Why the Markets Don’t Fear Either Trump or Harris
Author: Greg Valliere
September 13, 2024
THE SURREAL DEBATE on Tuesday night didn’t move the needle much. After looking at all the polls, we conclude that Kamala Harris perhaps gained a point, while Donald Trump’s personal standing took a hit as he embraced fringe ideas.
THIS ELECTION IS STILL TOO CLOSE TO CALL, with only a point or two separating Trump and Harris in swing states like Pennsylvania. Trump often exceeds his polls slightly in actual voting, so an extremely tight finish is not good news for Harris.
IT’S CLEAR THAT HARRIS did not maintain her remarkable momentum in early September, and it’s also clear that Trump has a plausible path to 270 electoral votes — which has prompted many readers to ask which candidate would be the most troubling for the markets.
FIRST OF ALL, a radical Trump or Harris agenda would have little chance of passing in Congress, since both the Senate and House look like photo finishes. There simply aren’t enough votes for massive tax changes or huge new spending.
WHOEVER WINS will have an opportunity to affect regulatory policy — Trump would take a laissez faire stance while Harris would crack down on antitrust policy. Many of these policies would not require approval from Congress.
ANOTHER REASON NOT TO WORRY about the new president’s agenda is that the two candidates are similar in two important respects. Both Trump and Harris show little interest in deficit reduction, and would subject the country to even more red ink. And both of them are trade protectionists, generally supportive of tariffs.
OUR GUESS IS THAT if neither Trump nor Harris can get much done, the markets would welcome gridlock. The most profound action may come in geopolitics, as both parties push hard for a breakthrough in Ukraine or Gaza.
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