaining support among Hispanics, Castro also may be in this race for a long time. He’s a very plausible vice presidential nominee.
5. Bernie Sanders: There isn’t much new in his angry speeches; the party’s activists have flocked to Warren. We wouldn’t be shocked if Sanders drops out this fall; he turns 78 on Sept. 8. Could he throw his support to Warren ?
4. Beto O’Rourke: Widely applauded by Democrats for his departure from the race to tend to his wounded city, O’Rourke bears watching as the gun control debate heats up. He’s a raw talent with plenty of passion, the kind of candidate who suddenly rides a wave of momentum.
3. Kamala Harris: She stumbled after the first round of debates, but this is a marathon, not a sprint. If she wins big in the March 3 California primary, she could become a compromise alternative if the top two are gridlocked.
2. Elizabeth Warren: Most everyone in Iowa agrees that she has run the best campaign, with an excellent staff and plenty of policy prescriptions. Too polarizing to win the nomination, you say? That’s not the view within the party, which has warmed up to her. Iowa is all about momentum; just ask Barack Obama. If Warren wins Iowa, which is quite possible, the financial markets will have to pay careful attention.
1. Joe Biden: Everywhere we go, we hear the same thing — Joe Biden is a nice guy, and a less bombastic president would be a refreshing change. But Biden doesn’t generate much excitement — instead, he generates anxiety because he will turn 77 this fall and frequently can’t find the right words. We were sorely tempted to drop him to second place in this month’s update but he’s got one huge advantage — an easier path to 270 votes than Warren or the others.
BOTTOM LINE: Global volatility is simmering, from China to Canada, where Justin Trudeau just got hit with a bombshell from the country’s ethics watchdog. And now the warning signals are flashing red for Trump, and he’s in jeopardy of becoming a one-term president if the Democrats play their cards carefully. We don’t think Warren is the party’s strongest challenger, but she’s becoming a major force — still another issue for the markets to worry about.
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