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If Biden does this as president it could be bad for the stock market: Wall St. veteran

Brian Sozzi
·Editor-at-Large

Markets may not want to totally rejoice at the prospects of a Joe Biden presidency after he cleared one hurdle this week in selecting a more moderate vice presidential candidate in Senator Kamala Harris, says Sanders Morris Harris CEO George Ball.

After all, Biden still has to build out a cabinet if elected president come November. And that cabinet could include the progressive, anti-business voices that some see as the future of the Democratic Party.

“I hate the word catastrophic. But it would be very, very difficult for the market to go up if you had a secretary of Treasury [Elizabeth] Warren and AOC [Alexandria Ocasio-Cortez] as head of the Commerce Department,” Ball — who has decades of experience on Wall Street — told Yahoo Finance’s The First Trade.

Right now, the market is only seeing two positive scenarios from the presidential election strategists have told Yahoo Finance.

First, President Trump wins re-election and extends his signature tax cuts that have bolstered the bottom lines of Corporate America (and the stock accounts of those in the market). Or two, Biden wins the presidency, installs a sense of calm in the White House and on the fight against COVID-19. In turn, the economy picks back up quicker than most think in 2021 and supports higher stock valuations.

Equities have rallied back to record highs based on those two best guesses.

Democratic presidential candidate former Vice President Joe Biden and running mate Sen. Kamala Harris, D-Calif., sign required documents for receiving the Democratic nomination for President and Vice President of the United States in Wilmington, Del., Friday, Aug. 14, 2020. (AP Photo/Carolyn Kaster)
Democratic presidential candidate former Vice President Joe Biden and running mate Sen. Kamala Harris, D-Calif., sign required documents for receiving the Democratic nomination for President and Vice President of the United States in Wilmington, Del., Friday, Aug. 14, 2020. (AP Photo/Carolyn Kaster)

Not in either scenario is there a Biden cabinet with strong progressive voices. But it must not be ruled out as a surprise factor for stocks if Biden does win, especially as Senator Elizabeth Warren was reportedly a final round contender for the vice presidency pick. Biden has reportedly showed an interest in bringing in those he interviewed for the VP spot on his team should he win the election.

Recall that it was just last October that Wall Street had a mild freak out as then presidential candidate Warren ascended the polls. Warren has long made taxing the wealthy, cracking down on Wall Street and pushing an expensive Medicare for All health care plan central to her platform. Some see her as potentially more hawkish on China than Trump.

Brian Sozzi is an editor-at-large and co-anchor of The First Trade at Yahoo Finance. Follow Sozzi on Twitter @BrianSozzi and on LinkedIn.

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