By instinct, investors are apt to think of radical, left leaning political leaders as a risk, or a negative, for asset values.
There are plenty of reasons why the election of Ms Warren as the next US president could hurt equity valuations. Above all, Ms Warren is a champion of the consumer. Companies will come under closer scrutiny. Worker activism will not be discouraged.
Energy companies, banks and big-tech will all be under pressure.
But Ms Warren also wants to promote competition and support small business creation. Ms Warren has described herself as a ‘capitalist to my bones’. She is a fierce advocate of low-cost green technology. The Massachusetts Senator wants to stimulate housing, and to write-off student debt.
It cannot, therefore, be assumed that Ms Warren’s policies will lead to slower economic growth. The markets may worry about what Ms Warren has in store. Political uncertainty in the US is one reason why US equity markets may peak next year. However, Ms Warren has a very strong grasp of policy. She is also a pragmatist, not an ideologue. A 20% correction by markets worried about the ramifications of a ‘radical’ shift in policies may be a buying opportunity.
