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Summary
- On the eve of election day, betting markets and polls show Vice President Kamala Harris and presidential candidate Donald Trump neck and neck.
- The Harris campaign has greatly outraised the Trump campaign, and the former has a much larger cash balance to spend on the last few weeks of the campaign, which could bring Harris over the line.
Market Implications
- I continue to expect the Fed to cut two more times in 2024 but 2025 is more of an open question, especially if the elections result points at an inflationary macro policy mix.
Candidates Are Neck and Neck
Betting markets have moved against Trump over the past week or so, although they still see him as more likely to win (Charts 1 and 2). Predictit though shows both candidates with winning odds of 54%, which suggests these markets have to be taken with a pinch of salt!
The stock price of Trump Medias and Technologies, which has correlated strongly with betting odds, is down from the highs (Chart 3).
Polling has moved against Harris for the past month or so but she remains neck and neck with Trump. She has lost her limited voting edge over Trump (Chart 4); her popularity ratings have fallen through they remain above Trump (Chart 5); her job approval rating has also fallen (Chart 6).
In the swing states, except Michigan, Trump is ahead but remains within the margin of error (Charts 7 and 8).
Lower Odds of Republican Sweep
The odd of the Democrats losing control of the Senate remain close to 80% (Chart 9). This makes sense, since out of the 34 Senate seats in play only 11 are held by Republicans and none is a tossup. Only two are ‘lean Republican’ with the rest considered either solid or likely Republican.
By contrast, the House is more in play as the Republicans currently hold 221 seats out of 435, and betting odds around 50% make sense.
Betting markets also show recently lower odds of Republican sweep, in line with Trump’s lower betting odds (Chart 10). Nevertheless, the odds of a Red sweep remain higher than a Blue sweep or of Harris winning the White House but facing a Red Senate and Blue House.
Exceptional Fundraising to Bring Harris Over the Line?
Where the Harris campaign has clearly outrun the competition is with fundraising (Charts 12 and 13; the last data point is 16 October, i.e., half a month of fundraising). During July-Mid October, the Harris campaign raised $713mn, more than four times the Trump campaign’s $171mn.
On 16 October, the last pre-election filing with the Federal Election Commission, the Harris campaign reported $119mn in cash against the Trump campaign’s $36mn. This large cash balance could give an edge to the Harris campaign. For instance, by funding a large Get Out the Vote operation.
Market Implications
A Harris victory would most likely be accompanied by a Red Senate and Blue House, which would likely bring about less fiscal profligacy than a Republican sweep.
That said, both campaign programs are vague and the policy intentions of either administration may not become known until the key cabinet positions have been announced, which may not be until late November (President Joe Biden’s last cabinet announcements were Attorney General Garland and Commerce Secretary Raimondo on 7 January 2021).
I continue to expect the Fed to ease two more times in 2024 but 2025 is more of a question mark, especially if the elections result points at inflationary policies.
Presidential Race
Calendar
Notes
The 2024 presidential campaign has started early and the stakes for market participants are unusually high as the macro policies of a second Biden or Trump administration would differ markedly. This elections monitor updates investors abreast on the progress of each candidate. It is updated every other week and more often if needed. The monitor has five parts.
I include swing state polls. Swing states could swing either Republican or Democrat and typically include Arizona, Georgia, Michigan, Nevada, Pennsylvania, and Wisconsin. They account for 77 votes of 538 (270 votes are required to win) and pollsters generally agree the winner must take most of them.
I monitor the funds each candidate raises and spends. Even though they are only a fraction of the funds Political Action Committees (PAC) raise, they still contain information on the popularity of the candidates. The data is updated monthly.
I use Google searches as proxies for the public interest in the elections, with Taylor Swift searches as the benchmark.
Calendar
The calendar provides the schedule of each party’s primaries, the steps to inauguration, and a calendar of Trump’s ongoing legal battles. These are:
- Supreme Court ruling on whether Colorado and Maine can keep him off the ballot.
- New York civil fraud trial.
- Defamation suit from writer E. Jean Carrol.
- Georgia racketeering suit against Trump and associates for trying to overturn the 2020 election.
- Federal trial over trying to overturn the 2020 election.
- Federal trial over the mishandling of classified documents.
- New York 2016 hush money.
Trump’s legal calendar is evolving and will be updated as information becomes available.