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Why the stock market wants Trump to beat Bernie Sanders (and others) in the presidential race

Brian Sozzi
Editor-at-Large

Even as the bulls eagerly watch the New Hampshire primary results trickle in on Tuesday evening, in their heart they only have one person they want to see win the presidency come November.

The tan fella with gold locks currently occupying the White House.

“I think it’s going to cause some short-term volatility, especially if he does very well in the primaries,” veteran trader Tom Essaye of Sevens Report Research said on Yahoo Finance’s The First Trade. Essaye was referring to the continued surge in the polls for self-described Democratic socialist Bernie Sanders.

The 78-year-old champion of Medicare for All and wealth taxes has stayed true to his anti-big business roots throughout the campaign. While the market has continued to shrug off Sanders’ recent surge in the polls, it has no doubt raised concerns among countless investors (even if they aren’t unloading stocks yet) that have enjoyed a generally favorable backdrop under Trump. A Sanders presidency could be the complete opposite of Trump’s in terms of regulation and taxes, experts opine.

“The market wants Trump to stay president because he is the most shareholder friendly,” he said.

Democratic presidential candidate Sen. Bernie Sanders, I-Vt., stands on stage with his wife Jane Sanders, left, after speaking at a campaign stop at the Whittemore Center Arena at the University of New Hampshire, Monday, Feb. 10, 2020, in Durham, N.H. (AP Photo/Andrew Harnik)

JPMorgan strategist Jesse Edgerton correctly points out that even if Sanders were to become president, his more socialist-leaning policies are far from a lock to be enacted given the system of checks and balances. “Most notably, passing even remotely controversial fiscal policies would almost certainty require Democratic control of both the House and the Senate,” writes Edgerton.

The strategist assigns a less than 10% probability Sanders or rival Elizabeth Warren become president and the Democrats control both the House and Senate. So somewhat soothing news for investors, in the near-term.

“It thus seems unlikely for all of these stars to align at once — a Sanders/Warren nomination, a Democratic presidential and congressional sweep, and an upswell of support around currently controversial policies. We put the probability of dramatic policy changes like this at less than 5%,” concludes Edgerton.

The wildcard, Essaye thinks: Democratic presidential nominee hopeful Michael Bloomberg.

“If Bloomberg comes in, I think that politics really starts to impact the markets. Bloomberg is not as friendly as Trump [for the market], and I think the market would look at Bloomberg as by far the most viable contender to beat Trump.”

Brian Sozzi is an editor-at-large and co-anchor of The First Trade at Yahoo Finance. Watch The First Trade each day here at 9:00 a.m. ET or on Verizon FIOS channel 604. Follow Sozzi on Twitter @BrianSozzi and on LinkedIn.

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