The outcome of Super Tuesday took most people by surprise and maybe even Joe Biden himself… A third-time campaigner to become the Democratic Party’s candidate (after 1988 and 2008) for the November 2020 presidential election, Joe Biden had a tough start. He did not manage to make it into the top four in the early caucuses, and, more worryingly, wasn’t able to raise as much money as other leading candidates. Last week, many specialists were calling for an early end to his campaign. The opposite happened, actually, and Biden won in 10 out of 14 states on Super Tuesday. The mood was so weak in Biden’s camp that his staff, who feared a collapse a week ago, is now talking about a resurrection. James Clyburn, Pete Buttigieg, Amy Klobuchar, Beto O’Rourke and, now, Mike Bloomberg have rallied around Biden. As of March 5th, he had 566 pledged delegates, 65 more than Bernie Sanders; 1991 delegates out of 3979 are needed to be nominated as the Democratic Party contender.
Only two candidates are now in a position to win in July, and become the Democrats’ champion against Donald Trump: the moderate Biden and the “socialist” Sanders. The race remains close and a lot can happen between now and the end of the campaign. The Democratic Party is deeply divided between moderates and its radical left wing. It will be difficult to reconcile antagonistic views in a common platform. Hilary Clinton’s defeat in the 2016 election reopened the debate on the Democratic Party’s ideological framework, and the left wing is challenging the legitimacy of the liberal moderate supremacy established in the 1990s. However, a common factor is the abhorrence of Donald Trump and, although democrats are divided within, they are united against the incumbent President.
The markets have welcomed Biden’s success. Although investors did not seem too concerned about Sanders’ positive momentum, some key points in his manifesto on higher corporate taxes and a tougher regulation of share buybacks for instance, could be a source of uncertainty for markets. Sectors like healthcare, energy, finance and IT could also be impacted by Sanders’ program. Paradoxically, a Sanders nomination is perceived as a more favorable outcome for Trump.
The fate of Donald Trump’s 2018 tax reform will be key for corporates and investors next year. Democrats want to repeal it, while Republicans look to expand it. The White House needs the approval of the Congress on this issue. It seems unlikely at this stage that the newly elected president will have full backing for a radical and disruptive program, which would require a clear majority in both the House and the Senate. However, the journey to the Election Day is still long and will not be short of surprises.