Apples and Oranges: Would Biden or Trump be best for capital markets?

Table of Contents

The United States 2024 presidential election is set to be the most consequential presidential election in recent times. Democrat incumbent Joe Biden is seeking a second speech pointing to his post-Covid treatment of the economy, with Trump becoming the first president seeking re-election to fail to book a second speech since George HW Bush. If Trump wins, he would be the first president to serve two non-consecutive terms since Grover Cleveland in the late 19th century.

nNotably, this will be the first election where each candidate has already presented a statement, giving voters a chance to evaluate the efficiency of generation and make an educated decision.

Thank you for reading this post, don't forget to subscribe!

Given the rarity of a sunny favorite four months before voting, how will capital markets react in the coming weeks before the election? And, more importantly, which government will impact the capital markets the most, positively or negatively?

apples and oranges

Former Commodity Futures Trading Commission (CFTC) Chairman Chris Giancarlo served for two and a half years as CFTC Commissioner under Democrat President Barack Obama, a presidency under which Joe Biden was vice president, and two and a half years as Chairman under Republican President Donald Trump. In form for years. They were passed unanimously by the US Senate twice. Giancarlo expects each of the incoming president’s second terms to be unique in several ways.

“In my experience, the way a president will operate in his second term is probably not very different from the way he operates in his first term. And, uniquely in this election, we have both candidates who have already served one term,” Giancarlo said. “Of course, the wildcard is when neither candidate is able to serve a full second term because of their advanced age.”

“I think a second term of Trump, with respect to regulation of financial services, will show more respect for the judiciary than a second term of Biden. Under Biden, the Securities and Exchange Commission (SEC) was recently found by a federal court to have engaged in ‘gross abuse of power’ and ‘undermining the integrity’ of judicial proceedings, engaging in misconduct and intentionally concealing evidence. Was severely punished. No Trump-era financial regulator has ever been so reprimanded or sanctioned by the judiciary.

James Engel, a labor instructor at Georgetown College in Washington DC, and who specializes in market making and the law of world economic markets, believes that if Biden is re-elected, the country will insure against capital markets One can expect policies. again. “With so many other crises facing the government, I do not expect the second Biden administration to have much appetite for major changes to capital markets policy or regulation.”

On the other hand, Engel thinks that if Trump is elected, he will appoint Trump loyalists to the courts and executive offices who will attempt to re-enact Biden-era insurance policies, especially surrounding business. But. “Trumpers will try to roll back climate disclosure rules, assuming the courts haven’t already blocked them. In terms of tax policy, they will withdraw incentives for electric vehicles. “Try to systematically dismantle the Environmental Protection Agency (EPA) and the Consumer Financial Protection Bureau (CFPB), while also filling the security apparatus and the military with loyalists who will support their leader Trump no matter what,” Angel says.

However Giancarlo believes economic regulators under Biden will vastly expand the choices companies have under the SEC on everything from required disclosures, custody and data analytics, private equity funding and generation infrastructure. May continue to expand jurisdiction “with or without” congressional authorization. Authorization as “dealers” of securities. The former CFTC chair also predicted that Trump will bring in skilled industry leaders, while Biden may continue to rely on untrained teachers. “Under Trump, we had real-life, business and market experience at the CFTC, SEC and other Washington financial regulators,” he said.

examples of taxation

Giancarlo also believes that, in another Trump expression, the SEC and CFTC could be more disciplined in enforcement, focusing on fraud and manipulation while reducing unnecessary activities, especially economic information. To bounce. Giancarlo said, “I hope the Trump administration will be more sensitive to the unauthorized collection of financial data.”

James Fischbach, chief investment officer at Azoria Partners, a US-based multi-asset funding company, also believes that the second Trump expression could be more favorable to economic services than the second Biden expression. “I think a Trump presidency is going to be the best it’s ever been for the capital markets, largely because when he was president it was the best for the capital markets, not just the capital markets, the real economy. For.”

Fischbach deals with Trump’s first turn as president and the way he has “supercharged” the economic system with tax cuts. “We are going to see an extension of the expiring provisions of the Tax Cuts and Jobs Act of 2017, which supercharged the American economy, supercharged the stock market, simplified the tax code and created more incentives for businesses to invest and grow. Granted, Fischbach said. “I think late this summer, markets are going to start pricing in the economic benefits of a Trump second term.”

However, there are alternative issues – including the issue of tax policy under a second Trump leadership. Engel believes that when the Trump tax cuts expire at the end of 2025, tax rates will increase. “It forces Congress to actually do something, which will be very difficult for a closely divided Congress to do. Given the huge deficit and huge national debt, Congress will have little flexibility to extend the tax cuts. Taxes must increase somehow, it’s just a matter of who pays, when and by how much.

