Biden goes the predictable route

What happened?

After a lengthy vetting process, Democratic presidential candidate Joe Biden selected Senator Kamala Harris as his running mate for the 2020 presidential election. Though many names were floated in the past month, Harris has long been considered a favorite for the VP pick. Harris, a 2020 candidate for president herself, fits the bill as an experienced politician with liberal credentials and a knack for fundraising. In the past Biden spoke about the need to pick a VP who could lead the country if needed, and her experience in California state government and the U.S. Senate, as well as her national profile, make her a natural choice.

What’s next?

Though typically considered a ceremonial position, Biden has made very clear that his VP will be instrumental in the governing process. Harris, like Biden, can be viewed as a pragmatic liberal. During her presidential campaign, she made it clear she was willing to take whichever position would help her with the primary, coming out for policies like Medicare-for-all and then walking them back when she was viewed as too far left. This ideological flexibility makes her a better running mate as she is more likely to toe the party line rather than hold steadfast to more liberal positions like a more dogmatic choice would.

In addition to being a team player, a Harris pick brings along other positives. She is an experienced campaigner as evidenced by her time as attorney general of California and as a senator. In many ways she may be a better campaigner than Biden himself and brings along youthful energy and a proclivity for fundraising. As a campaign surrogate it is hoped the historical nature of her candidacy will help turnout among African American and women voters. Outside campaigning she is viewed to be a good debater and her history as a prosecutor is seen as positive in any vice presidential debates. On the negative side, Republicans will likely try to paint her a coastal elite liberal and someone who is historically out of step with her party’s stance on criminal justice.

Our take

Though this pick will likely have limited market impact, it will be interesting to see if Biden gets any further polling boost above his already large lead over President Trump. Currently odds markets price in a more than 60% chance of a Biden presidency with the real possibility that Democrats will have unified control of government. We will  continue to monitor polling and position portfolios accordingly. In the short term we view a democratic sweep as negative for risk assets as corporate taxes will likely go up, but possibly a long-term positive with additional fiscal stimulus and infrastructure spending expected. As we have entered the last three months of the campaign, we expect polls to tighten while understanding that Biden’s current lead is outside the polling margin of error. At the end of the day the Harris pick is unlikely to be more than a short-term media flashpoint, but it does position her as the party figurehead and favorite for the nomination in 2024 as an 82-year-old Biden would likely not run again.

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