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“No longer operative.” That infamous utterance by a prevaricating presidential press secretary from another scandal-ridden era—Ron Ziegler, Richard Nixon’s mouthpiece—also applies to a statement that appeared in this space a couple of weeks ago. Then it seemed to be too early for presidential politics to have an impact on financial markets, but events have overtaken that assertion.

What is even more valid now than a fortnight ago is that Wall Street needs to take the candidacy of Elizabeth Warren very seriously. While recent public opinion polls have the Massachusetts senator in a statistical dead heat for the Democratic presidential nomination with former Vice President Joe Biden, the real-time betting markets show Warren pulling away from the field.

In the cold, cruel world of politics, the big loser appeared to be Sen. Bernie Sanders (Ind., Vt.), whose odds fell sharply at midweek after he needed to have two heart stents implanted. When news of his hospitalization hit midday on Wednesday, Art Cashin, head of UBS floor operations at the New York Stock Exchange, speculated that it added perhaps 200 to 300 points to the drop in the Dow Jones Industrial Average, which shed nearly 500 points on the session. (Sanders’ doctors said Friday that he had been diagnosed with a heart attack during the week.)

That’s because Warren’s betting odds of winning the nomination shot up to more than 50%, as she was thought to solidify the support of the progressive wing. “She has clearly separated herself from the pack,” observed Jim Bianco, head of Bianco Research. That was better than twice the odds the betting market placed on Biden, with whom Warren had been running neck-and-neck a little over a month ago. Late in the week, entrepreneur Andrew Yang was in third place, with about 11% odds, still ahead of Sanders’ 9%.

To be sure, the betting markets aren’t perfect and can be swayed by a few big wagers, but participants put real dollars down. Opinion polls take in a bigger sample, but mere talk is cheap.

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Warren’s rise in the polls was highlighted in bold face in a worry list compiled by David Rosenberg, the chief economist and strategist at Gluskin Sheff. While investors should be concerned about trade and China, along with a litany of global concerns, “the No. 1 issue should actually be the rising prospect of an Elizabeth Warren presidency, coupled with the House [of Representatives] staying Democrat and the Senate flipping that way,” he wrote to clients.

Warren, while declaring herself a capitalist to draw a distinction from Sanders, an avowed democratic socialist, “has made it very clear that she is no friend of the equity market,” he continues. And the Massachusetts senator has a point, Rosenberg adds. One of the biggest bull markets of all time created tremendous wealth—some $27.4 trillion since the low of March 2009, by Wilshire Associates’ calculations—but failed to deliver on facilitating capital investment, as textbooks teach. “On that file, she does have a leg to stand on,” he contends.

Adding to the rising prospect of a Warren nomination, the market also has to deal with the impeachment inquiry for President Donald Trump and its impact on his chances of reelection. And if the economy slows sufficiently to push up the unemployment rate, his odds would fade further.

Moreover, impeachment would likely make the already unproductive Congress even more so. Issues such as a vote on the USMCA trade deal, drug pricing, and the like probably would remain stalled. The impeachment proceedings also “all but ensures that we are going to see a de facto tax INCREASE on the corporate sector come 2021,” MacroMavens’ Stephanie Pomboy alertly points out.

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The end of provisions such as immediate expensing would be equivalent to a seven-to-eight percentage point increase in the statutory tax rate. “YIKES!!,” she comments. “Yeah, I know 2021 is a lifetime away. But if you are a CEO, you’re going to start factoring in that change in 2020, which, it bears reminding, is just three months away.” All of which will weigh on the already deteriorating profit outlook, she concludes.

The bottom line for next year’s presidential race is that it seems increasingly likely to pit Trump, the stock market’s No. 1 cheerleader, against Warren, “a cheer-less leader,” as Rosenberg dubbed her, who favors higher marginal tax rates, hikes in capital-gains and dividend levies, plus a wealth tax, to help pay for Medicare for all. Some choice.

Write to Randall W. Forsyth at randall.forsyth@barrons.com