US Presidential Election: Who’s Edging It And What Are The Markets Thinking?
With just 105 days between us and the 2020 US Presidential Election on 3 November, things are starting to heat up! You’d be forgiven for forgetting that this thing was even happening after the rollercoaster year we’ve all experienced so far. In fact, how it will happen (physically, we mean) is still a cause for much debate. But that’s not what we’re interested in today.
What’s going on the election? Who’s more likely to win and what does Wall Street make of that? Let’s dive in and take a look, before checking over the hottest trading events of the week.
Trump’s support wanes as election nears
Well, if the major opinion polls are anything to go by (they usually are), we’ll witness a landslide victory for Joe Biden. Trump’s popularity has plummeted over the last few months. Yet, we all know that the US President isn’t selected on overall popularity alone.
Trump vs. Biden opinion polls
Average of 7 national polls
There is, of course, the twisty-turny Electoral College system to circumnavigate. This system essentially divides the country up into Electoral College votes, the bigger the state’s population, the more EC votes they have.
The six states with the most electors are California (55), Texas (38), New York (29), Florida (29), Illinois (20), and Pennsylvania (20). The District of Columbia and the seven least populous states — Alaska, Delaware, Montana, North Dakota, South Dakota, Vermont, and Wyoming — have just three electors each.
So, how’s it looking based on Electoral College polling?
Electoral College votes tracker
According to this, Biden is likely to take the big states of California, New York and Illinois. With some other biggies, in the shape of Florida and Pennsylvania leaning his way, too. Right now, Texas is looking like a key battleground.
If the above were to happen, there’s almost no chance of Trump being able to amass the 270 EC votes he would need to win and we’ll all be welcoming Big Joe as the 46th POTUS on the 4th of November.
One interesting twist is that Trump still seems to be stronger on the economy. A recent CNBC poll showed that voters still favoured Trump 44% to 38% over Biden when asked who has the best policies for the economy.
What are the markets saying?
US economists and investors are following all of this of course, and some of them have noted that the recent slump in the markets may be due to Biden pushing ahead of Trump in the polls. This has, potentially, left investors feeling a bit queasy about the future of the economy under a Biden presidency.
Finance executives are now bracing themselves for this to happen, which is a bit of a 180 for some of them who had previously cheered on Trump’s cuts in corporate and income taxes, along with his regulation rollback.
Policy-wise, Biden has said he would raise the corporate tax rate to 28% from 21%. Households making over $400,000 would also see tax increases. He’s also promised a not-so-insignificant $700 billion to help revive the economy with an “America-centric” approach to job creation and manufacturing. None of these pledges are really surprising for a Democrat.
If Biden does win, one key thing for many investors will be the Republicans maintaining control of the Senate. Such a situation would stop Biden from embracing more left-leaning economic policies.
The elephant in the room…
No, not the republican elephant! This extremely difficult factor isn’t red or blue or even visible — we’re talking about coronavirus. Trump’s handling of the current crisis has been questionable and his approval figures have nosedived as a result.
Whoever wins the next election will have their hands more than partially tied trying to get the country back on its feet following its worst crisis for over a century. There are some things that politics can’t fix and it’s quite obvious that the US economy is in for a rough ride regardless of who parks themselves in the Oval Office.
Who do you think will win the 2020 election? And what impact do you think they will have? Tweet us your 2 cents @_contentworks.
What’s up in the markets this week?
A super quiet week lies ahead. Here’s what’s on the agenda.
Monday
No major events scheduled.
Tuesday
● The Bank of Japan is set to announce its latest inflation rate (YoY) figures (JPY).
Wednesday
● Canada will announce its own inflation rate (YoY) figures (CAD).
Thursday
No major events scheduled.
Friday
● Finally, the US’ Markit Manufacturing PMI Flash (USD), which measures the performance of the manufacturing sector, will be released.
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Speak soon!
The Contentworks team
