Here’s why the ‘Trump trade’ could come under pressure in coming weeks: analysts By Investing.com

Vice President Kamala Harris has rapidly become the clear frontrunner for the Democratic nomination, following President Joe Biden’s announcement of his withdrawal from the race.

But while several potential rivals quickly endorsed Harris, she is not guaranteed to win the nomination. Harris raised $50 million yesterday, alleviating concerns about whether the Democrats will have sufficient resources to compete.

“While it’s true Harris is unpopular and we think she is a slight underdog to Trump, she has the opportunity to reintroduce herself to the American people and she could look a lot more politically formidable in a month than she has the past four years,” Piper Sandler analysts said.

As such, the so-called “Trump trade” could face pressure, given that the former president’s victory now appears more uncertain than it did a week ago. The Trump trade refers to investments in assets anticipated to gain if the former president is re-elected.

Shortly after announcing his withdrawal, Biden endorsed Harris. Within hours, she secured endorsements from Bill and Hillary Clinton, leaders of the Black, Hispanic, and Progressive caucuses in the House, and some of her potential competitors for the nomination, including California Governor Gavin Newsom.

Meanwhile, other top Democrats such as Chuck Schumer, Hakeem Jeffries, Nancy Pelosi, and Barack Obama have been notably silent. According to analysts, Schumer and Jeffries are likely to follow the lead of their members, which probably means endorsing Harris soon, while Pelosi and Obama are believed to favor an open convention where a stronger candidate than Harris might emerge.

Regarding the next steps, the delegates to the convention will decide who the nominee will be. Biden’s delegates become free agents at the convention and can vote for whomever they choose.

As Biden delegates, though, they could be expected to give weight to who Biden endorses and have affection for Harris, too,” analysts noted.

About 14% of the delegates to the Democratic convention are superdelegates (party leaders), who can support whomever they wish, although whether they have a vote on the first ballot will depend on a ruling by DNC officials. A virtual vote before the convention in Chicago, which DNC officials have been considering, now seems unlikely.

In a potential Trump-Harris matchup, {{0|Piper Sandler}} analysts give the edge to Trump due to Harris’ poor approval ratings. However, her approval ratings are not as fixed as Trump’s and could improve after a month of favorable media coverage and a strong convention address.

“How she handles herself on the stump, in interviews, and in a potential debate will be the key to whether she can convince voters she is up to the job and will govern as a mainstream Democrat. If she can do that, she could pull even or even ahead of Trump,” Piper Sandler analysts concluded.