People earning a lot of money think differently: Morning Brief

Sam Ro
·Managing Editor
·5-min read

Wednesday, October 21, 2020

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People with money will consider their pockets when they vote

Rapper Curtis “50 Cent” Jackson sparked outrage on social media on Monday after he tweeted his reaction to a CNBC story saying presidential candidate Joe Biden’s tax plan would hit high earners in New York with a 62% tax rate.

“I don’t care Trump doesn’t like Black people 62% are you out of ya f***ing mind,” Jackson said as he unexpectedly urged his followers to vote for Trump.

On Tuesday, CNBC asked rapper Michael “Killer Mike” Render where he was on the issue, and Render offered a more nuanced view.

"I know a goal of any person of any wealth is to keep more of your money than you give away,” he said. “This is not an endorsement for any candidate. But this is just to say for the regular person at home, if you have $100 and someone is saying they’re going to tax you $62, that leaves you with $38.”

“I’m not saying don’t vote for Joe or vote for Trump or any of that,” he reiterated. “I'm just saying people who make over $400,000 a year are probably going to be thinking differently than people who make less than $400,000 a year.”

The stock market, which wealthier folks have a relatively high exposure to, does not contradict this logic.

“It is actually quite simple; when stocks gained the three months before the election, the incumbent party tended to win and vice versa when stocks were lower,” LPL Financial’s Ryan Detrick said. “Think about 2016 for instance; no one expected Hillary Clinton to lose, except the stock market that is, as stocks were quite weak before that upset.”

In other words, the data suggests voters will favor the incumbent party if they associate them with enhancing wealth.

The direction of the stock market has a good track record of predicting who will be represented in the White House. (LPL Financial)
The direction of the stock market has a good track record of predicting who will be represented in the White House. (LPL Financial)

While the track record is compelling, it’s not perfect nor is the argument airtight. And while personal wealth is important, it’s not the only thing that matters for voters.

“I pay about a 45% tax rate right now,” Render said. “Would I be willing to pay an extra 10% tax rate? Yeah, but I’d only be willing to do it if the guy I wanted to be president would be president. Because I’d know that the social programs I support would’ve then been supported out of my tax dollars and not necessarily me and my wife’s philanthropic giving, which we do.”

It’s a good reminder for everyone including investors that money alone isn’t what motivates people to make the decisions they make.

“What’s good for 50 Cent is what’s good for 50 Cent,” Render said. “But in terms of Michael, I would’ve been willing to pay slightly more on taxes — a 10% increase — simply because if the guy I was going for would’ve gotten voted in, I think that the social programs would’ve created a better America for the next 20 years.”

By Sam Ro, managing editor. Follow him at @SamRo

What to watch today

Economy

  • 7:00 a.m. ET: MBA Mortgage Applications, week ended October 16 (-0.7% during prior week)

  • 2:00 p.m. ET: Federal Reserve releases Beige Book

Earnings

Pre-market

  • 6:30 a.m. ET: Biogen (BIIB) is expected to report adjusted earnings of $8.05 per share on revenue of $3.34 billion

  • 7:00 a.m. ET: Nasdaq (NDAQ) is expected to report adjusted earnings of $1.47 per share on revenue of $691.65 million

  • 7:00 a.m. ET: Baker Hughes (BKR) is expected to report adjusted earnings of 4 cents per share on revenue of $4.75 billion

  • 7:30 a.m. ET: Verizon (VZ) is expected to report adjusted earnings of $1.22 per share on revenue of $31.63 billion

Post-market

  • 4:00 p.m. ET: Las Vegas Sands (LVS) is expected. to report an adjusted loss of 70 cents per share on revenue of $594.21 million

  • 4:00 p.m. ET: Align Technology (ALGN) is expected to report adjusted earnings of 58 cents per share on revenue of $530.06 million

  • 4:05 p.m. ET: Whirlpool (WHR) is expected to report adjusted earnings of $4.20 per share on revenue of $4.76 billion

  • 4:05 p.m. ET: Kinder Morgan (KMI) is expected to report adjusted earnings of 20 cents per share on revenue of $2.90 billion

  • 4:10 p.m. ET: Chipotle (CMG) is expected to report adjusted earnings of $3.46 per share on revenue of $1.59 billion

  • 4:20 p.m. ET: Xilinx (XLNX) is expected to report adjusted earnings of 78 cents per share on revenue of $756.05 million

  • 4:55 p.m. ET: Equifax (EFX) is expected to report adjusted earnings of $1.59 per share on revenue of $1.01 billion

  • 4:25 p.m. ET: Tesla (TSLA) is expected to report adjusted earnings of 55 cents per share on revenue of $8.26 billion

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