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Biden blasted Wall Street for threatening to raise taxes as soon as he was elected. Investors in US stocks were scared out in a cold sweat.
Jul 10,2020 10:47CST
Source:Huitong network
The content below was translated by Tencent automatically for reference.

SMM: Democratic presidential candidate Joe Biden revealed his economic recovery plan for the first time in a public speech on Thursday local time, slamming that his rival, incumbent US President Donald Trump, has focused too much on the stock market in the current bailout. The comments clearly did not please Wall Street investors. After Biden's speech, the U. S. stock market recorded a dramatic plunge on Thursday, with the Dow tumbling more than 500 points at one point.

In his speech on the same day, Biden said publicly that after his election, he would put an end to the era in which the American economy was dominated by "shareholder capitalism." He pointed out that in the current economic crisis, President Trump has almost completely followed the lead of the stock market, focusing on the performance of the Dow and Nasdaq, not the well-being of the average American family. As a result, he promised that if he was lucky enough to be elected president, he would devote himself to serving working-class and middle-class families, rather than taking orders from the wealthy investor class.

According to current polls, Biden leads incumbent President Donald Trump in the polls, with less than four months to go before polling day on November 3. Therefore, this is also the best time for him to throw out the blueprint of the economic "new deal". The most tit-for-tat policy he proposes is to reverse the Trump administration's tax cuts and raise the corporate tax rate again from 21% to 28%. And this is the proposal, which scared investors on Wall Street on the spot.

Jack Lew, the former US Treasury Secretary, agreed with Biden's proposal, saying that even the 21 per cent low tax rate Trump offered to business owners was unbelievable and overjoyed. But the move is harmful to America's long-term fiscal health prospects, and the US economy is fully capable of supporting higher tax rates at a time when the US economy is fully capable of supporting higher tax rates.

Previously, after the Trump administration and the Federal Reserve launched various economic stimulus measures, the S & P 500 has rebounded 40% from its trough in March, but the unemployment rate has still risen sharply during this period. The debt of the US federal government has ballooned to astronomical figures because of overspending. This has also been caught by its competitors. In the past, many observers also believed that the current situation in which the US stock market was separated from the support of economic fundamentals was unsustainable and that it was inevitable to adjust again in the future.

But in any case, Biden's open fire on the stock market and the threat of big tax increases have clearly scared Wall Street into a cold sweat. And his argument that the performance of the stock index is opposed to the interests of American families is indeed biased. Because as many as 70% of American households have direct or indirect investments in the stock market, the returns of individuals and public pension accounts are closely related to the rate of return on stock market investment. As a result, industry professionals are still more inclined to believe that Biden's comments are paving the way for an election, and that if he is elected in November, his real economic policy will not be as radical as he currently claims.

The research institute pointed out that Biden's current comments on the economy are mainly aimed at attracting young voters who had previously supported his party rival Sanders in the primaries to actively vote, and to try to bridge the cracks within the Democratic Party and establish his identity as a "co-owner." However, once he wins the election, he will still not be an open enemy of Wall Street in economic policy, which is the fundamental difference between him and Sanders.

Previously, institutions, including Goldman Sachs, also believed that if the Democratic Party also won control of the Senate and House of Representatives while Biden won the election, then there would be a smooth transfer of power in the United States. under such circumstances, US stocks will still maintain a steady upward trend. under the background that the tone of the Fed's loose monetary policy will not change because of the election result, it is very difficult for the stock market to suffer a dramatic and sustained decline because of political reasons.

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