A Chance for Mike Bloomberg

+2.57%
Upside
174
Market
178
Trefis
AAPL: Apple logo
AAPL
Apple

Relevant Articles
  1. Down 10% This Year, Will Gen AI Tools Help Apple Stock Recover?
  2. Down 5% Over The Last Month, Will Strong iPhone Sales Help Apple Offset Mac Headwinds In Q1?
  3. After Over A 40% Rally In 2023, Will Antitrust And iPhone Issues Hurt Apple Stock?
  4. Up 45% Since The Beginning Of 2023, Where Is Apple Stock Headed?
  5. Up 34% This Year, Will Apple Stock Rally Further Following Q4 Results?
  6. Will New iPhones Help Apple Stock Offset A China Slump?
Submitted by Wall St. Daily as part of our contributors program A Chance for Mike Bloomberg A Breakdown of Mike Bloomberg's 2016 Election Chances By Martin Hutchinson, Global Markets Analyst Last week, former New York mayor and multi-billionaire Michael Bloomberg indicated that he might run as an independent for the presidency in November. Whether he has a real chance of winning mostly depends on the two major parties’ nominations, but there may be a slim opening. However, in the event that he did win, it’s unlikely Bloomberg would solve the U.S. economy’s problems. In fact, he might make them worse  . . .

Bloomberg Knows Best (According to Bloomberg!)

Bloomberg’s attraction is obvious at a time when Donald Trump and Bernie Sanders are making considerable progress in the polls. He is anti-populist, offering the opposite of Trump’s and Sanders’ populist appeal. Rather than offer solutions that actually appeal to the electorate, Bloomberg has always believed in giving the electorate what’s good for it, whether through expensive anti-global warming campaigns, or fatuous bans on 32-ounce soda bottles. His support base is both bi-coastal and elite. It tilts fairly heavily towards the Democrats, since he has little appeal in the red states or among blue-collar and evangelical voters in the blue states of the Midwest. A modestly successful Bloomberg third-party campaign – anything up to Ross Perot’s 19% of the vote in 1992 – would tilt the election somewhat towards the Republicans, making it easier for them to win states like Pennsylvania, Virginia, and possibly Oregon and Washington, where he would take votes mainly from the Democrats. To do better than Ross Perot, however, Bloomberg would need to find a major gap in the electorate that his personality and politics might fill. But that depends on the main parties’ nominations.

Poring Over Permutations

If they nominate Hillary Clinton and Donald Trump, there may be a massive demand for an uncorrupt, sensible figure to safely guide the country for four years. If they nominate Ted Cruz and Bernie Sanders, there will be a huge policy gap, which a more centrist candidate like Bloomberg might fill. On the other hand, if the Republicans nominate Marco Rubio or another “establishment” figure, or even if the combination is Cruz and Clinton, there will be less space for a Bloomberg candidacy to flourish. If Bloomberg managed to grab above 30% of the vote, he’d probably find himself winning states in large numbers (he might carry New York against the leftist Sanders, for example) with the Republicans restricted to the South and the Prairies, and the Democrats reduced to a small pool of liberal bastions. The Republicans would probably control the process if no candidate had a majority and it went to the House of Representatives, but that’s fairly unlikely. Bloomberg’s initial states and votes taken from the Democrats would probably throw the Electoral College to the Republicans, and then only a modest further increase in Bloomberg’s vote percentage would cascade states to him and give him a majority.

The Market Reaction to President Bloomberg?

Initially, the markets would celebrate a Bloomberg victory. Traders and the international investment community have “elite” politics, and find the populism of Trump and the socialism of Sanders equally repellant. A Bloomberg victory would also appear to signify a business-friendly White House, with good relations in international economics, a penchant for free trade, and an understanding of financial markets. You could expect a big initial bump in the S&P 500. But in reality, the economic performance of a Bloomberg administration would, at best, be mediocre. In New York, Bloomberg increased spending from $28.9 billion in the fiscal year ending June 2002 to $52.2 billion in his last budget for fiscal 2014. That’s an increase of 81%, compared to the 32% price increase between those two individual years, meaning real spending rose by 37%. Since nominal gross domestic product increased by only 58% between those two years, Bloomberg’s profligacy cost New York City’s government 14% more than output. With the U.S. government budget already in a huge (and still-rising) deficit – over $500 billion and now expected to soar beyond $1 trillion in 2022 – Bloomberg’s proclivity for throwing money about and increasing the size of government might well bring gigantic, unsustainable deficits as soon as the economy turned down. He’d probably also raise taxes substantially (as he was happy to do in New York), which would deeply damage the U.S. growth rate. In addition, with his penchant for micromanaging citizens’ lives and imposing politically correct priorities, he would add a layer of meddling and expensive regulations to an already excessive jungle, further damaging the economy. We’ll have to see how the nomination races turn out before we know whether Bloomberg will run. He can certainly wait until March, and his money will allow him to overcome the various ballot access hurdles quickly if need be. He wouldn’t be the worst possible president – but the markets’ enthusiasm for him would likely be short-lived. Good investing, Martin Hutchinson The post A Chance for Mike Bloomberg appeared first on Wall Street Daily. By Martin Hutchinson