Markets responded positively to Joe Biden’s big night on Super Tuesday, as he won most of the contests.

Meanwhile, Michael Bloomberg has dropped out of the race and is now endorsing Biden. With Elizabeth Warren’s poor showing, the Democratic primary is now a race between Biden and Bernie Sanders. We have the following observations following Tuesday’s results.

  • The delegate count is close and it is likely to be a protracted primary that could go to the convention. There have been surprises in the primary so far and we would expect more – Biden is now the favorite but was a weak candidate until the past week.
  • As evidenced by the stock market reaction, a Biden presidency would be perceived as benign by the markets, relative to Sander’s far-left leaning agenda (see table below).
  • However, if the Democrats were to win the Senate (this would take an extremely poor showing by Trump and the Republicans in the November election which we are not trying to call), taxes on corporate income, investment income, and wage income could all go up, and other elements of the Democratic agenda could weigh on markets.
  • The health care sector is rallying in response to lower odds of Medicare for All proposals from Sanders and Warren. These proposals would be a major threat to private insurers and a threat to the profitability of health care providers and drug makers through lower reimbursements and price caps.
  • Sanders also has more extreme proposals that would be more disruptive to the Energy, Technology, and Financial sectors. The remaining candidates' proposals are summarized in the table below.

The following table summarizes the remaining candidates' policy proposals relative to Trump's current policies.

Corporate TaxesLowered from 35% to 21%.Raise rate to 28%.Raise rate to 35%.
Personal Income TaxesLowered top tax rate from 39.6% to 37%.Restore top rate to 39.6% and raise capital gains tax.Raise top rate to 52%, raise capital gains tax, and implement wealth tax.
TradeAmerica-first policy involves renegotiating trade deals, and trade/tech/investment war against China.Enlist U.S. allies to challenge China on trade. Enforce existing trade laws.Opposes free trade deals – would rewrite trade laws to favor labor, environment, and human rights.
HealthcareFailed attempt to repeal Obamacare in 2017.Improve Affordable Care Act.Medicare for All: Universal coverage, no private insurance, funded via taxes, patent breaking for drugs.
EnergyOpened more federal land for drilling.Ban new leases for drilling offshore and on federal land. Supports carbon tax and 100% clean energy by 2050.Ban fracking nationwide; end existing drilling offshore and on federal lands. Supports carbon tax and 100% clean energy by 2030.
Tech and CommunicationsNo sector-specific policies but ongoing investigations through DoJ, FTC, and FCCSupports anti-trust legislation to investigate anti-competitive practices.Big Tech break-up.
FinanceNo signature legislation but more lenient interpretation of Dodd-Frank Act.Supports a financial transactions tax.Reinstate Glass-Steagall Act; break up too-big-tofail banks. Cap consumer loans and credit card rates at 15%. Financial transaction tax of 0.1%
InfrastructureNo signature legislation but supports future plans.$1.3 trillion plan, including green proposals.$1 trillion plan to rebuild infrastructure.
Monetary PolicyFavors lower rates and replacing Powell. Two open board seats to fill.No public comments.Supports Modern Monetary Policy.
ImmigrationBorder wall, record contraction in legal immigration through visa limits.End family separation, protect DACA, create a pathway to citizenship, don't decriminalize crossing the border.Pause all deportations, protect and expand DACA, create pathway to citizenship, decriminalize crossing the border, end family separation policy.
OtherFederal minimum wage unchanged at $7.25/hr.Raise minimum wage to $15/hr.College for All, Housing for All, free universal child care and pre-K education, increase in Social Security benefits. Raise minimum wage to $15/hr.1

Source: Janney Investment Strategy Group; campaign websites for Trump, Biden, and Sanders

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