An Elizabeth Warren presidency would likely be tough on some sectors, but it might not hit stock markets as hard as feared, a Jefferies strategist suggested on Wednesday.
Warren, a Democratic presidential 2020 frontrunner, has bashed the rich — proposing a wealth tax — and lambasted the financial industry among other sectors. As the Massachussetts senator climbs in Democratic presidential polls, a growing pool of investors warn that her win would result in major losses for the U.S. stock market.
“In our industry … there’s a general perception that it would be a significant equity market correction, if she were to win,” said David Zervos, chief market strategist at Jefferies. “She would change returns on capital expectations, earning expectations, regulations would go up, taxes would go up, all of these things.”
His comments come after billionaire Paul Tudor Jones on Monday predicted that the S&P 500 would sink about 25% if Warren beats current U.S. President Donald Trump at the 2020 ballot box.
But Zervos suggested that the impact on the stock markets may be more tempered.
“But people forget she’s not that different from Obama. If you put the two of them side by side in 2007, they had very similar agendas — healthcare, regulation and financial, and energy and environment. From 2009 going forward, when Obama took office, we never looked back. The stock market just rallied,” he told CNBC’s “Squawk Box.”
Under Barack Obama, who was U.S. president between 2009 and 2017, the stock market soared, with the Dow Jones Industrial Average jumping more than 140% by the time his term ended. That’s the third-best stock market performance since World War II for any president.
Obama was known for his signature healthcare law, more commonly known as Obamacare, which significantly expanded health coverage by mandating everyone gets health insurance — or pay a tax penalty.
Similarly, Warren is a fierce supporter of Medicare for All, which also would put the government in charge or providing health insurance for practically all Americans. Warren has also explicitly supported an end to private health insurance plans under her healthcare plan.
She’s also taken a hard stance on energy policy and Big Oil companies, just as Obama did with his Clean Power Plan, which pressured the coal industry by requiring power plants in some cases to undertake expensive upgrades or shut down. It also established the first nationwide rules for carbon emissions.
Warren’s stance on those issues has led analysts to warn that drugmakers, in addition to energy and financial companies — could take the most heat under a Warren administration.
“She’s not going to be friendly to the financial industry. She’s not going to be friendly to the energy industry. She’s not going to be friendly to the tech industry,” Zervos said.