Wall Street thinks a Warren presidency could be catastrophic, new report finds

What will a Warren presidency mean for Wall Street? According to Barclays, it'd be bad news for financial titans and corporations

Investors at a major bank that Sen. Elizabeth Warren once criticized are worried about how sweeping economic changes that she’s vowed to implement if she becomes president could affect their bottom line.

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Mother Jones reported on Friday that the research arm of Barclays, a powerful London-based bank and financial services firm, circulated five reports late last year for paying clients, including hedge funds, commercial banks and insurance companies, about what the tumultuous Democratic primary could mean for the markets.

“Given Senator Elizabeth Warren’s (D-MA) policies that she asserts are ‘big structural’ change and ‘economic patriotism,’ her quantifiably more liberal voting record, and her steady rise in the polls and betting markets, investors and corporates across asset classes and geographies have taken note and posed questions,” the first report said, according to Mother Jones.

Barclays analyzed nearly 50 of Warren’s various plans in October and November — shortly after she surged in national polls — and echoed Warren’s own stance that a victory by the Massachusetts senator would be bad news for large corporations and financial titans.

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Some of the conclusions drawn in the report were:

  • Warren’s plan to impose a new tax on companies with more than $100 million in profits (7 percent on every dollar over $100 million) would “directly impact corporate earnings”
  • Her nine-point eligibility test for trade partners -- she set out a stringent list of conditions at the end of July, some of which the U.S. doesn’t even meet -- would “disrupt global supply chains” 
  • A proposal to impose a 2 percent tax on individuals worth more than $50 million, and a 6 percent levy on those worth more than $1 billion, would “likely crimp investment in the economy.” Households that are subject to it, the report said, “would likely need to fund it by reducing their assets.” 
  • Her call to ban fracking would be “broadly negative” for energy companies. 
  • Warren’s call to break up tech giants, including Amazon, Google and Facebook, would not only be “detrimental to the performance of these companies” but would “erode the value of the companies that own them.”  

One of the biggest concerns among Barclays researchers was the extent to which Warren could use executive authority to pass her agenda. Just this week, Warren said she’d skirt Congress to begin canceling federal student loan debt for 95 percent of borrowers on her first day in office.

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Still, the report pointed out that a victory by Warren, or fellow progressive Vermont Sen. Bernie Sanders, would present opportunities for certain sectors and consumers. For instance, if she successfully broke up big banks, it could benefit smaller regional banks that have taken a beating from increasing consolidation. Plus, her call to hike the minimum wage could boost retailers and auto dealers, as working-class Americans have more money to spend.

“The market appears to be defaulting to a view that Senator Warren’s political ideology would be a uniform negative for US business,” one report said. “In our opinion, this is too simplistic.”

Warren has centered her campaign on “big, structural change” and has capitalized on fights with billionaires, most notably JPMorgan and Chase CEO Jamie Dimon, Microsoft founder Bill Gates and former Goldman Sachs CEO Lloyd Blankfein.

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