Here's why the 'Harris trade' could be 'completely overblown'

By Victor Reklaitis

Analyst says Democratic nominee looks likely to become president but also likely to face a GOP-run chamber of Congress that would block her policies

One analyst has been warning investors against going too far with bets on Democratic presidential nominee Kamala Harris, even as a "Harris trade" has taken shape this week in the stock market.

This trade is "completely overblown since Harris is 70% likely to have a politically split Congress that wouldn't ratify her policy ideas anyway," said Terry Haines, founder of forecasting firm Pangaea Policy, in a note earlier this week.

"There's no blue or red wave on the horizon," he added, but rather his "70% base case" is that Democrats barely win a House majority in November's elections, while Republicans barely secure a Senate majority.

In a later note, Haines said he is continuing to "caution against leaning on the 'Harris trade' except as a short-term vogue, and against thinking there's some sort of one-party 'wave' building."

The Pangaea Policy analyst reckons there's a 60% chance that Harris beats Republican presidential nominee Donald Trump in the White House race. That's higher than the 51% chance that she was getting Friday in an average of betting markets from RealClearPolitics.

Meanwhile, betting market Polymarket gives Republicans a 76% chance of taking control of the Senate as of Friday, and Democrats a 63% chance of winning back the House. Another betting market, Smarkets, has Republicans at 83% for the Senate, with Democrats at 71% for the House.

Democrats currently have a small majority in the Senate, while Republicans have a slim edge in the House.

MarketWatch has reported on the Harris trade, tying it to gains for solar stocks TAN and other clean-energy plays ICLN, along with declines for Trump Media & Technology (DJT) and bitcoin (BTCUSD).

-Victor Reklaitis

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09-14-24 0911ET

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