with Brent D. Griffiths


Wall Street is sounding the alarm over Sen. Elizabeth Warren’s rise in the Democratic presidential race, as investors start to grapple with the possibility the industry scourge secures her party's nomination.

One investor joked that the stock market wouldn't even open if the Massachusetts senator became president; a segment on CNBC featured the idea that married couples could get divorced rather than be subjected to Warren's "wealth tax."

For now, the rising nerves are mostly evident in chatter. There's an emerging consensus that a Warren presidency would hurt the stock market -- yet there’s little evidence that investors are pricing in the risk.

"From a pure markets perspective, a Warren nomination hardly seemed 'priced in,'" Chris Krueger of Cowen Washington Research Group writes. He offers a few theories why that's the case: The election remains far away; Warren could be seen as a weaker Trump foe; or that Warren will moderate her pitch if she secures the nomination. "In any event, buckle up."

Greg Valliere, chief U.S. policy strategist for AGF Investments, dismissed the possibility of market fallout from the firestorm in Washington over reports Trump pressured the Ukrainian president to investigate former vice president Joe Biden — and the renewed impeachment talk it has touched off.

“What could affect the markets, however, is what we have warned about for months: the growing possibility that [Warren] may be the Democrats’ nominee,” Valliere writes.

Hedge fund titan Leon Cooperman went further. “They won’t open the stock market if Elizabeth Warren is the next president,” he said to the crowd at the Delivering Alpha Conference, apparently joking.

He later clarified the comment in a CNBC interview, saying the market would open, just “a hell of a lot lower,” estimating a 25 percent selloff and a bear market lasting at least a year. (Institutional investors, according to an RBC survey, view the Massachusetts Democrat as the candidate most threatening to the stock market, beating out Sen. Bernie Sanders (I-Vt.) 51 percent to 38 percent.) 

The network just aired a piece suggesting married couples rich enough to face Warren’s wealth tax, which proposes a 2 percent levy on a household's assets greater than $50 million, could avoid it by getting divorced. Richer couples stand to save even more by splitting, since the tax would apply an extra percent to assets over $1 billion. “If a couple worth $2 billion divorces, they would save $10 million a year in taxes,” CNBC’s Robert Frank explained. 

Couples could continue living together, the piece suggested, and just legally end their marriages for the tax savings. No matter that Warren’s proposal, if she is nominated then elected, still faces exceedingly long odds in what is expected to be a closely divided Senate. 

“The markets probably won't really focus on the campaigns until the candidates have been set next year at the parties' conventions, says Jeff Mortimer, director of investment strategy at BNY Mellon Wealth Management,” Randall Forsyth writes in Barron’s. “Even so, Wall Street has taken notice of Warren's recent surge in the polls past Sanders, to second place behind [Biden].” 

Indeed, Warren’s growing traction in the Democratic race is making a possible presidency more vivid for financiers she wants to subject to higher taxes and tougher regulation.

The latest Des Moines Register poll showed the senator leading in Iowa for the first time, edging ahead of Biden, 22 percent to 20 percent, though still within the survey’s 4 percent margin of error. And a new national Wall Street Journal/ NBC News poll finds Biden and Warren separating from the rest of the field. Biden is backed by 31 percent, Warren pulled in 25 percent, and Sanders, at 14 percent, was the only other candidates with more than single-digit support. 

The “ultimate irony,” Valliere writes, is that Trump “is going after the wrong opponent. His scorched earth assault on Biden comes as the former vice president is slipping into second place in the fight to win the nomination. Warren is the candidate Trump needs to worry about; simply calling her ‘Pocahontas’ will not be sufficient to stop her momentum.” 

Warren's rise hasn't yet weighed on stock prices. But the rising level of alarm among investors suggests they may be clearer-eyed about Trump’s challengers than the president himself.


