Democrats to Lean Progressive No Matter Who Wins, Cowen Says

(Bloomberg) -- The policy platform that emerges from the Democrats' July national convention will probably be the “most progressive in generations,” regardless of the party's nominee, according to Cowen.

“On a broad range of issues, from climate change to health care to fiscal policy, the party is staking out positions that differ sharply from both the current administration and past Democratic presidencies,” analyst Chris Krueger wrote in a note.

Krueger cited three key “currents” in the party that may have “meaningful consequences for global investors” if a Democrat were to win in 2020: First, he said that “income inequality has become an overarching umbrella through which all other policies, notably tax, labor, tech, and trade are viewed.”

He added that confrontation with China has “replaced globalization as a critical leg in the party's economic table,” and said that he expects what he called a “tech lash” as well. A bipartisan, decades-long “consensus that trade was good is collapsing,” he said, “in the same way that the consensus that ‘tech' was good is also collapsing.” He added that “both of these trendlines are likely to continue under the new administration - regardless of who is president.”

Krueger's views are similar to remarks made by Deutsche Bank chief economist Torsten Slok on Wednesday, and Bank of America's head of U.S. economics Michelle Meyer on Tuesday.

In interviews, Slok said a trend of aging home buyers speaks to “the broad umbrella of inequality across generations,” while Meyer said the trade war was likely to continue after the election, no matter who wins, as there's a consensus about staying tough on China, including concerns about human rights.

Read more: Trade War ‘Cease-Fire' Still Likely Before Election, BofA Says

“We continue to detect a misperception that the China confrontation developments are unique to Trump,” Krueger said. “In reality, we believe this is one of the most bipartisan issues in an increasingly partisan and tribal town.”

Cowen analysts including Roman Schweizer, Jaret Seiberg, Eric Assaraf, and Rick Weissenstein flagged other issues:

• Defense spending would likely drop under a Democrat, though spending under a second Trump term may be “flat (at best) or slightly down (at worst)”
• Warren's agenda is likely to drive financials and housing policy, which means restoring the Glass-Steagall Act and imposing a financial transaction tax “will be on the front burner”
• Neither Medicare for All nor major drug pricing reforms are likely to move forward; “less drastic changes such as shoring up the ACA and bipartisan drug pricing reforms are more feasible”

Read more: Defense Stocks Could Again Outperform in 2020, Buckingham Says

(Michael Bloomberg is also seeking the Democratic presidential nomination. Bloomberg is the founder and majority owner of Bloomberg LP, the parent company of Bloomberg News.)

To contact the reporter on this story: Felice Maranz in New York at fmaranz@bloomberg.net

To contact the editors responsible for this story: Catherine Larkin at clarkin4@bloomberg.net, Steven Fromm

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