by Greg Valliere, AGF Management Ltd.
DEFINITIVE RESULTS ARE UNLIKELY TONIGHT: It could take days for officials to count mail-in ballots — and then there will be recounts and inevitable lawsuits that could take weeks to resolve. It’s 2020 after all; expect the unexpected.
THE REPUBLICANS PROBABLY WILL WIN TODAY’S VOTING, since a large percentage of the nearly-100 million votes already cast went to Democrats. So have enough Democrats voted to maintain the party’s lead? Here’s our take —
The Easy Calls —
Democrats will maintain their control of the House, probably picking up a few more seats; they presently have a 35-seat majority. Joe Biden will easily win the popular vote, perhaps by 5 or 6 million votes.
The Big Call —
If polltakers are even more wrong than in 2016, Donald Trump has a chance. But most polltakers have increased their weighting of white males who never attended college (the heart of Trump’s base).
Michigan and Wisconsin should be comfortable Biden wins, and he’s ahead by just enough in Pennsylvania to win there, even if the polls are off by a little. But those three pivotal states may report late, which could arouse suspicions.
We think Biden is on a path to about 300 electoral votes, hardly a landslide, just 30 more votes than required. He could pick off Georgia or North Carolina, but he doesn’t have to; Pennsylvania is the key, although Biden has several paths to 270, many more than Trump.
The toughest call —
The Senate, with 53 Republicans and 47 Democrats, still looks very close. Republicans may lose four of their seats while the Democrats lose only one — creating a 50-50 tie that the Democrats would break. Or the Democrats could gain control by 51-49. Or we may have to wait for a runoff election on Jan. 4 in Georgia.
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SO WILL THIS BE A BLUE WAVE? It won’t be a tidal wave, in our opinion, just a “light blue wave,” because Democrats need a bigger Senate majority to ensure passage of progressive legislation. A couple of Senate Democrats, maybe more after tonight, are moderates.
THE DEMOCRATS WOULD BE IN FAR BETTER SHAPE tonight if they had done more with African Americans and Hispanics, or done more with voter registration. But with women and seniors strongly opposing Trump’s handling of the pandemic, the Democrats are headed for a pretty good night.
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NOW THE FOCUS WILL SHIFT TO THE LAWYERS: Hundreds of attorneys from each party will challenge voting, demand recounts, and seek to invalidate mail-in ballots. We could be spared this if Florida or North Carolina break early tonight for Biden; that might make legal challenges moot.
BUT TRUMP IS LIKELY TO CHALLENGE a close outcome, with Attorney General Barr taking a case all the way to the Supreme Court. A final ruling may not come until December, which would not be a welcome development for the financial markets.
The views expressed in this blog are those of the author and do not necessarily represent the opinions of AGF, its subsidiaries or any of its affiliated companies, funds or investment strategies.
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This post was first published at the AGF Perspectives Blog.
