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Summary
- Vice President Kamala Harris is struggling to widen her small lead over presidential nominee Donald Trump but continues to outraise him.
- Should Harris win, pollsters expect a red Congress while betting markets see a blue or split Congress as most likely.
Market Implications
- I still expect the Fed to cut two more times in 2024.
Harris Struggles to Widen Her Lead
Betting odds still favour Harris but not overwhelmingly so (Chart 1). This could be because Harris’ polling lead seems to have hit a floor around 2% (i.e., within the margin of error, Chart 2). Regarding the Electoral College, Harris is within 2% of Trump in every swing state but ahead in four of seven (Charts 3 and 4). These numbers make it difficult to have conviction on the election outcome.
Trump did not benefit from the second assassination attempt (Charts 5 and 6). His net favourability rating remains well below Harris.
Harris’ fundraising remains impressive and well ahead of Trump (Charts 7 and 8). Both campaigns will launch a blitzkrieg of ads in the last few weeks of the campaign, but Harris will have more ammunition to spend. That said, Trump won in 2016 even though he spent less than Clinton.
Trump’s DJT stock price has stabilized but remains close to the lows (Chart 9). In any event, the former president has already indicated he would not be selling his stock.
Blue Sweep Remains Unlikely
Lack of a Congressional majority could constrain Harris if she wins. Democrats are ahead of Republicans in generic Congressional polls but the Senate races favour the Republicans (Chart 10). Of 34 Senate seats up for grabs, only 10 are currently Republican, and all of them in seats considered safe.
The Democrats currently have a majority of one and will lose the seat of Senator Joe Manchin who is retiring this year. The Democrats must lose only one more seat for the Senate to flip (if the Senate is split 50/50, the vice president casts the deciding vote). With Montana Democratic Senator Jon Tester falling behind his opponent, the Senate seems likely to flip (Chart 11).
Yet, the hitherto unassailable lead of Republican Texas Senator Ted Cruz is narrowing (Chart 12). Also, the Nebraska Senate race pitting Republican incumbent Deb Fischer against Dan Osborn, an independent with a union background, has received limited media coverage and could surprise. The few polls available show both candidate neck and neck.
Contrasting, the House seems more within Democratic reach as the current Republican House majority is slim. They hold 220 seats to the Democrats 211 (with four vacant seats). That said, most pollsters see the Republicans as more likely to keep the House, though by a small margin.
Betting markets disagree with pollsters. In a Harris victory, the former see a blue or split Congress as much more likely than the red Congress that is the latter’s base case (Table 1). This could reflect pollsters viewing the Congressional and presidential elections as independent events while bettors assume Congress is more likely to go with the party that wins the White House. I agree with betting markets and the combination of a blue White House, blue House and red Congress is my base case.
Market Implications
The outcome of the race will have profound market implications. However, currently the risks are largely 50/50.
I still expect the Fed to ease two more times in 2024.
Betting Odds
Polls
Fundraising
Market Impact
Congressional Races
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.
Polls (Charts 2 and 3)
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.
Fundraising (Charts 7 and 8)
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.
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.