Moneybeat: Untested leaders

MARY REICHARD, HOST: Next up on The World and Everything in It: the Monday Moneybeat.

NICK EICHER, HOST: All right, another special edition with seismic changes in the political world. We will talk it over from the perspective of economics with financial analyst and advisor David Bahnsen. David's head of the wealth management firm the Bahnsen Group. He is here now. David, good morning.

DAVID BAHNSEN: Well, good morning, Nick. Good to be with you.

EICHER: Wow, two history-making weekends in a row. Now Joe Biden succumbed to pressure, bowing, I guess, to the reality of the polls, which tells you that it’s the campaigning that’s so taxing, not the job itself, in that he’ll remain president.

When I asked last week about whether attempted assassinations jostle the markets, I’ll ask a similar question, now that the presidential race has in fact been scrambled. Can this kind of uncertainty rattle economies?

BAHNSEN: Well, not the economy, but the market. I mean, those are two really different things, and I think that financial markets will absorb a certain increase in unpredictability for the reason that the presidential election results were becoming more predictable by the week. The lead in the polls, particularly the battleground polls, was expanding. That's, of course, the reason why President Biden has been pushed to drop out and there's uncertainty as to whether or not vice president Harris will end up being a viable candidate, but I think that the dream scenario for the Trump campaign has been taken away, and I do expect that the polls will tighten. We'll see here, and whether it's days or weeks, who she selects as Vice President, I have significant sources that believe they're making a full court press to get Senator Mark Kelly from Arizona. That doesn't mean he will accept it. It doesn't mean that they won't have other candidates, but Mark Kelly, who's one of the more moderate Democrats in a state that President Trump was leading President Biden in, significantly, which President Biden had won in 2020, that could change things quite a bit. So I want to look to where the Vice President's election goes, and what I suspect we could end up with is a tighter race than markets were expecting, which, yes, will add to volatility. Ultimately, it doesn't change the thing I've said on the program several times, which is that the markets are not going to know the ultimate result until November. And by ultimate result I mean more than the White House. I mean the outcome of the House of Representatives and the outcome of the Senate. If you look at all the polls in Senate races now, the Republicans are almost assured to take West Virginia. Have a chance to take Montana, but that's tight, but look quite behind in a lot of the other states they thought they were going to compete in. So you could end up with a 51-49 Senate for Republican, regardless of who wins the White House, and that ends up with a lot of divided government as well. How do markets price that in in the summer? They just simply don't.

EICHER: David, how does Kamalanomics differ from Bidenomics, if at all? Do you have some insight on that?

BAHNSEN: Well, a lot of that depends on what Kamala economics would be. She in 2020, at one point, said she was for Medicare for All and getting rid of private insurance. And then she backtracked on that, and she hasn't had much of a portfolio in the policy sphere in her time as vice president, other than supposedly being in charge of certain things at the border. And then, of course, she's been a leading spokesperson on the abortion issue. But economically, she hasn't had a lot to say. And the only way a guy like me is able to decipher this, and I do this with Republicans and Democrats, I believe, Nick, that personnel is policy, and you start to get an idea of how someone would govern in a presidential spot or a gubernatorial spot, or whatever their role is, based on who they're putting around themselves as key advisors. You know, President Obama famously had selected Larry Summers as his National Economic Council Chair, who had been Bill Clinton's treasury secretary. And there were, I don't want to say moderates, but more center left, Neo-Keynesians who were not far left extremist. He selected Tim Geithner from the New York Fed as his treasury secretary. That gave us an idea of where the Obama economic regime would be, which was center left, but not necessarily where some feared it may go. I have no idea who Kamala will pick as some of her economic advisors, but I'll be paying very close attention to that in the weeks ahead, you can believe that.

EICHER: All right, and obviously we will check back in on that, David. Let’s not forget now about intrigue on the Republican side and zoom in a bit on the senator from Ohio who is now former President Trump’s VP running mate J-D Vance. I would bring up Vance’s views on economics, because they are a break from standard Republican fare on free markets, light regulation, and low taxes. Vance is different. What do you know about him?

BAHNSEN: Well, there's been a couple different Vances, and the one that I really liked a great deal, when his book Hillbilly Elegy came out nearly 10 years ago now, talked about a lot of the problems facing working class America, particularly the kind of Appalachian region that he had come from, a poor, white, working class part of America that he identified a lot of the problems there as cultural and moral and the need for strong institutions, stronger families, it was just a wonderfully captivating book, and the underlying message of it is one that really resonated with me. I do think that he has become much more interested in governmental solutions to a lot of these economic issues, and he has spoken out in favor of larger minimum wages. He's spoken out against lower tax rates. And so there's a bit more populist. You know, I've heard him referred to as kind of a Republican FDR, a Republican Elizabeth Warren. He's culturally more conservative. He's a converted Catholic. I mean, there's a lot about him that's very interesting, but he would not be in the Reaganite mold of free market conservative, and so there are some issues that concern me a little bit there, in terms of the future, of what the Republican plank may be.

I will say this though, Nick, I know you haven't asked yet, but President Trump's speech Thursday night did not go in that direction. He spoke for tax cuts, he spoke for less regulation. He defended what his prior administration has done, and I think rightly so, about repatriating a lot of corporate profits that were held offshore, coming back onshore. It was a bit more supply side friendly. And so Vance may have a certain different point of view on this, but Vance is not at the top of the ticket, and I'm encouraged that at least so far, candidate Trump is holding the line on some of these more free market planks of his administration.

EICHER: Okay, well, back to Vance. David, I did note that there was one official in the administration, in the Biden administration, for whom Vance had praise, and that was someone we've talked about before here. Lina Khan is her name. She's head of the Federal Trade Commission, and Vance specifically singled her out, Lina Khan as one official he thought was doing a good job, but she's not doing a good job by your reckoning?

BAHNSEN: No. And anyone else who believes that the government ought to have a more humble role in economic administration, she's a big believer in governmental oversight of companies and in some cases, breaking up companies, proving which companies get to merge and which ones don't. And I myself am supportive of some governmental involvement where it involves national security. She has never been involved in any anti-corporate activity that was related to national security, and Vance's fondness of her was not related to that. It has to do with a belief that sometimes companies just get too big and profitable, and we need the government to help right-size them.

So look, Senator Vance is 39 years old. He came out of an incredibly difficult childhood with a absolutely powerful story, and served in the military. He went to Ohio State, got his degree, went to Yale Law School, worked at Silicon Valley in a significant venture capital role, wrote one of the best selling books of the last 10 years and became a United States Senator. And now he's 39 years old. All right, so that's a lot to have done in the last 10 years, and to have gone from a Yale Law grad and venture capital, you know, multi-millionaire to now being an anti elite, you know, populist. It sounds to me like his journey is still going on, and so I'll cut him a little slack.

EICHER: Ok, David Bahnsen is founder, managing partner, and chief investment officer of The Bahnsen Group.

Check out David’s latest book, Full Time: Work and the Meaning of Life at fulltimebook.com.

Have a great week, David!

BAHNSEN: Thanks so much. Good to be with you.

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