The Bloomberg Threat

The possibility of Bloomberg entering the Democratic presidential sweepstakes raises multiple risks. He is far softer on China than Trump or any other Democrat, especially Warren, so his presence in the mix lowers at the margin Chinese willingness to cut a deal with Trump and aid his re-election. This prolongs the risk of a disorderly first-ever recession in China, which would have global implications. Bloomberg’s more moderate positions make him more electable, but those positives are still far-left, including opposing the 2018 corporate tax cut, the repeal of which would reduce S&P 500 earnings by 10%. Warren is more dangerous economically, but less electable for that reason, so Bloomberg may be the greater threat to markets.