Piper Sandler analysts highlighted what they see as the extraordinary risks posed by the potential re-election of either President Joe Biden or former President Donald Trump.
According to the firm, both candidates present unique challenges that could significantly impact financial markets and the nation.
Biden, who currently holds 99% of the pledged delegates for the Democratic nomination, faces significant internal pressure to step aside, says Piper Sandler. Despite this, his closest advisors are reportedly urging him to run for re-election.
The firm highlights that betting markets have reflected a drop in Biden’s odds of being the Democratic nominee from 86% to 61% following a poor debate performance.
They believe that if Biden steps aside, Democratic delegates and superdelegates would decide his replacement, with Vice President Kamala Harris and California Governor Gavin Newsom being top contenders.
Piper Sandler suggests, “The smarter play would be to select a mainstream governor from middle America rather than Newsom.”
The Democratic panic is partly fueled by fears that if voters perceive Biden as unfit to serve, it could lead to a significant down-ballot catastrophe.
Meanwhile, Piper Sandler said Trump’s recent debate performance was notable for its restraint and arguments against Biden, especially on issues like border security.
However, they believe Trump’s habit of making sweeping, often inaccurate generalizations remains a concern.
Piper Sandler notes, “Trump makes these sweeping statements that are either misleading or outright false because of an unusual combination of being minimally acquainted with the facts and having an utter disregard for the truth.”
The analysts conclude that the risks posed by both candidates are unprecedented, stating, “Last night’s debate could hardly have provided more evidence for our view that both Biden and Trump pose unprecedented risks for financial markets and the nation.”
