THE MAP & ISSUES
Given the reliance that markets have had on existing stimulus and how correlated index performance has been on day to day progress for another round of fiscal measures, investors have increasingly focused on the likelihood of a Joe Biden victory. The way the map is currently structured, if Donald Trump wins all of the toss up states but Biden comes out on top in the states currently “Leaning Democratic” Biden would win the election. A Biden presidency, coupled with a blue Senate, likely means larger levels of stimulus and fewer roadblocks towards enactment in a period where time is really of the essence.
Prior to the onset of the Covid-19 pandemic Donald Trump had a roughly 57% chance of retaining the presidency according to PredictIt. As of October 26, that stands around 41% while FiveThirtyEight has Trump at a roughly 12% chance according to their statistical model. Former Vice President Biden’s general ballot lead, while lower than at previous points in the cycle, is outperforming Hillary Clinton’s lead by about four points relative to this time in 2016.
President Trump won in 2016 largely by over-performing the polls in the states that perennially matter such as Florida and Ohio while flipping Wisconsin, Michigan, and Pennsylvania – all of which hadn’t voted for a Republican since at least 1992. His hopes of a victory largely hinge on his ability to do that again.
For this election, there are two issues: The Economy and Coronavirus. For individuals who have the virus as their top issue, Joe Biden is their overwhelming candidate. For others who view the economy as more important, Donald Trump is the favorite but by a smaller margin than Biden’s on Covid-19.
Five times this year, The Wall Street Journal/NBC News poll has asked voters who they think would be better at handling the economy, Mr. Trump or Democrat Joe Biden. Five times they have named the president, by margins ranging from seven to 11 percentage points. Plenty of Americans, in short, appear to buy the president’s argument that the economy was in fine shape before the coronavirus hit, and that it isn’t his fault it has plunged since then.
However, for recent elections “It’s the Economy, Stupid” has had substantially less pull for voters than in previous cycles. In 2018, voters overwhelmingly said they thought Republicans would do a better job with the economy, yet the party lost 41 seats in the House that year.
For most voters, if Covid-19 is not their top issue it is a close second. Voters are viewing Covid-19 and the economy in largely the same vein; that it’s difficult to get the economy back to a pre-pandemic normality while we are still in the midst of said pandemic. Joe Biden leads nationally on virtually every issue other than the economy such as health care, climate change, race relations, and an ability to unite the country.
However, the President is not elected via the popular vote and, in our view, this is an election that is going to be all about the margins. There are 10 states that matter in this election, and new Covid-19 infections as a share of population are at or near all-time highs in four of them – with Wisconsin being in the midst of one of the worst epidemics in the country, reporting numbers just mildly below the peaks of Florida and Arizona in July. Wisconsin was a major flip for Trump in 2016, so a current Covid-19 outbreak of this scale is a negative for his chances there.
All in all, in our view, the absolutely key states to watch are Pennsylvania, Arizona, Florida, as well as – to an extent – Georgia and North Carolina which have both emerged as potential toss ups despite solidly Republican electoral histories. Pennsylvania is likely the key to an electoral victory and Joe Biden’s lead there has narrowed in recent days.
As of Oct 21, Joe Biden leads by about four points in the Real Clear Politics (RCP) Average for Pennsylvania, down from a high of seven points on Oct 12. In the six top battlegrounds, Donald Trump is actually polling better with Joe Biden today than he was with Hillary Clinton at the same juncture in 2016 which does quite a bit of damage to the view of a landslide Biden victory.
And while Trump still has resounding support from the farmers, leading Biden by 73 points nationally, Trump’s base of support in other areas has shifted. While he has lost support with Whites (especially in Women, and non-college educated), his support among minorities has shifted substantially. According to FiveThirtyEight, he has gained 11 points in Black support, nationally, while his support among Hispanics has increased by around 14 points. In states like Florida, where about 20% of the electorate is Hispanic, this is incredibly important. An NBC/Marist poll in September found Donald Trump leading Joe Biden in that category. In 2016, Hillary Clinton’s lead with Hispanics in Florida was 27 points. This also matters in states like Arizona, which Trump narrowly carried, and Nevada, which Hillary Clinton won by a little over 2 points in 2016. Nevada had one of the more onerous and drawn out lockdowns relative the nation, and the rebound has lagged which has emerged as a potential swing to the Trump campaign.