04/08 – Choices for Joe: US election update

Hi there and welcome to our new weekly rundown of all things to do with the upcoming US presidential election between President Trump and former Vice President, Joe Biden. Each week we will take a look at the likes of policy changes, polling shifts, the continued impact of Covid-19, the geopolitical stances that the candidates are taking and of course, the economic impact on the US, the dollar and global trade.

The US presidential election remains the most important political event globally and markets are starting to pay attention to the run-in to November’s polling day.

Trump doubles down on delegitimisation

The main electoral news last week came just minutes after the announcement of a record fall in US GDP in the form of a tweet from President Trump saying that the 2020 election should be delayed “until people can properly, securely and safely vote.”

This is not something that a President can actually do as it would require an act of Congress however, casting doubt over the legitimacy of the electoral results is not a new play by the Trump campaign; Trump voiced similar concerns as a candidate in 2016, the difference is now that he is the President.

Trump’s focus is falling on the increase in postal voting that is likely this time round given the discomfort about having thousands of people congregating at a location to cast votes in person. A poll by the US broadcaster NBC in April showed 39% of Americans supported a delay to the election until the virus is under control while political polling powerhouse Five Thirty Eight found in a separate study both Republicans and Democrats were open to their preferred presidential candidate “rejecting the legitimacy of the election if they claim credible evidence of illegal voting or foreign interference.” And in that vein, 29% of Republicans said it would be appropriate for Trump “to refuse to leave office because he claims that he has credible evidence of illegal voting.”

So, while he cannot delay the election, plans to question the legitimacy could see a President unwilling to leave the White House on January 20th if a definitive winner has yet to be decided. We would be well through the looking glass if that happened given the 20th amendment ends the Presidential term at noon on the day following an election.

Biden continues to lead in the polls ahead of VP nomination

For a number of weeks now Democratic candidate Joe Biden has led Donald Trump in opinion polls with a lead as high as 15 percentage points. At the time of writing, that lead seems to be around 8 points ahead of Biden’s decision to announce his running mate and the person who would become his Vice President were he to win on November 3rd.

Unusually for any major political race but hopefully in a sign of things to come, all of the frontrunners for the position are female, with the majority also being women of colour. The favourite is Senator Kamala Harris who ran in the Democratic primary, making her relatively well known across the country. Harris has also gone through several of the vetting processes that candidates must endure so as to eliminate any skeleton-filled closets.

Given the ongoing race relations debate and protests in the US as well as the conversation over the role of the police, having a black woman who previously worked as a prosecutor makes a lot of sense for Biden.

Biden has long been supported by black voters and will often harken back to his role as Barack Obama’s No.2 in order to paint himself as a friend of the black community. Having Senator Harris by his side would only increase that support.

We expect his decision by the end of the week.

Politics in the time of Corona

Whilst several countries are starting to battle the second wave of Covid-19 cases within their borders, it has become clear that the US never finished its first. More than 40% of U.S. infections were recorded in July and we are starting to see renewed lockdowns as well as delayed reopenings in a further dent to the wider economic recovery

Within the key battleground states – Florida, Ohio and Pennsylvania – national polls point to Biden leading where infections have hit record highs.

A plan to deal conclusively with the Coronavirus is the one thing that could definitely get Trump back to level pegging with Biden but such a silver bullet looks unlikely at this time.

Checking for stimulus

Last week saw Congressional squabbles over the amount of support the government should be offering US citizens who have lost their jobs as a result of the pandemic continue without resolution. We can but hope that some form of agreement is delivered soon or the growth stumble that has characterised US economic data will become more entrenched.

As with everything we publish, we want to make sure that it is relevant and insightful for those of you taking the time to read it. If you have any questions, suggestions or general feedback, please feel free to email me at j.thomson-cook@equalsmoney.com

Have a great week.

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Jeremy Thomson-Cook

Jeremy Thomson-Cook

Jeremy has over 13 years experience working in the FX industry. As a specialist in political risk mitigation and currency hedging, he regularly advises clients on the day-to-day moves of the markets and the implications of fiscal and monetary policy on international businesses.