Trump Narrows the Gap as Swing States Sit on the Fence

The Latest Polls

After very little movement in the summer, the U.S Presidential Election polls appear to have come to life.

According to the latest FT’s interactive Calculator and polling data, Presidential hopeful Biden has seen his lead narrow. In fact, the narrowing is by quite a margin when considering the little movement over the summer.

As at the time of writing, the FT projects Biden to win 263 Electoral College votes. This is significant for a number of reasons.

Firstly, Biden falls short of the 270 votes needed to win. This is the first time since we have been tracking the polls that Biden falls short of the 270.

Secondly, the slide has been significant. Back on 5^th August, the FT had projected Biden to win 308 Electoral College votes. This had then fallen to 298 and held steady at 298 through the summer.

In the current week, the FT had projected Biden to win 269 votes on Tuesday before falling to 263 votes.

If you take away the 60 Electoral College votes leaning in Biden’s favor, that leaves 203 votes.

For the U.S President, the FT project a haul of 122 Electoral College votes. This was a recovery to the FT projection of 122  back on 5^th August.

Trump still sits below the FT’s 132 projection from 19^th July, however.

With Biden projected to hold 203 solid votes, Trump is projected to hold just 77 solid votes, with 45 leaning.

This is also significant. Back on 5^th August, the FT had projected Biden to have 194 sold votes and 114 leaning.

So, while Biden has seen his lead narrow, the number of solid votes have, in fact, risen.

For Trump, the number of solid votes had stood at 80 the last time he had a projected 122 haul, back on 5^th August. 42 votes had been leaning in his favor at that time.

So, it is less convincing this time around despite the rise in projected votes.

The Fence Sitters

At the time of writing, the FT had 153 states sitting on the fence. Classified as toss-up states, these are states where the difference in poll numbers between Biden and Trump is less than 5 percentage points.

Amongst the 8 states that fall within the toss-up category, there are a number of significant ones up for grabs…

These are Texas (38 E.C votes), Florida (29 E.C votes), Ohio (18 E.C votes), Michigan (16 E.C votes), N. Carolina (15 E.C votes), and Arizona (11 E.C votes).

For U.S President Trump to take the 2020 Presidential Election, he would need 148 of the 153 E.C votes up for grabs. This is assuming of course that all of the 45 leaning Electoral College votes go in his favor.

For Joe Biden, he would need Maine-2 (1 E.C vote) and one other, assuming that all 60 leaning Electoral College votes go his way.

On face value, therefore, the odds remain heavily stacked in Biden’s favor, in spite of the narrowing in the polls.

Key States

If we look at the key U.S states that tend to be election barometers:

Missouri continues to lean in favor of Trump and the Republicans, with Kansas also leaning in Trump’s favor.

For Biden, Illinois, New Mexico, and Oregon remain solid blues, with New Hampshire and Pennsylvania leaning in favor of Biden. Of concern, however, will be the loss of Michigan that had leaned in Biden’s favor and now sits on the fence.

So, as things stand, out of the swing states that include Arizona, Florida, Michigan, North Carolina, and Pennsylvania, only Pennsylvania sits with Biden.

The rest are on the fence and up for grabs…

The Road Ahead

As the markets and voters look forward to the live debates, there are two key areas of focus near-term.

Firstly, progress or lack of progress towards an effective COVID-19 treatment drug and vaccine.

Secondly, continued improvement in the labor market and economic conditions.

There was bad news for the U.S President this week after news hit the wires of AstraZeneca suspending vaccine trials. AstraZeneca has been working with Oxford University on a coronavirus vaccine. It had been this very vaccine that Trump had attempted to fast track into the U.S…

A resumption of trials would provide some relief. In reality, however, Trump’s eagerness to deliver a vaccine before Election Day was all too obvious…

The suspension to trials will leave the President looking elsewhere for an effective vaccine. It would be hard to imagine, however, that Trump would reach out to China or Russia in desperation… Wouldn’t it be ironic if Russia delivers an effective vaccine that lands Trump a 2^nd term?

Looking at the economy and labor market conditions, there has been significant improvement. There is still a long way to go, however, and winning an election amidst a U.S recession stemming from COVID-19 seems implausible.

While Trump did not create the virus, he certainly contributed to the impact on the U.S economy.

In fact, the Democrats could just replay the Trump speeches and assurances before the pandemic really hit home to highlight the President’s miscalculations…

Biden has already attacked the President over the apparent rush to deliver a vaccine for political gain. One hazards a guess that there will be more than just vaccine talk in the weeks ahead.

The U.S Dollar

At the time of writing, the U.S Dollar Spot Index was down by 0.10% to 93.162.

As yet, we have not seen the Dollar show any particular interest in the election or the polls for that matter.

This is undoubtedly going to change, though the likes of the NASDAQ may ultimately have a greater voice.

For now, Trump’s foreign policy remains the key risk to Dollar weakness and to the equity markets.

While Trump will continue to deflect from the errors of his ways, he may need to tread carefully or face the wrath of the markets and ultimately the voters.

A U.S recession, a COVID-19 pandemic, high unemployment, and a slump in the U.S equity markets. That may be a list too long for even Trump to overcome on Election Day.