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Why investors should be more terrified of a 'blue wave' of Democrats than Trump being re-elected


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Why investors should be more terrified of a 'blue wave' of Democrats than Trump being re-elected

Another four years of President Trump may not excite everyone, but it could be way better than having what’s known as a ‘blue wave’ of Democrats taking control over the House and Senate in November — at least from an investor standpoint.

“I think the markets will be most concerned of what they call the blue wave, not just the executive branch going Democratic but certainly the Senate swings as well,” said Wells Fargo Investment Institute chief investment officer for wealth and investment management Darrell Cronk on Yahoo Finance’s The First Trade. “I think why they would be concerned of that, mostly, is because it would put in jeopardy the 2017 Tax Reform Act. There are discussions that certainly the Democrats would like to repeal that legislation and bring the tax rates back up somewhere around 28% to 29%, which would be pre-2017 levels. That would certainly challenge margins and earnings growth in an environment where it’s already challenged.”

Of note is that there are 35 seats identified as up for grabs in the Senate in November, according to polling tracker 270toWin. Currently the Senate has 53 Republicans and 47 Democrats. In the House, Ballotpedia estimates 74 of the 435 House races are in play. The Democrats control the House, 233 to 197.

But a blue wave must not be ruled out amid dissatisfaction among voters with how Trump has handled the twin crises of the COVID-19 pandemic and racial injustice.

Cronk joins a yawning list of Wall Street strategists voicing concerns on a Joe Biden presidential win unleashes that blue wave in the House and Senate.

The former vice president has put forth reversing half of the president’s signature tax cuts, lifting the statutory rate to 28%. Credit Suisse estimates this change in taxes would increase the effective rate by 4% to 5%, and cut $9 off estimated S&P 500 earnings per share. Over at Goldman Sachs, it has projected that Biden’s tax plan would lead it to reduce its 2021 earnings estimate by 12%.

Experts believe Trump would continue to extend his tax cuts in a second term, which could support corporate profits and stocks.

“It might put downward pressure and take a little bit of momentum out [of the market],” Cronk said of a potential Biden win.

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Biden and the democrats would be horrible for the economy, so choose wisely if you want to keep more of your money.

 

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30 minutes ago, MovieMadness said:

 

Biden and the democrats would be horrible for the economy, so choose wisely if you want to keep more of your money.

 

What a load of Cod'sWallop!  Which party has created the biggest and the most recessions in the past 40 years.? The Republicans.  Even your idiot Ronald Reagan had recessions.  The only think they are good at is giving tax breaks to the rich and brainwash their base of numbskulls that they are doing it al for them.

Every time it is to the democrats to dig them out of a hole.  Then while they are in power the Republicans choke off the funds in the name of fiscal responsibility and hammer home the message that only they can save the economy.

This is gaslighting extreme.

 

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2 hours ago, MovieMadness said:

Biden and the democrats would be horrible for the economy, so choose wisely if you want to keep more of your money.

 

This is what right wing partisans do when they know they're losing - they fall back on fear, fear of the economy tanking, fear of protesters, fear of brown skinned peoples taking the jobs of whites (remember all those caravans that were coming?). I look forward to your future posting about how long toothed Democrats will also hide under beds to scare children at night, MM.

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