A few months ago, it seemed like a foregone conclusion that former Vice President Joe Biden would be the Democratic nominee for the 2020 presidential election. Following the initial period of campaigning, however, as well as a number of gaffes and a rather weak showing at some of the debates, Biden looks to have lost his stranglehold on the nomination. The frontrunner almost always loses ground when challenger candidates have the opportunity to present their case, but even so, the field has narrowed significantly, with Senator Elizabeth Warren gaining on the former vice president.
Another important development has been Warren's displacement of Senator Bernie Sanders as the standard-bearer for the progressive wing of the Democratic party. Warren used to have to explain how her brand of progressivism differs from Sanders' - now it is he who must justify his presence in the race.
Biden is still the frontrunner. President Donald Trump will have the advantage enjoyed by every incumbent against a challenger. But the idea of a Warren presidency should be taken seriously. Here is what it could mean for investors.
Big tech breakup
Antitrust action against Big Tech has been a consistent cornerstone of Warren's campaign. Although President Trump has raised the possibility of taking action against the likes of Facebook (NASDAQ:FB) and Alphabet's Google (NASDAQ:GOOG), a Warren presidency would be the most hostile administration yet encountered by the tech giants.
As has been written elsewhere on GuruFocus, a Warren presidency could present an existential threat to Facebook, particularly given the deterioration in political sentiment towards Big Tech. Even if her candidacy is ultimately unsuccessful, it could go a long way towards normalizing the idea that some of the biggest companies of the 21st century might need to be broken up.
I have written previously about how Amazon (NASDAQ:AMZN) is building up a quasi-monopoly in a number of areas, and has acted profoundly anti-competitively in doing so. For instance, by selling products like the Kindle Fire at or below cost in order to capture market share. These are precisely the kinds of situations that would be looked at closely by a Warren administration.
A number of high-profile investors have gone on record with their beliefs that a President Warren would have a negative effect on the market more generally speaking. Macro-trader Paul Tudor Jones (Trades, Portfolio) recently said that the market would drop as much as 25% if Warren is elected. Leon Cooperman (Trades, Portfolio) has criticised the senator form Massachusetts' proposed wealth taxation plans (perhaps unsurprisingly), and has forecast a similar drop in the market if she were to be elected.
In short, Warren is generally viewed as more antagonistic to the market than President Trump, who has been a consistent cheerleader for stocks. And with her recent gain in the polls, perhaps the market will begin to price in the possibility of her victory soon.
Disclosure: The author owns no stocks mentioned.
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This article first appeared on GuruFocus.