Wall Street investors and finance executives, who traditionally side with the Republican Party, are resigned to a victory by Joe Biden in November as support for president Donald Trump continues to plunge in national polls and those in battleground states.
One lobbyist estimates over 50% of his Wall Street clients are convinced Biden will win the presdency in November. A Republican Party political operative said his finance executives clients are starting to believe Biden will beat Trump. This man also said his clients hope Biden won't raise corporate taxes until the economy gets past the worst of COVID-19 pandemic.
Independent advisory firm Signum Global Advisors is telling clients not only will Biden win, but Democrats will also seize control of the Senate. It also believes Biden will increase taxes across most industries.
The U.S. business community's instinctive resistance to a Biden presidency stems from lingering perceptions the Democratic Party is anti-business and anti-rich but is pro-taxes and pro-regulation. The prospect of Biden raising taxes across the board is definitely at the very top of the mind among the business community, according to one consultant.
Biden hasn't dispelled these perceptions. He's said he'll increase the corporate tax rate to 28% from 21%. He'll also increase taxes for households making over $400,000 a year, which is the definition of rich. In 2019, the average household income in the United States came to only $89,930.
On the other hand, the nonpartisan Tax Policy Center estimates Biden's tax plan will raise $4 trillion in revenue over the next decade. Biden's tax increases, however, will go a long way towards erasing the enormous U.S. budget deficit. The U.S. Department of Treasury said the deficit stood at $984 billion for fiscal 2019, a 26% increase from 2018.
A number of market analysts claim the ongoing slump at Wall Street could really be due to the growing reality Biden will beat Trump in November. Polls increasingly support this view.
The latest poll from The New York Times and Siena College show Biden ahead of Trump, 50% to 36%. Biden beats Trump by 10 points in a Real Clear Average of national polls. More ominous for Trump is Biden widening his lead over him in battleground or swing states such as Wisconsin, Pennsylvania, Florida and Michigan. Trump won all these swing states in 2016.
Many Wall Street analysts still warn clients a Biden presidency will be bad for Wall Street and business, in general. Canadian global investment bank RBC Capital Markets said 60% of its clients believe a Biden White House will be bearish or very bearish for equities. Only 24% of its clients held this opinion in December 2019.
RBC Capital also found a Biden win in November is the greatest source of worry among its clients. It said 73% of its clients hold this view.
