Trump, the U.S Presidential Election, and the Race against Time

The latest

Through the early part of this week, the markets responded to a number of vaccine-related news reports.

There are a number of contenders in the race to deliver a COVID-19 vaccine to the world.

Riskier assets have continued to stand their ground on hopes of a vaccine and viable treatment drug. By contrast, U.S President Trump continues to struggle in the U.S Presidential Election opinion polls.

It’s hardly surprising when you consider the spread of the virus across the U.S and the 2^nd wave.

In a number of economies, including China and the EU, governments have managed to prevent a 2^nd wave until now.

Patience and caution was the name of the game in China and across EU member states. For now, it appears to have paid off.

For Trump, the gamble has certainly backfired. The only hope that the U.S President has now is for a vaccine to be widely available before a 2^nd economic meltdown.

A 2^nd Meltdown Scenario

On Wednesday, news had hit the wires of Jefferies raising its S&P500 price target to 3,100. The upgrade came as a result of an improving outlook on corporate earnings and collapsed Treasury yields.

The revised target came without any consideration of a 2^nd nationwide lockdown across the U.S and beyond.

It is hard to imagine what impact a 2^nd U.S lockdown would have on the U.S economy and beyond.

One certainty is that Trump would see his chances of a 2^nd term go up in smoke along with the economy.

That makes a COVID-19 vaccine essential. Even then, will voters forgive the U.S administration failings in managing the pandemic?

The U.S remains the worst-hit nation by some distance.

At the time of writing, the total number of COVID-19 cases globally stands at 13,697,662, with 586,896 coronavirus-related deaths.

In the U.S, the total number of COVID-19 cases stands at 3,616,747, with 140,140 coronavirus related deaths.

Brazil is a distant second, with 1,970,909 cases and 75,523 total coronavirus related deaths.

Many would argue that a large proportion of the 140,140 deaths could have been avoided.

We saw Trump, not only blame China for the virus but also accuse them of being too slow in alerting the global community.

What If?

Had Trump listened to medical experts, however, the U.S may have gone into lockdown mode much sooner. Ditching the WHO didn’t really achieve its intended result…

Was self-interest to blame or was it a combination of bad advice and a lack of understanding?

Either way, a U.S President is only as good as the appointed advisers and cabinet.

What has been clear in Trump’s presidency is that neither has been up to the task.

Foreign policy has alienated just about every member of the G7 and beyond. China and Russia are on the brink of an unprecedented diplomatic partnership. Iran has even joined the two mighty nations.

Trade had come close to a standstill as a result of the extended U.S – China trade way. While COVID-19 has not helped, U.S attitudes towards Beijing could disrupt trade further.

Making America great again sounded like an ideology at best. As it transpires, it was more of a pipe dream than anything else.

Trump didn’t unite the country but divided it, with racial tension a major domestic issue once more.

The Polls

Looking at the FT’s interactive Calculator and polling data, which are as at 15^th July 2020:

Joe Biden has 308 of the Electoral College votes. This is 38 more than the 270 needed to win the Presidential Election.

At the end of June, Biden had 318 of the Electoral College votes, so the gap has narrowed.

U.S President Trump has 132 of the Electoral College vote. Alarmingly for the U.S President, that is down from 148 Electoral College votes back on 29^th June.

Looking deeper into the numbers,

Biden has 198 solid votes and 110 leaning votes. At the end of June, Biden also had 198 solid votes but 120 leaning votes.

Trump has 115 solid votes and just 17 leaning votes. At the end of June, Trump also had 115 solid votes but 33 leaning votes.

Both sides have seen leaning votes fall away in the 1^st two weeks of July. Trump and the Republicans should have more concern over this than the Democrats, however.

There are 98 Electoral College votes that are now in the “Toss-Up” category. That is up from 72 back in June. It’s still not enough for the Reds.

For the Superstitious

Trump still has Missouri leaning in his favor…In the Presidential Elections between 1904 and 2016, Missouri has voted for the winning candidate in all but 3 elections.

For Trump, perhaps Ohio will be the key to the Oval Office. No Republican president has reportedly won the Presidential Election without winning Ohio… Ohio continues to sit in the FT’s “Toss-Up” category, where there is less than a 5% difference in the polls.

Biden still has Florida and Nevada leaning in his favor, however, with New Mexico as a solid blue. These are also strong indicators for the pollsters.

So, if the polls are anything to go by, Trump’s chance of winning remains slim to none.

The Rabbit out of the Hat

A U.S patented COVID-19 vaccine and effective treatment drug is Trump’s rabbit out of the hat.

Not only would the U.S economic recovery speed up but any uncertainty would also be removed.

That would be a boost for consumer confidence and consumption. For Trump, it should also mean fresh record highs across the U.S equity markets.

All of this is assuming of course, that the economy doesn’t go into meltdown between now and the election.

We’ve yet to see the markets pay too much attention to the polls. The polls may garner more interest once we pass through this earnings season.

Whatever happens, it will get choppier, though the jury is out on who the markets are siding with.