by Greg Valliere, AGF Management Ltd.
Insights and Market Perspectives
Author: Greg Valliere
September 8, 2020
HOW MUCH IS ENOUGH? Joe Biden is ahead by 7 or 8 points, but if you eliminate his likely landslides in California and New York, the presidential race looks much closer in the battleground states that are crucial to winning 270 electoral votes.
AS WE RETURN FROM VACATION, it strikes us that gaffes and scandals and tell-all books have not made a huge difference — because only about 10-to-13% of voters haven’t made up their minds yet.
THE KEY ISSUES: What could change the opinions of those undecided voters?
The economy: Unemployment is now well below 10%, and third quarter GFP — which will be released in late October — probably will rise by more than 20%. The economy is Trump’s most realistic hope for re-election, but enacting a major pandemic stimulus bill, which would help him, looks increasingly unlikely.
The virus: Trump still gets poor grades on this issue. He initially dismissed the virus, then sent conflicting signals on masks and shutdowns and constantly praised his performance on the issue. You can be sure that Trump he will proclaim by late October that a vaccine is available — whether it is or not.
Urban violence: Trump obviously sees this as a life-preserver, and it just might be. Free advice to Biden — Joe, you should support calling out the National Guard in riot-torn Portland, you could win the election if you do.
The military: Who knows if the Atlantic Magazine article is accurate? The four sources who allegedly heard Trump mock U.S. soldiers should come forward; otherwise Trump will continue to call it fake news. This incident could slightly erode Trump’s support in the military, which supported him four years ago despite his outrageous comments about John McCain.
The unknown: Bob Woodward reportedly has some bombshells when his book comes out next week; the editor of the Atlantic says he has much more dirt to dish; both candidates could have health issues; U.S.-China trade friction could erupt on Sept. 15; geopolitics is always a wild card — and could there be a departure at the Supreme Court?.
OUR BOTTOM LINE: It’s too early to make a definitive call — the first debate, on Sept. 29, could be pivotal. (The bar has been set low for Biden, who will show once again that he’s not “sleepy.”)
IN THE MEANTIME, Biden’s nationwide lead of roughly 7-8 points isn’t as important as the battleground state margins, which have tightened slightly; Trump still has a shot of winning Michigan, Pennsylvania, Wisconsin, Arizona and Florida. The winning candidate needs at least three of those states, all of which show slight Biden leads.
FOR NOW, OUR ODDS ARE AS FOLLOWS:
1. A 25% percent chance that Biden wins comfortably, sweeping the Senate
along with him;
2. A 30% chance of a narrow Biden victory that may be challenged in court, with the Senate still very much in play;
3. And a 45% percent chance of a Trump victory that retains GOP control of the Senate. Even Trump’s own advisers say he’s unlikely to win the popular vote, but it’s far too early to rule him out in the Electoral College.
SO WE’RE AT 55-45 that Biden wins, but that’s not our final call. These odds are unlikely to change much between now and Sept. 29, when the first debate could make all the difference.
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This post was first published at the AGF Perspectives Blog.
