Uncertainty is a blessing for Wall Street as America’s future hangs in the balance with this upcoming election

It’s a jump ball.

At least, that’s what Wall Street polls are saying as the dust settles over the new Democratic presidential field, led by the young and intelligent Kamala Harris, who is challenging the Republican Trump-Vance team.

Big banks, citing narrowing polling gaps and interviews with officials from both parties, are warning clients that it’s an anyone-candidate game. Democrats have rallied behind Harris, who has seen huge amounts of money flow into her campaign after Joe Biden dropped out of the race. Donald Trump needs to come up with a new strategy, and fast.

Wall Street researchers say the tight race has broader implications. With the burden of Sleepy Joe Biden sidelined, lesser Democrats have a shot at victory. The Senate could still go Republican because of the many open seats in Republican-leaning states. But with Biden not dragging lesser candidates along, the House could flip to the Democrats. That means some of Trump’s economic policies, such as tax cuts, could be undone if he wins.

But with the future of the country hanging in the balance, all this uncertainty is a godsend for Wall Street. Given the public policy implications of who governs Washington and the candidates’ starkly different approaches to the economy, it’s a trader’s paradise. That’s why so much research is being published.

Investors are scrambling for insight as they scramble for trades that could favor a Trump or Harris victory, Wall Street sources say. At 30,000 feet, a Trump win would favor stocks that would benefit from Republican economic policies, especially those that don’t require congressional approval, like deregulation. Think financials or fracking companies.

Given her reputation as a leftist, Harris is in favor of anything that benefits from a green economy.

Or, as one veteran capital markets player put it to me, “The election is the biggest macro event in the markets today because everything is so chaotic and there is the potential for big money to be made if you get it right.”

No Agreement

A research report released by JPMorgan last week underscored this uncertainty, saying Harris’ candidacy “reopens the very clear possibility that Democrats will regain control of the House of Representatives, upending expectations of a Republican sweep.”

Still, the consensus among the geniuses at the nation’s biggest banks is that there is no consensus, and many observers say the outcome “will not be known until the last moment, and may not even be known until Election Day.”

The problem for any campaign strategy is two wild cards at the top of the list: Trump had a chance to unite the nation with his Republican convention speech, which he initially did, then drifted off for nearly an hour into grievances and bizarre asides, a missed opportunity to attract independents, researchers say.

Kamala Harris, yes, Kamala Harris, is smarter than Biden (I know that’s a low bar), so the issue of presidential dementia is out of the question.

But she has a lot of questions: in addition to her weak record as vice president (yes, she was a disastrous border agent, no matter what the mainstream media tells you), she inherited Biden’s terrible record on inflation and so on. It’s only a matter of time before she tries to elevate her speech into incomprehensibility.

Perhaps that’s why the betting odds – another measure of how bookmakers view the election – still show Trump in the lead.

But Hillary Clinton was also seen as the favorite by bookmakers in 2016 until Trump appeared to have the potential to pull off an upset.

So I decided to bet on Wall Street polls, which started saying Biden was dropping out of the race in June, and analysts are now saying the race is essentially neck and neck.

Dan Clifton of Strategas gives Harris an edge over Trump based on her uneven record, but the margin is slim. Clifton said: “Harris benefits from Biden’s campaign base, but picking a running mate, crafting a message more in line with her views, and allocating limited resources won’t be easy in the short term. Trump has the edge, but by a smaller margin than last week.”

Others I spoke to also see Trump with a slight advantage, albeit with reservations. Remember, the Democratic response to Trump’s scattered convention speeches was muted.

“They didn’t have a functioning campaign, and if they did they would have been running a ton of ads with meaningless word-filler footage of the speech Trump gave that night,” said one Wall Street government relations executive. “Once Biden is out of office, donors will come back, so she has a chance.”

Democratic unity would undoubtedly help Harris’ cause.

According to the latest tally, the campaign has raised more than $120 million since placing Harris at the top of its list of candidates, compared with nearly zero in the days before Biden withdrew.

But the folks at Meridian Research point out that that may not be enough.

“Harris will face challenges that don’t exist for other potential Trump opponents. She represents the policies of Biden, who has a big lead on the economy and immigration, two of voters’ biggest concerns, and Trump has a big lead on those two issues.”

Start rolling the dice.