How Bernie Sanders and Donald Trump Are Connected To the Market Drop
Both Bernie Sanders and Donald Trump have come in for a drubbing at Davos.
Participants at the World Economic Forum have taken pot shots at both candidates. In a panel discussion earlier in the week, Larry Fink, the CEO of BlackRock, said, “For those politicians who are constantly focused on a re-election and nothing more, we need a revolution. Unfortunately, the revolution may be Donald Trump.”
Dominic Barton, the global managing director of McKinsey, told Reuters that Trump will hurt the global image of the United States. And actor Kevin Spacey got laughs at a Davos cocktail party when he said that the difference between the character he plays on “House of Cards” and Trump is “one of these characters is a fictional character, and one of these is a fictional character.”
But it’s not just Trump coming in for criticism. Anthony Scaramucci, the head of hedge fund firm SkyBridge Capital, said, “Bernie Sanders is a black swan for the market.” A black swan is an unlikely event that’s associated with market plunges.
Scaramucci says he made the comment at a closed door meeting of investment managers who were attending the World Economic Forum and that his argument received broad agreement from the group. Scaramucci says the market started dropping right around the time that Sanders’ poll numbers improved and he believes two events are related.
But the same can be said for Trump. He started doing better in the polls in the summer, right before the market took a down turn. Of course, there are lots of other, better reasons that the market has been falling, namely oil and a slowdown in China. But the fact that both Trump and Sanders are doing well are unexpected events, and that’s adding to the uncertainty in the air these days. And uncertainty is bad for markets.
It’s just another reason 2016 could be a rough year for stocks.