Best Biden VP Pick May Be Harris or Rice: Wall Street Votes

(Bloomberg) -- Wall Street is watching whether Joe Biden will choose a relatively moderate vice presidential running mate or a partner who will push the Democratic Party further to the left.

A moderate pick -- like California Senator Kamala Harris, former National Security Adviser Susan Rice, or Illinois Senator Tammy Duckworth -- might ease concern about higher taxes and tougher financial regulation. On the other hand, Elizabeth Warren may be the most worrying choice for investors. Analysts have long voiced unease about the senator from Massachusetts, who is also seen as a contender for Treasury secretary under Biden.

Investors should consider what Rice might do to “expedite a likely Biden trade/foreign policy strategy,” FiscalNote Markets Managing Director Stefanie Miller said via email. Rice, who served on President Barack Obama's cabinet, may be able to help Biden quickly pivot toward a “more multilateral and less protectionist approach” than Donald Trump's administration has taken, particularly with the European Union, she said. That would likely be viewed as markets-friendly, Miller said. Rice's father, Emmett J. Rice, was a Federal Reserve governor.

Biden is expected to announce his vice presidential pick by the start of the Democratic National Convention on Aug. 17, possibly as early as this week. Harris has long been seen as the front-runner, and Biden allies have indicated that California Representative Karen Bass, chairwoman of the Congressional Black Caucus, is also being seriously considered.

Miller said that a sitting member of Congress, such as Harris, Bass or Florida Representative Val Demings, might help push Biden's first-100-days agenda items like more Covid-19 stimulus and tax and health-care overhauls, along with “longer-tailed” stimulus and infrastructure policies.

Even a progressive vice presidential pick wouldn't necessarily be bad for markets because that person “would have to convince Congress or regulators to agree to policy changes,” and there are “a lot of potential roadblocks in that process,” said Bloomberg Intelligence senior government analyst Nathan Dean.

Cowen analyst Chris Krueger sees Harris, Rice, Duckworth and Bass as the most likely picks, followed by Demings, Michigan Governor Gretchen Whitmer and New Mexico Governor Michelle Lujan Grisham. He sees Warren, Atlanta Mayor Keisha Lance Bottoms, former Georgia State Representative Stacey Abrams, and Wisconsin Senator Tammy Baldwin further down the list.

The New York Times on Aug. 1 listed 13 women who are in the running and said Warren and Harris remain strong contenders.

Selected News Coverage

MARKETS OVERVIEW: U.S. equities edged higher on Tuesday as investors looked past disappointing earnings amid speculation that lawmakers would move forward on a stimulus bill. The S&P 500 has risen 2.5% in the past week.

Recent Polls

Additional Reading

CAMPAIGN UPDATE: Biden Up by 39 Points in California

“Wall Street Votes” is a weekly column highlighting opportunities for stock investors deluged with political news. Click the button at the top to subscribe.

©2020 Bloomberg L.P.

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