Wall Street is unfazed by Bernie Sanders so far since investors believe Trump would demolish him in an election matchup
- Sanders recently won primary victories, causing some, like ex-Goldman CEO Lloyd Blankfein, to warn that the Vermont senator's policies would wreck the American economy.
- Most investors on Wall Street are shrugging off Sanders so far though, believing he would be handily defeated in a general election faceoff with President Trump.
- "Bernie Sanders ... is a lightning rod. And he's going to be killed with the socialism by the Republicans," one investor told The Times.
- But the nascent calculus among analysts could rapidly reverse if a Sanders victory appears likely.
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Sen. Bernie Sanders has clinched two back-to-back primary victories in Iowa and New Hampshire over the past two weeks. That has cemented the self-described democratic socialist's place as the frontrunner for the Democratic nomination.It also caused some in the financial world, like former Goldman Sachs executive Lloyd Blankfein, to warn on Tuesday that Sanders would "ruin our economy" and nominating him risks polarizing the nation even further.
Sanders hasn't generated the same anxiety - and it reflects a belief among analysts that President Trump would demolish Sanders in a general election match-up."There's no Bernie fear at all, because I think the general view is that he is just way too far left of a candidate to beat Trump and a more moderate candidate would be much more competitive," analyst Steve Massocca of Wedbush Equity Management told Politico.
Vin Ryan, a founder of the firm Schooner Capital and Warren supporter, told The New York Times that Republicans would easily paint Sanders as a left-wing politician eager to expand the federal government's reach into the economy."Bernie Sanders, I think, is a lightning rod," Ryan said. "And he's going to be killed with the socialism by the Republicans."The Vermont senator has called to break up six of the largest financial institutions on Wall Street and blasted massive corporations for raking in huge profits while paying little in taxes.
He's also unveiled a wealth tax plan aiming to reduce "outrageous" inequality in America and do away with the existence of billionaires.
Moderate Democrats have ripped into Sanders for wanting to move too far, too fast, saying it imperils their party's chances of winning back the White House.A similar belief that Sanders' progressive policies would backfire on the campaign trail and cost him the election has set in on Wall Street.
"The lack of any stock market reaction to Sanders's surge suggests that investors either still don't believe he can win the Democratic nomination against the more centrist candidates or, alternatively, that Sanders will win the nomination but, in doing so, his lack of appeal to independents makes it even more likely that Trump will be re-elected," Andrew Hunter, a senior US economist at Capital Economics, wrote in a client note.
A Goldman Sachs client poll conducted last month found 87% of its respondents believed Trump would win re-election on the back of a booming economy experiencing strong job growth and steady wage gains.But nothing is set in stone - and the calculus among Wall Street bankers could rapidly reverse with the prospect of a Sanders victory.
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