The decision of former New York City mayor, Michael Bloomberg, to enter the US presidential race as a democratic candidate, spells a refreshing and hopeful sign for US equity investors. Until now, the democratic field of contenders are notable for their hard left leanings, to the point that some refer to the group as Marxists, Maoists, Chavismos and socialists. Two of the hopefuls, Elizabeth Warren and Bernie Sanders, are notable for their unabashed hatred of the wealthy. Both are completely comfortable with the imposition of net worth taxes, which represent a direct form of government expropriation. Such views, understandably, alarm both business interests as well as capitalists in general and has likely placed some ceiling on equity valuations for the past year.
Michael Bloomberg is known to the public as the former mayor of New York city. He was mocked for his “soda tax” which placed higher tax rates on fountain drinks. However, this is somewhat atypical for a pretty pro-business, pragmatic and free market espousing multibillionaire. Mr. Bloomberg, with an estimated net worth north of $50 billion, clearly represents the upper echelon of the ruling class in todays business world.
Possessing extremely deep pockets and with a view towards self-funding his campaign, democrats presently in the race should not underestimate Michael Bloomberg’s ability to influence the potential outcome of the 2020 presidential race. Bloomberg has a deep knowledge of taxation and business in general. More importantly, he understands basic math, which is, evidently, a skillset completely beyond the capability of certain extreme left leaning candidates. Mr. Bloomberg is capable of skewering the nonsense, being bandied about as interesting economic policy by Mr. Sanders and Ms. Warren, in the very first debate where he would quality to enter. Most importantly, his arrival spells some hope for centrists in the democratic party.
I consider it irrelevant that Michael Bloomberg wins the democratic nomination. His entrance restores some sanity to the democratic party candidacy, which historically has been, more or less, pragmatic, but which has recently verged on the fanciful and ridiculous, based upon the policy platforms proposed by the front runners to date. More importantly, if Michael Bloomberg were to win the democratic nomination, the set-up for 2020 would be a pro-business democrat, outside of the political system, running up against a business centric republican incumbent. This could bode up extremely well for many sectors of the American equity market, specifically knowledge based industries and certain parts of the healthcare economy. At the very worst, the democrats now have an option that isn’t completely unpalatable to taxpayers and capitalists.