Jeff Weniger, Head of Equity Strategy at WisdomTree (WT), spoke with Quartz for the latest installment of our “Smart Investing” video series.
Watch the interview above and check out the transcript below. The transcript of this conversation has been lightly edited for length and clarity.
ANDY MILLS (AM): Reports are saying that Kamala Harris wants to raise the corporate tax rate from 21% to 28%. How do you see that affecting markets?
JEFF WENIGER (JW): It used to be at 35 and Trump cut it down to 21, so it would take you half of the way back. First off, is it a politically popular move? And second off, does it suddenly become a lot less popular if the S&P reacts to the downside in anticipation of it? Right now, the markets are making new highs or at least kind of bopping around the 5,600 area. So right now it looks like it’s kind of a non-event for markets. I say that with a big asterisk because if you think about the top of the S&P 500, that’s a lot of those companies that are basically parking some sort of domicile in Dublin to escape the tax authority here in the United States. So it might be a risk, I would say, namely for tech names.
AM: Kamala has also proposed a ban on grocery price gouging. Do you see that affecting grocery stocks or big food stocks?
JW: Yeah, and you have Mars just announced that it was buying Kellanova, and that was maybe the number one or number two deal of the year in terms of the entire market. We got a whiff of that news last week. We’re looking inside our largest fund and at the top of our largest fund, among the top 20 names, you know, Pepsi (PEP), Coke, Procter & Gamble (PG). And now you have for the first time since Nixon 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 the middle of the DNC, we have a neck and neck coin toss election on our hands. Sometimes you get up there and say things that were not properly vetted. You can see basically, I don’t think that there’s an economist on planet Earth that wants to support that. Austin Gouldsby, for example, came out like one minute later and basically separated himself from those remarks. So staples, food plays, groceries, these types of concepts. Let’s get into September and let’s see if this is still a policy plank of the Democratic Party. I think it might just kind of get swept away. We’ll see.
AM: Are they gouging right now?
JW: No. The prices are set in the free market. If you don’t like what you’re getting at Walmart (WMT), you can go to Costco (COST) and if you don’t like that, you can, even if you’re thinking outside, you can go to Dollar Tree (DLTR) or Dollar General (DG), that is groceries as well. You can go into a CVS and buy food. You can go into Walgreens. Those are not grocery stores. And look, we own Procter & Gamble (PG), just using that as an example. If Proctor and Gamble decides it wants to gouge on diapers, then Kimberly Clark (KMB) is going to steal from them. And so it’s not in your best interest as a mega corporation and a free society to gouge again. Hey, we’re trying to win a 50-50 election, go on the stump. And sooner or later I would hypothesize the advisors to Harris will say, enough with the price gouging thing.
AM: A big concern for voters is the cost of things because of inflation. And then that’s one that they could identify with maybe.
JW: Well, then we shouldn’t have created so much money. Supply inflation is caused by the money supply which went spiking inexorably higher. Outside of a few things that you could say would be short-term shocks. For example, total lack of Russian natural gas into Germany sent their inflation sky high. You could say maybe it wasn’t such a monetary effect for them, but generally speaking there was massive fiscal and monetary stimulus that occurred during Covid. And then that’s why we ended up with a nine handle on CPI. And actually, if you look at the data, it should have been probably a 12 or a 13. It was just that the housing data wasn’t fully being picked up by the CPI and now needs to play catch up and get it in probably the next year to three.