Choppy Markets?

Macro Perspectives: Fri 11 Sep 2020

We have 53 days until the US election and a vacuum to be filled with uncertainty and speculation - generally a formula for choppy markets.

Let's take a look at how the election is sizing up...Despite the reports that the polls have swung in recent weeks to a very tight race, Reuters still has it at a seven point spread in Biden's favor, with The FT at eight points.

In the Reuters surveys, a "robust plan for covid" leads the list of determining factors for choosing the next President. Second is restoring trust in the government. Third is "strong on the economy."

Safe to assume there's a solid bias in all of these polls, given the media's position on Trump ("coverage bias"), and given the propensity of Trump supporters to decline a survey (nonresponse bias).

If a "robust plan for covid" is top of the list, and the virus was indeed considered "a war", then history is on Trump's side. Incumbent Presidents, when they’ve actively sought a second term in war time, have a 6-0 record.

For now, markets seem to be numb to the daily anti-Trump "bombshells" delivered by the media, on a loop. The debates (assuming they happen) will be where the needle gets moved. Here's a look at that schedule;

• Tuesday 29 September - First Presidential Debate (Cleveland, OH).

• Wednesday 7 October - Vice Presidential Debate (Salt Lake City, UT).

• Thursday 15 October - Second Presidential Debate (Miami, FL).

• Thursday 22 October - Third Presidential Debate (Nashville, TN).

• Tuesday 3 November - US Presidential Election.