A stock-market meltdown stemming from Elizabeth Warren's victory in the 2020 election will likely be short-lived, RBC says – Business Insider

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  • Some investors and analysts are growing increasingly concerned about the prospect of democratic presidential candidate Elizabeth Warren taking the White House in 2020. 
  • Any hit to the stock market from a Warren presidency will likely be temporary, RBC Capital Markets said in a note to clients on Monday. 
  • Most of the concerns about a Warren presidency stem from the Senator’s policy positions on regulating industries such as health care, banking, and energy. 
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Wall Street is getting worried about the potential impact of an Elizabeth Warren presidency on the stock market.

But RBC Capital Markets says any pain will likely be short-lived. 

Much of the concern surrounding a potential Warren presidency stems from the democratic senator’s position on regulating industries such as health care, banking, and energy.

According to RBC, while the broader stock market seems expensive, the industries most vulnerable to Warren’s policy plans are deeply undervalued. 

“Ultimately we think corporate America and US equity investors would learn to adapt to new political leadership, as they always do,” said Lori Calvasina, the head of US equity strategy, in a note to clients.

“The stock market tends to go up over time, regardless of who occupies the White House.”

RBC also said that if Warren secures the democratic nomination, the risk of her presidency will likely unravel in the market well before election day. 

Warren has proposed a broad range of policies including stricter guidelines for Wall Street banks, a ban on fracking, and a dramatic transition away from private health care providers. While Warren’s push for increased regulation could pose a threat to some industries, a democratic presidency could also present some positive themes for US equity investors, RBC added. 

“The election of a progressive Democrat seems supportive of the already growing popularity of ESG as an investment approach, since issues like climate change and fair pay could be in the spotlight,” the firm said in a note to clients on Monday. 

Dividends could also become more popular as share buybacks typically lose political favor under democrats, RBC added. 

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