by Greg Valliere, AGF Management Ltd.
Insights and Market Perspectives
Author:Â 8
October 19, 2020
FOUR YEARS AGO TODAY, Hillary Clinton led in Michigan by 12 points and was ahead by 7 points in Pennsylvania and Wisconsin. She lost all three. Joe Bidenâs lead today is actually less than Clintonâs in Pennsylvania and Michigan â a signal that as this Thursdayâs debate approaches, Donald Trump still has a chance.
OF ALL THE BAROMOTERS WE LOOK AT, the RealClearPolitics aggregate of Las Vegas betting odds is the most interesting right now. Biden had a roughly 66% chance of winning just two weeks ago; that figure was 59.6% this morning.
RECOVERED FROM COVID-19, Trump is barnstorming across the country with an energy level that far eclipses Bidenâs. Trump is drawing huge crowds, egged on by his outrageous charges about Michigan Gov. Gretchen Whitmer, Dr. Anthony Fauci and of course Biden, whose lead in Ohio has evaporated and is now down to only 4.4% in Pennsylvania.
THE MEDIA AND WASHINGTONâS POLITICAL ELITES still expect Biden to win; several Republicans have distanced themselves from Trump, which only makes his base more motivated to vote for him. But his base isnât enough; Trump needs wider support, which makes the upcoming debate his last shot at getting to a tie in states like Pennsylvania.
DESPITE ALL THE COMMENTARY about how this looks like 2016, it really isnât that similar. Biden has a huge cash advantage; Clinton did not. Biden has astonishing popularity among women and seniors; Clinton did not. And Covid-19, not even on the radar screen in 2016, continues to be Trumpâs single greatest albatross.
WEâVE PROCLAIMED SINCE OCT. 2 that Biden would win, narrowly, and that still seems like the base case (a landslide never seemed likely). Yet this predictable
narrowing has two big impacts: a close race could allow the GOP to keep the Senate, maybe by one seat; and the threat of a disputed election still looms.
BOTTOM LINE: Thursdayâs debate is huge, and Trump almost certainly will improve on his disastrous performance in the first debate. The key issue: Will he have the discipline to hammer away at Bidenâs tax hiking agenda? Or will he focus on personal grievances?
BIDEN WILL GO INTO THE DEBATE as the favorite, looking to run out the clock, not always the best position. What a difference two months makes: the Democrats were complacent and cocky in August â and suddenly theyâre nervous as Pennsylvania tightens, just as it did four years ago.
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THE STIMULUS HYPE WONâT END: Seemingly every day thereâs another breathless account of one final meeting between Nancy Pelosi and Steve Mnuchin; they will speak today and the new deadline apparently is tomorrow. Actually, both sides are close to agreement, egged on by Trump, whoâs willing to sign off on a bill that spends more than Pelosiâs $2.2 trillion target.
BUT THIS OBVIOUSLY OMITS Mitch McConnell and congressional Republicans from the equation. They adamantly oppose spending more than $1 trillion and some GOP lawmakers donât want to spend anything. McConnell will hold a show vote this week, pledging to spend $500 billion, and the Democrats will scoff. We canât see a deal with these divisions.
A STIMULUS PACKAGE EVENTUALLY will pass, possibly in a lame duck session but more likely after the Jan. 20 inauguration. Millions of Americans will be left in limbo for weeks longer; theyâre mere pawns in Washingtonâs political gamesmanship.
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