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Why Wall Street is trying to shake up the 2024 race

When Jamie Dimon, head of JPMorgan, flew to Shanghai this week, he might have expected to attract attention for his views on Sino-American relations. But that was before Bill Ackman, the veteran activist investor, jumped in. On Wednesday, Ackman issued a passionate appeal for Dimon to throw his hat into the 2024 presidential race, challenging the incumbent Joe Biden on a Democrat ticket.

“Our country is at risk with $32tn of debt with no end to massive deficits in sight, heading into a recession at a time of great political uncertainty,” Ackman tweeted, lamenting that “@POTUS [ie Biden] is extremely weak and in cognitive decline [and] 70 per cent of Democrats don’t want him to run”. Ouch.

“Jamie just needs a push from people he respects and from the broader electorate” to run, Ackman continued, lauding him as the “centrist” to beat both Biden and Donald Trump. The former president is currently favoured as the Republican presidential candidate by 56 per cent of Republican-leaning voters, according to a recent Quinnipiac poll.

Should Dimon as potential POTUS be taken seriously? It seems hard. Ackman tells me he did not tell Dimon in advance about the tweet. But Dimon’s friends say he has been mulling the presidency idea for some time; indeed, he had already observed in Shanghai that “maybe one day I’ll serve my country in one capacity or another”. Moreover, he has not shot down the suggestion in public — yet.

However, the experience of watching Mike Bloomberg, former New York City mayor, spend about a billion dollars in 2020 to lose his own presidential bid has left Dimon wary of politics. And he knows he could face attacks from the progressive Democrat wing, who hate his stance on fossil fuels and his Wall Street pedigree. Then there are the legal battles over JPMorgan’s financial ties to the disgraced financier and paedophile Jeffrey Epstein. That timing is bad.

But even if Ackman’s trial (Twitter) balloon quickly bursts, investors should note it for at least two reasons. First, it shows how frustrated the US business elite feel about the prospect of another Biden-Trump mismatch (something that is also true of the broader electorate).

The problem is not simply that both politicians — and their parties — have a high disapproval rating among general voters. What really unnerves the big would-be donors for both parties, according to recent conversations I’ve had, is that the Quinnipiac poll also suggests Biden and Trump would be neck-and-neck in a theoretical match-up.

This is alarming for American democracy, given Trump’s repeated denial of the 2020 election results. But what really alarms Wall Street is that a return of the former president could spell fresh economic upheaval, in the form of capricious policymaking, geopolitical isolation and rising debt levels. The US can ill-afford that, given geopolitical tensions today are far worse than in 2016 — along with the country’s fiscal situation.

The second reason why Ackman’s tweet is revealing, at least in a symbolic sense, is that it shows the US elite still dream that a centrist caucus might save them. And Dimon is not the touchstone here. When the Milken Institute held its annual conference last month in California, one of the hottest talking points at the financiers’ private dinners was whether Joe Manchin, the Democrat senator from West Virginia, might run as an independent presidential candidate with the backing of the bipartisan No Labels platform.

Manchin himself seems uncertain. “While I understand that Americans are frustrated with the dysfunction of DC, I am currently focused on doing my job” for West Virginia, he tells me. The leaders of the No Labels organisation will not decide whether to launch a third-party challenge until next spring — and will not do that if polls suggest the move would deliver a victory for Trump.

In any case, history shows that third-party presidential candidates in the US have always performed very badly, since the two-party duopoly is deeply entrenched. To understand why, it pays to reread some trenchant 2017 analysis published by Harvard Business School. Katherine Gehl and Michael Porter use antitrust analysis to show why America’s “politics industry” fosters such damaging extremism — even though many voters have centrist instincts.

“The failure of politics has persisted because the normal checks and balances of healthy competition are neutralised” (as they can be in duopolies), the pair write, noting that “the failed competition in politics is perpetuated most of all by the very high barriers to entry, many of which are artificial and intentionally constructed to deter new competition and substitutes”. In other words, independent candidates struggle.

But even if this makes the chatter around Dimon — or Manchin — sound far-fetched, No Labels should not be ignored, particularly since many Wall Street donors, including Ackman, tell me they are backing it as an “option” or “insurance” strategy. If nothing else, it shows that it is not just mainstream voters who have lost trust in the political system; many of the ultra-wealthy feel like political “orphans” as well.

And that suggests the 2024 race might yet become less predictable than financial markets expect. Now that the debt-ceiling dramas are (almost) over, investors should brace themselves.

gillian.tett@ft.com 

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