Two-thirds of Wall Street investors say stocks will be worse during President-elect Joe Biden's term in office than they have been during President Donald Trump's.
A two-thirds majority of U.S. investors, traders and strategists predict that stocks will see a lower return in the next four years versus numbers like the 60 percent rally the S&P 500 has recorded since Trump's January 2017 inauguration. A new CNBC survey of dozens of top Wall Street insiders reveals mixed feelings about the ensuing Biden administration. Just 33 percent of those surveyed said they think stocks will be "better" under Biden than they have been under Trump, with many highlighting the president's corporate tax cuts, which caused a surge in profits and a record of share buybacks.
Despite two-thirds of investors predicting lower stock market returns with Biden in the White House, a nearly identical majority of those surveyed also said the Dow Jones Industrial Average will finish 2021 at a new high. About two-thirds predicted the blue-chip benchmark will finish next year above 35,000 points, a 16 percent gain from last week's close of 30,199.87.
Only five percent of those surveyed said the Dow will rise to 40,000 by the end of 2021. Just 10 percent of the investors surveyed said they believe the Dow will fall below 25,000 points, and 18 percent said 2021 will finish at 30,000.
About one-third of the Wall Street investors predicted that bitcoin will become the hottest new investment in 2021, while 58 percent said special purpose acquisition companies (SPACs) will see a rise in investments among their clients.
Biden's tax plan departs significantly from Trump's 2017 tax cuts, which heavily favored corporations and pulled back on regulations believed to be slowing down U.S. markets. The Biden tax plan calls for the corporate tax rate to rise from 21 percent to 28 percent, with a 15 percent alternative minimum tax to apply to corporate income higher than $100 million. The 2017 Tax Cuts and Jobs Act passed by the GOP-led Congress and signed by Trump will require congressional action because it was signed into law and is not set to expire until 2025.
Coal and oil were among the industries that saw massive gains as Trump also relaxed corporate regulations put in place by the Obama administration.
One-third of the investors surveyed by CNBC expressed optimism in cryptocurrencies like bitcoin garnering more support among their clients. Bitcoin on Monday is up close to 28,000 points, but some investors are not convinced that international regulatory bodies will ever allow cryptocurrencies to truly flourish.
"The central banks are not going to give up their control over monetary policy. That's just not going to happen. The Fed will not give it up, the Bank of England will not give it up, the ECB will not give it up, the Bank of Canada and the reserve banks of New Zealand and Australia, the People's Bank of China, they're eventually not going to want to give up monetary authority. And that's just a given," said Dennis Gartman, a contributor and member of the University of Akron endowment investment committee, on Fox Business Monday. But while he noted the "clock is ticking" on bitcoin investments, he said bitcoin could crack 100,000 points in the interim.
But he warned, "one day" soon regulators will step in and cryptocurrencies will fall 40 or 50 percent.