With only a few hours to go before the first presidential debate tonight between former Vice President Joe Biden and President Donald Trump, industry experts weighed in on what investors should be focusing on while watching the event and what the candidates could say to help move the markets.
Speaking during a JConnelly Virtual Media Roundtable Tuesday, they pointed to key issues around the economy, taxes, trade and continued consumer and investor uncertainty that the candidates may address.
Here are four things Biden and Trump could say during the debate that would have a positive effect on markets, according to the panelists.
1. Trump offering to compromise on a stimulus deal.
The U.S. desperately needs another stimulus package from Congress and the White House, according to Troy Gayeski, partner, co-chief investment officer and senior portfolio manager at SkyBridge Capital.
“One thing that Trump could say, however unlikely, is ‘I’ve ordered my Treasury Secretary and I made it very clear to [Mitch] McConnell that we need a stimulus. We’re willing to meet the Democrats halfway and do around a $2 trillion package, and if we don’t have enough Republican votes to get it through, then I’m telling McConnell to allow it to be voted on and we’ll get enough Democratic votes to get it through and a few very vulnerable [Republican] senators like Susan Collins and Thom Tillis and [Martha] McSally to get on board.’ That would be very positive.”
The chances of that happening are slim, he conceded. Earlier in the roundtable discussion, he said the stimulus plan was “on life support” and he predicted the chances were slim of both sides agreeing on a plan before the election.
Biden pledging to hold off on a tax hike.
Biden has announced he would look to raise taxes on individuals making more than $400,000 in annual income and he will likely raise taxes on capital gains and on corporations if he wins and the Democrats sweep Congress, Gayeski noted.
However, “a key bullish driver would be a mention” tonight by Biden that even though that’s part of his platform, “we’re in no rush to do that because we know the priority now is to get back to GDP and get unemployment as low as possible,” according to Gayeski.
“It would be a sigh of relief to markets” if Biden said tonight that he plans to tax and spend, but “we’re going to spend way more than we’re going to tax” and also “we’re not even going to consider raising taxes until the end of 2021,” after hopefully GDP is strong again and unemployment declines to about 5.5% from 8.4%, according to Gayeski.
Biden taking Trump to task on China trade.
Responding to a question by ThinkAdvisor on what the candidates might say about trade that investors would want to hear, Gayeski and Frank Rybinski, chief macro strategist at Aegon Asset Management, both predicted Biden and Trump will continue to talk tough on China.
Neither predicted Biden would reverse Trump’s policies regarding trade with China, but they guessed Biden would look to align the U.S. more closely with traditional allies than Trump has done.
“The most positive comments” would be if Biden says tonight that “we know China’s a problem but, President Trump, the way you’re going about it is completely crazy” by taking the “unilateral” approach without U.S. allies instead of teaming up with them to challenge China, according to Gayeski. That would be the “more rational approach,” Gayeski said.
Biden sending a message of unity.
“My guess is Biden will try” to restore trust in our democratic system and ease the uncertainty that Americans have on so many levels, Will Weatherford, managing partner at Weatherford Capital, predicted.
“He’s going to try and present himself as a unifying candidate” who is bipartisan and can work with those across the aisle, as opposed to Trump, who has been more divisive and less willing to work with Democrats, Weatherford predicted.
However, the “distrust is real” between the two political parties and “I don’t think it goes away” so fast, he warned.
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