President Elizabeth Warren?

Herewith, from Niall Ferguson, a few sobering thoughts about a prospective Elizabeth Warren presidency. His point, well worth reporting, is that the more the markets think that Warren might become president, the more they will sell off. The more they sell off the more businesses will rein in investment. The more they do so, the more likely we are to have a recession. And then Warren’s chances of winning will increase.

In Ferguson’s words:

So it will not be hard for Trump to run against Pocahontas the socialist. With the usual incumbent’s advantage and a favourable electoral college map, he ought to win. But I agree with PredictIt. This is going to be close.

The key variable will be the state of the economy — and this is where things get interesting. At some point, Wall Street is going to wake up to the implications of Warren’s rise. True, most of her programme could be enacted only if the Democrats won the Senate as well as the White House and proceeded to kill the filibuster. Is that impossible? No.

That means that four large sectors of the economy are in the firing line: the pharmaceutical industry, the banks, oil and gas and big tech. That is a pretty big chunk of the main stock market indices.

As investors digest the rising probability of a Warren presidency, I predict a Wall Street sell-off. Businesses in the targeted sectors are going to cut investment. And that, in turn, is going to lower growth. Three years ago, Trump ran on a promise to double the growth rate. But already the economy is projected by the International Monetary Fund to grow by just 1.9% next year. If it tips over into a recession, Trump is done.

Have a nice day!