Markets Shouldn’t Count Mike Bloomberg Out Just Yet, Citi Says

(Bloomberg) -- Markets should pay close attention to Democratic presidential candidate Michael Bloomberg as a counterweight to Bernie Sanders, and as the likely trigger of a brokered convention that may lengthen primary season uncertainty to June from March, according to Citi.

“Importantly, markets may assume that Bloomberg as a candidate is a benign and market friendly scenario,” economist Dana Peterson said in a note. Instead, “his campaign platform suggests a less vanilla outcome.”

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Earlier this week, Bloomberg tried to shrug off a widely criticized first presidential debate performance by saying the Democrats risked handing the election to Donald Trump if they nominate front-runner Sanders. New leftward-leaning financial regulation proposals also surprised analysts, who had been expecting a more Wall Street-friendly campaign from the former New York mayor.

Here are some of Citi’s thoughts regarding Bloomberg on key topics:

• Financial services: “Markets should expect more, not less, financial regulation,” as Bloomberg appears consistent with Elizabeth Warren, who advocates for more “Wall Street accountability, more regulation, and stronger consumer protections.”
• Companies, REITs and the wealthy can expect “higher and more taxes,” Peterson said, as Bloomberg is among a “growing minority of ultra-high-net-worth individuals advocating for higher taxes.”
• Energy: “Bloomberg does not advocate ‘keeping it in the ground’ energy policy, but clearly leans toward policies that are likely to be disruptive to the energy and auto sectors.” At the same time, Bloomberg’s views on green building and investing in projects with climate change in mind may boost construction and equipment companies.
• Health care, pharma: Bloomberg’s outlooks on “health care expansion and lowering costs are double-edged swords, favoring consumers, government and insurers, while portending mixed-to-negative results for providers and drug-makers.”

To contact the reporter on this story: Felice Maranz in New York at fmaranz@bloomberg.net

To contact the editors responsible for this story: Catherine Larkin at clarkin4@bloomberg.net, Will Daley, Steven Fromm

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