The Stakes of the Presidential Debate: Key Economic Questions and Investor Sentiment

The Stakes of Tonight’s Debate

As the presidential election looms just two months away, the anticipation surrounding tonight’s debate is palpable. Scheduled to begin at 9 p.m. Eastern, the face-off between Vice President Kamala Harris and former President Donald Trump is set to be a critical moment, particularly in light of the tight race. The previous debate, which featured Trump and President Biden, significantly altered the dynamics of the contest, raising expectations for this evening’s event.

What Wall Street Is Eager to Learn

Corporate leaders are keenly focused on gaining deeper insights into Harris’s economic policies. While debates typically do not serve as platforms for major policy announcements, business executives will be closely monitoring how she articulates her economic vision and how she distinguishes her policies from those of President Biden. There is a growing hope among business circles that Harris might adopt a more business-friendly approach compared to the current administration.

Here are some essential questions that DealBook would pose to Harris regarding her economic strategies:

• What motivated your decision to dial back the proposed increase on the capital gains tax?
• Can you clarify your approach to combatting price gouging, especially considering the varied interpretations surrounding it?
• Are you prepared to eliminate the filibuster to advance initiatives such as an expanded child tax credit or a cap on prescription drug prices?
• Would you consider replacing Lina Khan as chair of the Federal Trade Commission?

For Trump, the Spotlight Is on Age and Mental Acuity

In this debate, attention will also be directed toward Trump’s age and mental fitness, concerns that previously plagued Biden during the last debate and ultimately impacted his re-election bid. Trump, who is nearly two decades older than Harris, faced scrutiny following a particularly convoluted response about child care at the Economic Club of New York last week, which raised additional questions about his cognitive sharpness.

While Trump’s remarks did touch upon key economic issues, including his stance on tariffs, here are some pertinent questions DealBook would ask him:

• You advocate for tax cuts alongside increased tariffs; are you not concerned that this could exacerbate income inequality?
• How would you address analyses suggesting that your trade policies might contribute to rising inflation?
• Do you believe the Federal Reserve should maintain its independence?
• Do you align with your running mate, Senator JD Vance of Ohio, who endorses Khan’s stricter antitrust measures?

Insights from an Influential Report

A recent report from the Penn Wharton Budget Model has provided insights into how each candidate’s proposals could impact the U.S. deficit. The analysis estimates that Trump’s tax and spending plans could lead to an increase in primary deficits by as much as $5.8 trillion over the next decade, whereas Harris’s proposals might raise them by up to $2 trillion.

Investor Sentiment Remains Cautious

As the debate approaches, investors are feeling the pressure. Indicators such as the futures curve of the VIX, often referred to as Wall Street’s “fear index,” signal that market volatility is expected to persist until Election Day, leaving many in the financial sector on edge.