Bloomberg Throws His Hat Into The Presidential Race - Winners And Losers

Michael Bloomberg
Net Worth: $58 billion
Age: 77 years old

Education: BS from Johns Hopkins, MBA from Harvard
Business: Owner & Founder of Bloomberg LP

Philanthropist: He has given $8.5 billion to charitable causes (so far)

Experience in Politics: 3-term Mayor of New York City

Political Bias: Moderate Democrat

Extraordinary credentials to run for President of the United States!

It's not hard to figure out who the biggest loser will be as a result of Michael Bloomberg's entry into the race for President: DONALD J. TRUMP!

With his unlimited pocketbook, Bloomberg will be firing broadsides at Trump every day and every night from now until election day, assuming Trump is able to survive impeachment and that he doesn't resign prematurely from office (which can't be ruled out). And despite loud cries from other Democrats running for President that Bloomberg is attempting to "buy the Presidency", the media will now follow Bloomberg's every move and every word until the Dems make their final choice at the Convention. This gives the former 3-term NY Mayor a national stage to criticize Trump. And it also gives Bloomberg a national stage to advocate for his favorite causes and also his favored political positions.

Former Vice President Joe Biden is the next biggest loser, of course, because Michael Bloomberg will now aggressively challenge Mr. Biden's centrist lane with Bloomberg's own superior centrist plans for growth, job creation, and the rebuilding of America's infrastructure.

Luckily for Mr. Bloomberg, Senator Elizabeth Warren and Senator Bernie Sanders have split the ultra left leaning arm of the Democratic Party. Both candidates are losers with Michael Bloomberg now in the race. Each of these two candidates will now come under intense scrutiny from Michael Bloomberg as being too liberal for the current electorate and therefore unlikely to win the Presidential election against Trump (or VP Mike Pence should Trump resign before election day).

While no one would argue that Michael Bloomberg would love to win the Democratic nomination for President and then go on to beat the Republican candidate for President in November 2020, I don't think that Michael Bloomberg actually thinks he can win either the nomination or the Presidency. My strong view is that the real reason why Michael Bloomberg has entered the race is NOT to win himself, but just to make sure that Donald Trump doesn't win!!

And who, therefore, is the biggest winner as a result of Michael Bloomberg's entry into Presidential Politics? The answer may surprise you. Senator Amy Klobuchar is the clear winner from Bloomberg's entry into the race for President. While I am confident that Bloomberg could win the general election against any Republican if nominated by his party, I see very little probability that Bloomberg will in fact be nominated by his party. By default, therefore, Klobuchar is "the last man standing" in the center lane. The distinguished Senator from Minnesota has ALL the right credentials to be President of the United States, and she is the ONLY reasonable moderate Democratic in the field who can win the nomination AND beat the Republican candidate on election day November 3, 2020. And if Senator Amy Klobuchar selects Senator Cory Booker as her Vice Presidential running mate, the November 2020 election will then be among the most one-sided victories for the Democratic Party in the modern era!

So how does all this shake out with regard to the U.S. stock market?

When the Dems win everything next November 2020 (President, Senate majority, House majority), the Federal corporate tax rate will be increased to near 30% from the current rate of 21%. That's all you really need to know, beside the fact that a major economic recession is on the near-term horizon. As soon as investors figure out that Donald Trump will NOT be President for a second term, U.S. stock prices will fall sharply as "after tax" profits completely collapse!!

And one last note about the U.S. stock market. Has anyone noticed that Apple stock is currently trading at +22.1% above its 200-day moving average line? The S&P 500 is trading at +6.7% above its 200-day moving average line. The Nasdaq Composite is trading at +7.5% above its 200-day MA and the Russell 2000 Index is trading at +5.2% above its 200-Day MA. Given Apple's $1.21 trillion market capitalization right now, any "reversion to the mean" near its 200-day moving average line would result in a dramatic decline in ALL the closely watched benchmark stock market averages because Apple is a component in all of them. Apple insiders are now selling their Apple shares on balance (smart money) and uninformed Wall Street analysts (less than smart money) are almost ALL universally bullish on Apple's stock price with buy ratings, outperform ratings, and overweight ratings on this massively over-bought, over-owned, and over-valued stock. Everyone talks about Apple's monstrous cash position at approximately $100 billion right now, but almost no one is talking about Apple's massive corporate debt at 1.19 x equity. As of September 30, 2019, Apple had $248 billion in liabilities, of which $91 billion was long term debt!

Postscript (late Sunday, December 8th): Given the unexpected strength of the latest U.S. Unemployment Report this past Friday, it seems to me that the Federal Reserve will now lean "hawkish" at this week's FOMC meeting. Since stock investors seem overly complacent right now regarding domestic monetary policy following three straight cuts in interest rates, a hawkish Fed report this week may very well come as a major shock to many investors who are now clearly over-weighted in equities. The U.S. stock market has the feel to me right now that is similar to where we were in late January 2018 when volatility exploded and share prices quickly dropped 10%.