With the 2020 presidential election almost just around the corner, we could see a battle of the ultra-business men. Investors who would be more than happy to see the bull market continue may be looking to root for a surprise win of the election by former new York mayor, and business media tycoon Michael Bloomberg.

Brown Brothers chief investment strategist Scott Clemons said in a recent interview “I think Bloomberg would be better for the markets because he would represent more fiscal responsibility. One of the most interesting things — and discouraging things — about this administration over the past two or three years is that we are running trillion dollar deficits in a period of relatively good economic activity. I am a long-term investor, so I worry what that means in the longer term when the economy turns down again.”
Clemens raises a very valid point, with trumps outsized spending on the armed forces and his trademark corporate tax cuts assisted in pushing the US deficit to almost $1 Trillion USD in the 2019 financial year according to data from the US treasury department, The biggest gap since 2012.
Equity and bond markets have mostly unheeded the flying U.S. deficit, instead focusing on the powerful positive impact of the Federal Reserve’s 3 rate cuts this year and powerful corporate stock buybacks (due largely to Trump’s tax cut plan). however if the U.S. economy does slip into a gentle recession inside the next 2 years as several on Wall Street suppose, stocks might get drilled and bond yields could soar on deficit worries.
With Bloomberg as president, many presume that he would lean left and roll back on some of Trumps military spending and tax cuts to reduce the deficit, which would be a smart move with the loom of a hypothetical recession. Another four years of Trump could see the deficit grow even further, which may put heavy strain on a large array of assets that could see a downside.

Akira Annaisha- Fore Front Global
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