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Investment Adviser CEO Explains How ‘Democratic Sweep’ In 2024 Election Would ‘Hurt The Market’

Investment Adviser CEO Explains How 'Democratic Sweep' In 2024 Election Would 'Hurt The Market'

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Jason Cohen Contributor
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Infrastructure Capital Management CEO Jay Hatfield on Tuesday said that a Democratic takeover of the executive and legislative branches in January 2025 would be bad for markets.

Vice President Kamala Harris plans to hike the corporate tax rate to 28% if elected president, raising them from the 21% rate imposed in 2017 under former President Donald Trump’s 2017 Tax Cuts and Jobs Act. Hatfield, on “Making Money with Charles Payne,” warned that this policy would lead to a decline in corporate earnings and growth, negatively impacting the market. (RELATED: ‘I Need Explanations’: Kevin O’Leary Says Kamala Harris ‘Has To’ Break down Her Actual Economic Policies To Press)

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“This isn’t really a political point, just the math. So if you raise corporate taxes 28%, earnings go down ten and the growth rate goes down, which would imply about another 10% reduction in the market multiple. And the [4,800] seems a little too conservative, but if there is a Democratic sweep, people aren’t stupid,” Hatfield told host Charles Payne. “They know the cutoff date’s going to be at the end of this year. There’s going to be a ton of people taking profits in primarily tech.”

A chart displayed behind Hatfield and Payne indicated that the CEO projects an “S&P 500 target” of 4,800 in the event of a “Democratic sweep,” while a “Republican sweep” would lead to a target of 6,500.

“That’s going to drive the market way lower, it’s going to spook people. And so it’s not like this big call like, ‘Oh, the Democrats are terrible and the Republicans are great.’ Tax policy matters to stocks, it matters to valuation,” he added. “You can’t ignore it, I don’t care what political stripe you are. It’s going to hurt the market if there’s a Democratic sweep.”

Economist and TrendMacro Chief Investment Officer Don Luskin in August warned on Fox Business’ “The Evening Edit” that Harris’ corporate tax plan could reduce Americans’ 401(k)s by 13%.

“Corporate taxes are just an expense for companies, they’re a huge expense. Raising the corporate tax from 21% where it is today to 28%, where Kamala Harris wants to put it, is a 33% expense increase,” Luskin said. “Expenses will go up 33%. That will take 13% off of S&P 500 earnings, that will take 13% off the S&P 500, that will take 13% off your 401(k).”

“Shark Tank” co-star Kevin O’Leary said on Thursday that past “28%-plus corporate taxes” in the U.S. contributed to companies moving to Ireland.

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