by Greg Valliere, AGF Management Ltd.
Insights and Market Perspectives
Author:Â 8
November 4, 2020
IT WAS A GOOD NIGHT FOR REPUBLICANS, but Donald Trumpâs 2:30 a.m. charge of fraud and his vow to take the election to the Supreme Court will make the outcome â whether itâs a Trump win or loss â controversial for years to come.
THE NUMBERS FAVOR TRUMP: There are literally millions of mail-in ballots to be counted in states that havenât been called, but Joe Biden is trailing badly in most of those states; itâs unlikely that he can change the initial outcome in Georgia or Pennsylvania. Winning just Michigan and Wisconsin wouldnât be enough for Biden, but he hasnât lost the election yet.
A BIG STORY FOR THE FINANCIAL MARKETS is the likelihood that the Republicans will maintain their control of the Senate. This will lead to gridlock with the liberal House â and as a result, market-unfriendly tax hikes could stall in 2021.
BUT THE SENATE RESULT HAS BEEN OBSCURED by the threat of litigation and uncertainty, even though the Supreme Court recently has deferred to state legislatures on issues like last nightâs vote counts.
IF TRUMP DEMANDS A HALT TO VOTE-COUNTING, the courts probably would block him, but this could become so controversial that âfaithless electorsâ could become part of the nationâs narrative ahead of the Electoral Collegeâs mid-December vote to confirm the election.
EVEN REPUBLICANS like Chris Christie and Rick Santorum were distressed by Trumpâs charge this morning that there was fraud in the election; there is no evidence of fraud.
WE SAID REPEATEDLY THIS FALL THAT âyou underestimate Donald Trump at your own peril,â and he displayed extraordinary energy in the past month. Why couldnât the polltakers see this coming? They were even worse than in 2016. What can we say? Weâll never get bamboozled by polltakers again.
ASSUMING BIDEN LOST, the Democratsâ recriminations will begin immediately. Why did they seemingly ignore Hispanics until the last couple of weeks? Why did the party lose the voter registration battle? Progressives will be furious this winter, and the party undoubtedly will veer to the left.
IF BIDEN ACTUALLY WON, his presidency would be hamstrung by Mitch McConnell and the Senate Republicans. Biden could toughen regulations that Trump has eased, but any major legislative accomplishments would be unlikely.
THE REPUBLICAN SENATE PROBABLY WOULD REJECT A MASSIVE BIDEN STIMULUS plan that the financial markets are hoping for. Trump, on the other hand, probably would be able to get a bigger package than Bidenâs through Congress. Trump would spend lavishly next year, boosting an economy that should be shaking off the pandemic by spring.
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This post was first published at the AGF Perspectives Blog.
