Kamala Harris: Wall Street’s New Ally or a Continuation of Biden's Legacy?

Politics21/08/2024

As the 2024 presidential race heats up, Vice President Kamala Harris is positioning herself as a candidate who can bridge the gap between Corporate America and the everyday American struggling with the country’s affordability crisis. Harris, who has won the support of some key Wall Street figures, is now a significant player in the financial sector's political landscape.

Wall Street's Embrace of Kamala Harris

Since launching her presidential campaign in July, following President Joe Biden’s decision to exit the race, Harris has garnered backing from several prominent Wall Street executives. Historically, Wall Street had a contentious relationship with the Biden administration, particularly over Biden's progressive policies that often blamed corporate greed for the inflation crisis. Despite this, Harris has managed to foster a better relationship with Wall Street than Biden ever had, according to experts like Jeffrey Sonnenfeld, founder and president of the Yale Chief Executive Leadership Institute.

Harris’ previous experience as California’s Attorney General and as a Senator demonstrated her ability to maintain an open approach with Silicon Valley and other major corporate entities. Her ability to attract Investment from Wall Street is evident, with significant contributions from high-profile individuals like Jonathan Gray, President of Blackstone, and Marc Lasry, CEO of Avenue Capital Group. These contributions have provided Harris with a substantial financial base for her campaign, ensuring that she remains a formidable candidate in the upcoming elections.

The Financial Implications of Harris’ Policies

Harris' approach to economic policy is anticipated to differ from Biden's, although the details are still emerging. Her platform includes proposals to make big-ticket expenses more affordable for middle and lower-income Americans through tax relief and by challenging price gouging. These measures could have a significant impact on the Financial services industry, particularly in areas such as Investment management, Mortgage rates, and the pricing of Life insurance products.

However, some investors, including Burns McKinney, Managing Director at NFJ Investment Group, are cautious about Harris’ economic policies. They argue that her proposals could lead to inflationary pressures if not managed carefully. The recent Federal Reserve actions to hike interest rates to control inflation have already placed a burden on the economy. Harris' proposals to increase the corporate tax rate from 21% to 28%, reversing Trump's tax cuts, have also sparked debate among investors. While these measures aim to fund her campaign promises, they may also reduce Return on Investment (ROI) for companies and potentially slow economic growth.

Should You Invest in Companies Backing Harris?

The financial sector is closely monitoring Harris' campaign, with many wondering whether her policies will ultimately benefit Wall Street or lead to more stringent regulations. Her relationships with business leaders like Ray McGuire, President of Lazard, and Blair Effron, co-founder of Centerview Partners, suggest that she will continue to engage with the financial sector. Investors should weigh the potential risks and rewards of Harris' proposed policies, particularly in relation to tax cuts, tariffs, and Investment banking strategies.

On the other hand, Harris’ commitment to maintaining the independence of the Federal Reserve could provide a stabilizing influence on the economy, reducing the volatility that often accompanies election cycles. However, it remains to be seen how her policies will resonate with the broader financial community and whether they will translate into sustained economic growth.

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