Wall Street quant finds rising impeachment risk. The possibility of impeachment no longer drives market performance the way it did, say, in the opening months of Trump’s presidency, when the prospect of his ouster clouded the outlook for his corporate tax cut. But GeoQuant CEO Mark Rosenberg, whose firm uses artificial intelligence-powered indexes to chart different kinds of political risks, says Trump now faces the highest risk of impeachment yet. His "Mueller Risk Index," which measures institutional support for the president, shows the threat to Trump spiking early next month:

“I am a bit surprised that these events pushed us to an all time peak--higher than late June 2017, when Mueller expanded the probe to include obstruction and was reportedly ordered to be fired by Trump,” Rosenberg emails. But he also notes his index shows the risk trailing off sharply after early next month, “suggesting that a successful  impeachment remains quite unlikely.”

British court: Boris Johnson acted illegally. The Post's Karla Adam and William Booth: "Britain’s highest court dealt a major blow on Tuesday to Prime Minister Boris Johnson, ruling that his controversial decision to suspend Parliament was unlawful, in a landmark judgment that will have immediate implications for Britain’s departure from the European Union. In one of the most high-profile cases to come before Britain’s Supreme Court, the 11 judges ruled unanimously that Johnson had not acted lawfully in shuttering Parliament... 

"The decision was a brutal one for the embattled prime minister, asserting that his move to suspend the Parliament was political maneuver, and suggesting that he might have misled the queen... Johnson, who is in New York for the U.N. General Assembly session, said he will not resign."

NY Fed: Central bank did the right thing last week. CNBC's Jeff Cox: "New York Fed President John Williams said Monday that the central bank acted quickly during last week’s jolt to overnight lending markets and that the issue appears resolved for now. However, he cautioned that short-term lending markets face another crisis, though a few years in the distance, if banks don’t prepare themselves for when the London Interbank Offer Rate, or LIBOR, is phased out. LIBOR is used as an international benchmark for overnight lending.

"Williams also said that there’s potential for further disruptions at the end of the quarter Sept. 30 and that the Fed is continuing to monitor the need for more reserves in the system."


Japan trade deal stalls: “The trade agreement [Trump] told Congress he had reached with Japan last week is now hung up amid Japanese concerns that Trump will still move to penalize their auto shipments to the United States, according to two people familiar with the negotiations,” my colleague David J. Lynch reports.

“Japanese officials have insisted they should be able to back out of the deal if Trump imposes these tariffs, something he has threatened to do for more than a year. This concern has emerged as the principal substantive issue before a formal pact can be signed, said the people, who weren’t authorized to discuss the private deliberations. Trump had wanted to ink the deal during the U.N. General Assembly session in New York, but that now appears unlikely.” 

  • What might happen this week: “The finishing touches now are unlikely to be completed in time for Wednesday’s scheduled meeting between Trump and Japanese Prime Minister Shinzo Abe. But the leaders may sign a nonbinding statement, according to Japanese news reports.”

China buys more soybeans after trade talks: “Chinese importers bought about 10 boatloads of U.S. soybeans,” Reuters’s Karl Plume reports, a development that occurs “following deputy-level trade talks in Washington last week that were overshadowed by the abrupt cancellation of a U.S. farm state visit by Chinese agriculture officials.”

“The deals for about 600,000 tons, slated for shipment from Pacific Northwest export terminals from October to December, were similar in size to a wave of buying earlier this month, two traders with direct knowledge of the deals said.”

  • Mnuchin says China talks will resume in two weeks: "We had deputy level talks last week and we made a little bit of progress on that front and we look forward to meeting with the Vice Premier," Treasury Steven Mnuchin told Fox Business Network's Lou Dobbs last night.
  • Xi under pressure from slowing economic growth. "A protracted U.S. trade war, protests in Hong Kong, soaring food prices and the slowest economic growth in decades are among the many problems facing China’s leader as he prepares to celebrate 70 years of Communist Party rule. On the surface, things look fine," Bloomberg reports. "But the mood on the ground is less celebratory, especially in a stretch of southern China that runs from the Vietnamese border to the Pearl River Delta."
  • Huawei CFO returns to court. "Defense lawyers for Meng Wanzhou presented videos and thousands of pages of documents to back claims that Canadian authorities collaborated with the U.S. Federal Bureau of Investigation to engage in a 'covert criminal investigation' to unlawfully detain, search and interrogate the Chinese executive," Bloomberg's Natalie Obiko Pearson writes. "Meng’s team aims to show there was an abuse of process, which if successful, could result in the judge ordering a halt to the extradition proceedings."

