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Summary
- Vice President (VP) Kamala Harris is virtually assured of the nomination.
- Her nomination at the top of the Democratic ticket has made the race more competitive.
- Trump administration economic policies might not be as destabilizing as I initially feared.
Market Implications
- I still expect one insurance Fed cut in 2024.
Harris to Become Democratic Nominee
Harris is virtually certain to become the Democratic nominee. All potential rivals have pledged their support, and she is already nearing the 1,976 delegates needed to win the nomination. The Democratic National Convention starts on 19 August, but Democrats could hold a virtual nomination on 7 August, which they planned to do for Joe Biden to comply with Ohio nomination guidelines.
Harris has also moved quickly to secure the Biden-Harris campaign cash, currently $96mn (Chart 7). No precedent exists for a candidate withdrawing so late in the election season, but most campaign finance experts agree that Harris, unlike an entirely new candidate, is entitled to the existing Biden-Harris campaign funds. The Harris campaign also reports record fundraising since Biden announced his exit, $81mn from 880,000 donors, 60% of whom made their first contribution in this election cycle.
Harris has yet to choose her running mate, which she should do before the convention.
Race Becomes More Competitive
Because polls take time to implement, we so far only have betting markets data to gauge Harris’ chances. They show the race becoming more competitive, with Donald Trump’s odds falling and Harris’ already above Biden’s post-presidential debate (Chart 1). I expect the odds to tighten further as Harris starts campaigning.
Harris’ pros and cons can be summed up as:
Pros:
- She is not Biden. 80% of voters did not want a Biden-Trump rematch. Harris does not have mental acuity issues; she is 19 years younger than Trump.
- She brings energy to the campaign, as shown by her strong fundraising.
- She is a champion for reproductive rights, a key issue Democrats expect to sway independent voters, especially women.
- She can claim law-and-order credentials as a former district attorney (DA), though she was DA in the most liberal US city, San Francisco.
Cons:
- She may have to explain how she was unaware of Biden’s cognitive decline.
- She has the image of a California liberal.
- She has no experience running a state or a business.
Will the Real Trump Trade Stand Up?
Following the Republican National Convention, there is greater uncertainty on the policies a second Trump administration could pursue. First, the appointment of VP Vance could signal more populism. Vance criticized Wall Street and big business in his acceptance speech. Vance supports Lina Khan’s Federal Trade Commission. Also, Vance comes across as a rational voice that can articulate Trump’s economic instincts. It is unclear how involved Vance would be in policy design and implementation but there is risk he could play a key role. If so, this could lower the risk of economic instability.
Second, Trump’s acceptance speech expressed a new willingness to do business with China. Trump said he was ready to accept Chinese products if they came from US-based factories employing US workers. That said, this was a long and rambling speech and the GOP platform has little details on economic policies other than the usual immigration and tax cuts. We will get more information as the campaign unfolds.
Market Implications
I still expect one 2024 insurance Fed cut.
Betting Odds
Polls
Google Searches
Fundraising
Market Impact
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.
Betting Odds (Charts 1 and 2)
I focus on a Trump/Biden rematch because of the overwhelming odds that they will each get their party nomination. Also, a change in candidate prior to the election is unlikely but possible. I monitor this risk through the difference between the odds of a party victory and that of the candidate. For instance, the recent widening of the difference between the odds of a Republican and a Trump victory could signal a greater, though small, risk of Nicky Hailey winning the nomination.
Polls (Charts 3 and 4)
I include swing state polls (Charts 3 and 4). 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.
Fundraising (Charts 6 and 7)
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.
Market Impact (Chart 8)
The performance of the stock Trump Media and Technology Group stock could become a proxy for market views on the odds of a Trump victory.
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.
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Dominique Dwor-Frecaut is a macro strategist based in Southern California. She has worked on EM and DMs at hedge funds, on the sell side, the NY Fed , the IMF and the World Bank. She publishes the blog Macro Sis that discusses the drivers of macro returns.
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