How a Kamala Harris candidacy could wreak havoc on the stock market: ‘She’s not sustainable’

Wall Street predictions that Joe Biden would lose enough of his mental faculties to be forced out of the 2024 presidential race go back more than a year.

Yes – it was becoming increasingly clear to investors by early 2023 that the man had no business running the country, much less business running another term.

Now that he’s out, it’s a big political story, but also a big economic market.

Markets hate uncertainty. One reason for last week’s selloff after the Dow hit an all-time high, my sources say, was uncertainty over who former President Donald Trump and JD Vance will run against.

It’s also why the Street was bracing for the worst of all worlds: that Biden — just before he was officially nominated at next month’s Democratic National Convention — would drop out and endorse his incompetent vice president, Kamala Harris. , who if you believe the polls has a fighting chance of winning the presidency.

Now, brace yourself for more market turbulence as investors try to predict a Democratic ticket and its chances of defeating Trump.

“The conventional wisdom is that Kamala can’t beat Trump,” a high-net-worth financial adviser told me on Sunday.

“I don’t see more upside in the market with Kamala at the top of the ticket, I can’t see the market liking her. It is not sustainable.”

Yes – next week will be an interesting spectacle. Among the questions you will hear in the coming days:

If Biden is not healthy enough to run for president, then how is he healthy enough to be president?

Why isn’t he handing the keys to the White House to Harris, the person he claims is qualified to replace him?

Which Democrats are going to call for an open convention to sort this all out?

But here’s where things get really annoying for investors. If you look at the poll, this race is not over.

There is a Trump trade – people jumping into stocks and certain sectors of the market when it looked like he was a shoe-in for president and the GOP would take both houses after Biden’s terrible debate performance and his subsequent disastrous efforts to recover.

My trading sources noted how investors last week started to take some profits on the Trump trade when it became clear that Biden was headed for the exit, especially after dealing with COVID.

Bet: Despite all of Biden’s weaknesses, he still wasn’t getting crushed, polls show. Whoever the Democrats put up would be better and have a shot at beating Trump, who has his negatives that we all know. The Dems could hold the House or possibly the Senate.

If the Democrats hold one of the houses of Congress, even if Harris loses to Trump, they will be able to let the Trump tax cuts expire, so that will be included as well.

That would be bad for investment and the economy of course, given how left-leaning the Democratic Party has gone on all things economic, regardless of who’s in charge.

Depriving the nation of Trump’s economic policies of lower corporate taxes and deregulation is bad for stocks, traders say. and that’s why you saw a broad-based selloff last week even as Trump seemed to be coasting to victory at the GOP convention.

The good news, on the other hand, is that the American people will have a choice between a fearsome GOP ticket of Trump and Vance, and the Democrats offering two sentient human beings.

Harris is likely to be at the top of the ticket, with a candidate (if you can believe the Wall Street-Democratic grapevine) along the lines of the moderate Pennsylvania governor. Josh Shapiro.

One of the reasons Biden finally gave in is because his money machine ran dry. This has changed. The American people will have a real election with well-funded candidates who are also likely to finish their terms.

Now, my Democratic Wall Street sources say big donors are ready to spend whatever it takes to defeat Trump.

“Donors are ready to weigh in,” a senior Wall Street executive with ties to the Democratic Party told me just minutes after Biden made it official.

The bad news: Another Wall Street insider told me the plan is not only to anoint Harris, but also for “an open convention for the Democratic Party.” It sounds tempting given Harris’ weaknesses, but it’s a recipe for chaos.

And again – the Wall Street research I mentioned explained this over a year ago, when the DC press corps was ignoring Biden’s obvious and ongoing mental and physical decline.

In other words, this thing could get ugly.