Apple avoids some tariffs with plan for new Mac Pro: “Apple will manufacture the next generation of its Mac Pro desktop computer in Austin, Texas,” CNBC’s Josh Lipton and Kif Leswing reports. “The Mac Pro is the only major Apple computer to be assembled in the United States. Most of Apple’s products, including the iPhone, are assembled in China and are facing tariff threats.”

  • Apple received some tariff-related news this weekend: “Apple over the weekend received federal product exclusions, the company confirmed, which enabled it to import some parts it needs for the Mac Pro without paying import tariffs. Apple said the new Mac Pro models include over two times more American-made components than previous models.”


Juul is the subject of a criminal probe: “Federal prosecutors in California are conducting a criminal probe into e-cigarette maker Juul Labs Inc., according to people familiar with the matter, escalating law-enforcement scrutiny of the startup,” the WSJ’s Jennifer Maloney reports. “The investigation by the U.S. attorney’s office of the Northern District of California is in its early stages, the people said. The focus of the probe couldn’t be learned.”

Nissan lawyers raised concerns about internal investigation: “Lawyers inside Nissan Motor Co. have raised concerns that the company’s investigation into former Chairman Carlos Ghosn is marred by conflicts of interest involving a Nissan executive and the auto maker’s outside law firm, U.S. legal giant Latham & Watkins LLP, according to people familiar with their concerns,” the WSJ's Sean McLain and Nick Kostov report.

“General counsel Ravinder Passi brought up the matter with Nissan directors by handing them a letter when they gathered Sept. 9 to review the investigation’s results, say people who attended the meeting in Yokohama, Japan … The objections by Mr. Passi and others lay bare the continuing turmoil at the car maker over corporate governance nearly a year after Mr. Ghosn’s arrest and following the resignation this month of Chief Executive Hiroto Saikawa.” 

WeWork CEO is reportedly considering relinquishing his title: “WeWork co-founder Adam Neumann has started talks with board directors and investors to discuss his future role at the U.S. office-sharing start-up, including the possibility of giving up his title as chief executive, people familiar with the matter said,” Reuters’s Joshua Franklin and Greg Roumeliotis report.

“Neumann has not yet agreed to step aside as CEO of WeWork parent We Company, and there is no certainty he will do so, the sources said. However, a board challenge planned by investors, including SoftBank Group Corp and Benchmark Capital, has been put on hold until these discussions produce an outcome, the sources added.”

Credit Suisse had a star banker followed. Bloomberg's Jan-Henrik Foerster and Patrick Winters: "A made-in-Zurich banking drama spilled out into the open over the weekend after it emerged that ex-top Credit Suisse Group AG banker Iqbal Khan had been shadowed by the lender, leading to a confrontation in broad daylight in the Swiss financial capital.

"The private banker, hired by crosstown rival UBS Group AG last month, was followed by detectives trying to establish if he was attempting to poach ex-Credit Suisse colleagues to join him at the world’s top wealth manager, according to several people familiar with the situation. They asked not to be identified because the matter is private."



  • The House Financial Services Committee holds a hearing on oversight of the SEC on Tuesday, chairman Jay Clayton and all four commissioners are scheduled to appear.
  • Nike, Nio, CarMax, AutoZone, Cintas and Chewy are among the notable companies reporting their earnings, per Kiplinger.
  • The Financial Services Subcommittee on Diversity and Inclusion holds a hearing on the racial wealth gap.


  • The Commerce Department releases data on new home sales for August on Wednesday.
  • KB Home is among the notable companies reporting its earnings on Wednesday, per Kiplinger.
  • The Senate Banking Committee holds a hearing on “facilitating faster payments” on Wednesday.
  • Accenture, Conagra and Carnival are among the notable companies reporting their earnings on Thursday, per Kiplinger.
  • The Financial Services Committee holds a hearing on abusive debt collection practices on Thursday.
  • The Financial Services’ Task Force on Technology holds a hearing on real-time payments on Thursday.
  • The Chief Economist of the American Farm Bureau Federation speaks at the National Economist Club on Thursday.