By FROMA HARROP
Guess what. The stock market seems to like Joe Biden. More precisely, investors seem to like that his lead in the polls is solid enough to lessen the prospect of President Donald Trump setting off an explosion of doubt, anxiety and possible violence if Biden wins narrowly.
“A Clear-Cut Biden Win Is Emerging as a Bull Case for Stocks,” reads a headline on Bloomberg News. Biden’s widening lead in polls “signals there may be less room for dispute over the results of the November elections, which would be welcomed by markets,” says The Wall Street Journal.
Trump’s statement that Biden could beat him only through a “rigged election” and his telling right-wing goons to “stand by” should the results not go his way have been spooking the markets. That’s why jumps in Biden’s poll performance have been sending the S&P 500 higher, according to strategists at Citigroup Inc. and JPMorgan Chase & Co. Or, as the head of market strategy at Swissquote Bank put it, polls pointing to a clean succession are “reducing uncertainty and increasing risk appetite.”
The markets’ apparent pleasure at seeing Biden so far ahead goes beyond the obvious point that the former vice president isn’t nuts. Biden is an economic moderate who proposes restoring some but not all the taxes cut in 2017.
Another plus for the economy would be Biden’s intention to work on pressing problems that Trump denies exist. Biden has an interest in actually containing the coronavirus plague, which has flattened key industries. And he’s onto dealing with the threat of climate change in a way that could grow green businesses and jobs.
Wall Street may not care for the Biden plan to raise taxes on rich people and tighten regulation, but it very much likes the part that combines government spending at a time of low interest rates. That’s called economic stimulus.
The chief economist at Goldman Sachs says a “blue wave” that would give Democrats control of both the White House and Congress would probably “prompt us to upgrade our forecasts.”
Moody’s Analytics predicts that Biden’s proposals would create 7.4 million more jobs than would Trump’s. Its economists also see a Democratic sweep as the best outcome for investors as well as workers.
This, of course, goes counter to the Trump fable that he is the driver of stock market wealth. It’s true that his 2017 tax cuts goosed stock prices for a while. But it helps to recall that under Barack Obama, the Dow Jones Industrial Average closed at 118 record highs, and he came into office during a stock market crash.
Fresh out of the hospital and with steroids coursing through his veins, Trump issued a tweet vowing to walk away from the latest stimulus package proposal — mere hours after Federal Reserve Chairman Jerome Powell warned of a “tragic” scenario if government doesn’t rush to the rescue with aid. Stock prices plunged. Then, Trump tweeted the opposite and stock prices rose. Someone with advance knowledge of the tweets could have made a fortune trading on them. Just saying.
The Nomura-Wolfe Biden Election Basket showcases stocks that will do well if Democrats take over Washington. Its stocks soared after the anti-stimulus, market-wrecking Trump tweet, the expectation being Biden will be president soon.
To show what a laugh-riot Trump’s economic gyrations have become, JPMorgan analysts established the Volfefe Index — a takeoff on Trump’s incomprehensible “covfefe” tweet from 2017. The index, which measures the U.S. Treasury market’s sensitivity to Trump tweets, hit a peak in May. That was the heart of the COVID-19 pandemic.
The latest Wall Street Journal/NBC News national poll gives Biden a 14-percentage point lead over Trump. Investors should take heart.
Follow Froma Harrop on Twitter @FromaHarrop. She can be reached at [email protected]