Jeff Weniger, Head of Equity Strategy at WisdomTree, spoke with Quartz for the latest episode of our Smart Investing video series.
Watch the interview above and read the transcript below. The transcript of this conversation has been lightly edited for length and clarity.
ANDY MILLS (AM): Kamala Harris reportedly wants to raise the corporate tax rate from 21% to 28%. What impact do you think this will have on the markets?
JEFF LESSER (JW): It used to be 35, and Trump has lowered it to 21, so that’s halfway back. First, is that a politically popular move? And second, will it suddenly become much less popular if the S&P reacts to the downside in anticipation of that? Right now, the markets are making new highs or at least hovering around the 5,600 mark. So right now, it looks like that’s a non-event for the markets. I say that with a big asterisk because when you think about the top of the S&P 500, that’s many of these companies that are basically parking a kind of domicile in Dublin to evade the tax authorities here in the United StatesSo I would say it could pose a risk, especially for technology companies.
AM: Kamala has also proposed a ban on price gouging in the grocery trade. Do you think this will affect the stocks of grocery retailers or large food companies?
Jehovah’s Witnesses: Yes, and Mars just announced that it’s buying Kellanova, and that was maybe the biggest or second biggest deal of the year as far as the entire market is concerned. We got a whiff of that news last week. We look at our biggest fund and the top of our biggest fund, among the top 20 names, you know, Pepsi, Coke, Procter & Gamble. And now, for the first time since Nixon, you have a discussion about price controls. Not wage and price controls like Nixon, but price controls. And I think we’re doing this interview, it’s in the middle of the DNC, we’ve got a head-to-head coin toss in front of us. Sometimes you stand there and say things that haven’t been properly vetted. You can basically see that I don’t think there’s an economist on planet Earth that wants to support that. Austin Gouldsby, for example, came out about a minute later and basically distanced himself from those remarks. So staples, food matters, groceries, those kinds of concepts. Let’s look at September and see if this is still a political issue for the Democratic Party. I think it could just be swept away. We’ll see.
AM: Is there any usury going on right now?
Jehovah’s Witnesses: No. Prices are set by the free market. If you don’t like what you get at Walmart, you can go to Costco, and if you don’t like that, even if you think outside the box, you can go to Dollar Tree or Dollar General, those are grocery stores too. You can go to a CVS and buy groceries. You can go to Walgreens. Those are not grocery stores. And look, we own Procter & Gamble, that’s just one example. If Procter & Gamble decides to go extortionate on diapers, Kimberly Clark is going to steal from them. And so it’s not in your best interest as a megacorporation and as a free society to go back to charging extortionate prices. Hey, we’re trying to win a 50-50 election, so you campaign. And sooner or later, my hypothesis is, Harris’ advisers are going to say, stop the extortionate pricing thing.
AM: Voters are particularly concerned about the cost of things because of inflation. And maybe they can identify with that.
Jehovah’s Witnesses: Well, then we shouldn’t have created so much money. Supply inflation is caused by the money supply, which was rising inexorably. Except for a few things you could call short-term shocks. For example, the complete lack of Russian natural gas to Germany drove inflation up. You could say that maybe that didn’t have that big of a monetary impact for them, but generally speaking there was massive fiscal and monetary stimulus during Covid. And that’s why we ended up with a CPI of nine. And actually, if you look at the data, it probably should have been a 12 or 13. It was just that the housing data wasn’t fully captured by the CPI and now it has to catch up and probably in the next year or three.