Engel says tax coverage is simply a matter of understanding who can pay for what. “Anyone who says they want to cut taxes is lying if they don’t specify what government spending they want to cut. The pandemic panic of excessive stimulus and unprecedented Fed money printing has caused a major crisis in the economy. Whoever is elected in November faces a major deficit problem,” Engel says.

body trade of workers

Fischbach predicts that reintroducing “redundant” laws, pushing for unilateral industry trade and price gouging will likely be mainstays of Trump’s presidency. Fischbach said Biden has decided to continue many of the Trump 1.0 value lists, but not infuse them with a geopolitical power projection approach like Trump, and will do so if he wins.

He expects Trump to nominate a lot of “strong characters” – such as United States industry adviser Bob Lighthizer to reprise his role under Donald Trump from 2017 to 2021. “But obviously he would be great at Treasury as well. I think we’re going to see some really big policy areas that impact trade, Treasury, legislative affairs, their relationship with Congress, budget setting, etc.”

Fischbach believes that the industry would essentially be considered a government sector outside the control of Congress. “And so this is an area where President Trump can lead without pressure from Congress and we expect to see that,” he said.

If Biden gets a second term, Fischbach expects some exchanges of staff, but more than the same policy-wise. “I would be surprised if (US Treasury Secretary Janet) Yellen sticks around. I think we’re going to see more of the same in terms of regulations, crippling investment and hiring that are not pro-business and pro-capital markets.

Since SEC Chairman Gary Gensler’s term does not expire until 2026, Engel believes that no matter who is chosen, he will have a task ahead of him. “The SEC was designed to be a bipartisan expert agency. No more than three commissioners may be from any one political party, and commissioners’ terms vary. Thus, Chair Gensler has the job until 2026, if he wishes to stay,” explains Engel.

“Former Chairman Jay Clayton stepped down and ran when Biden arrived, making the situation look more political than intended. “Even though I’m not a big fan of Chair Gensler, I hope he doesn’t resign on January 20 because that would make the SEC even more political,” Engel says.

fed query

There are concerns that Trump is planning to weaken the Fed’s sovereignty should he win a second term – media reports suggest his aides were making plans that could challenge or restrict the authority of the US central bank. could, including rumors that the Fed would -The President himself wants to play an immediate role in the interest rates environment. Trump repeatedly criticized Fed Chairman Jerome Powell during his first term, and passion about his potential plans for the Fed is central to the market impact he would need to win a second term.

Any attempt to change the construction of central storage will undoubtedly have a divisive effect, especially since Trump has made it clear he plans to replace Powell (a chair he himself held during his first appearance in power ) they will have to win once again. However witnesses are divided – some fear the potential consequences of Trump imposing additional controls on the region’s strongest central repository (“a truly terrifying prospect”), as Bill Dudley, former president of New York’s Federal Book Depot, writes. Bloomberg), Fishbach, etc. are additional helpful.

Voters, led by Fischbach, will have to watch how Trump handles the Fed book in his first term. “He didn’t fire anyone.” On the Fed’s skepticism about lowering rates, Fischbach was at once clear. “We must not forget that inflation reached 5% in June 2021 and it took them nine months to respond with the first rate cut in March 2022. It is not an infallible institution that has got it right. “They have got it wrong at almost every turn, harming the American worker, the value of his dollar, and overall economic well-being.”

Therefore, Trump was right to criticize the Fed, Fischbach believes. “There is a lot to criticize over the last few years. I think at the end of the day, there needs to be some oversight and self-awareness and self-reflection on the part of the Fed,” Fischbach said.

holiday rally

Giancarlo says that, in 2017, incoming Trump economic regulators faced distrust and skepticism at international economic conferences. “Under the former Obama management, the CFTC was once outspoken in bullying foreign country regulators into adopting a US-centric, one-size-fits-all approach to financial emergency reforms. In contrast, the Trump-era CFTC and SEC respected nationwide self-governance, today actively participating in the opposite numbers as a foreign country’s economic regulator.

“Within a few years, the Trump financial team was recognized as some of the most responsive, competent and trustworthy US regulators in recent memory. Contrary to all predictions, financial regulators of the 2017-2021 Trump era were the ‘adults in the room’ both at home and abroad. If the past is indeed prologue, then contrary to all predictions, the future may once again be Trump financial regulator,” Giancarlo says.

Conversely, Engel believes that in the long run, having “a stable leader” equal to Biden would be better for long-term capital market health and balance than a fickle Trump. Engel says, “Trump’s delusional and inflammatory statements give me serious doubts about his ability to create the economically stable and peaceful environment necessary for economic growth.”

“The real question is whether we will have a peaceful transition to a new administration, whatever that is. I think the markets will have a ‘relief rally’ when there is a clear solution that will be accepted by the majority of the American people,” Engel says.