A Bernie Sanders presidency would present ‘one of the key risks for markets’ in 2020: UBP

Even the possibility of Sen.Bernie Sanderswinning theDemocraticnomination for the2020 electionsis an important risk for markets this year, a chief investment officer told CNBC this week.

Sanders last year unveiled a plan to reverse PresidentDonald Trump’stax cuts for businesses and increase the corporate tax rate to 35%, up from 21%.

“We think a Bernie Sanders presidency or even the prospect that he wins the nomination probably presents one of the key risks for markets as we move through 2020,” said Norman Villamin, CIO of wealth management at Union Bancaire Privee.

“That’s largely because what you’re going to see is, the market will have to price the prospect of risingtaxrates or a reversal of the tax cuts we saw in 2018,” he told CNBC’s “Capital Connection” on Tuesday.

“That will be a rather major hit toearningsif the market needs to anticipate that,” he added.

Villamin’s comments come amiddelays in the release of the resultsfrom theIowacaucuses.The vote is seen as significant because the candidate who wins Iowa, often proceeds as the Democratic Party’s presidential nominee.

The Iowa Democratic Party said it found “inconsistencies” in the reporting of some results. It also said the underlying data and paper trail is “sound,” but it will take time for the results to be ready.

Following these delays, Sanders told supporters he had a “good feeling we’re going to be doing very, very well in Iowa.”

Villamin isn’t the only market watcher who warns what Sanders could mean for big-money investors. The chief U.S. equity strategist at RBC told CNBC this weekthat markets have priced in a “Trump reelection.”

“The betting markets are sending a positive signal on Sanders right now,” said RBC’s Lori Calvasina. “The big sort of shift in trend is Bernie.”

2020 election race

Villamin weighed in on what a Sanders-Trump race would look like.

“If you look at the polling there, that’s roughly 50-50 in terms of who wins,” he said.

“Sanders, like Trump, really will expand the electorate,” he predicted, adding that the senator would bring “a lot of young people” in.

“So, like in 2016, it’s going to make the polling very difficult to really understand whether it’s accurate or not.”

(CNBC)