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Bob Mason
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The Mood

It has been a week of distraction for the markets in the week ending 7th August. All eyes have been on Capitol Hill and the political wrangling over the COVID-19 stimulus package.

There was little surprise that the Republicans and Democrats would dig in their heels with less than 3-months remaining until the U.S Presidential Election.

While the markets focused on the lack of progress, Trump continued to downplay the COVID-19 pandemic.

On Wednesday, the U.S President once more diverged from medical experts stating that COVID-19 will “go away”. This view comes as the summer races on…

The comments were in contrast to Fauci, who stated that the pandemic may continue to hit the U.S through 2021 and possibly beyond. Fauci also stated that he would envisage effective vaccination next year.

For the U.S president, the polls have continued to show Joe Biden with a clear lead. The last time that the polls showed Trump ahead was before March.

This was before the COVID-19 pandemic reached U.S. shores.

At the time of writing, the total number of U.S coronavirus cases stood at 4,973,741. The U.S accounted for around a quarter of the 19,006,692 global cases. The total number of U.S COVID-19 related deaths stood at 161,608.

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The Latest Polls

According to the latest FT’s interactive Calculator and polling data, which are as at 5th August 2020, there has been another shift in the numbers.

Once more, the numbers were not in U.S President Trump’s favor.

The FT has Democratic challenger Biden with 308 Electoral College votes. This has remained unchanged since a fall from 318 Electoral College votes held back at the end of June.

By contrast, Trump has seen a downward trend continue since the coronavirus reached U.S shores.

According to the latest FT poll, Trump had 122 Electoral College votes, which was down from 128 votes as at 29th July. A week prior, Trump had had 132 Electoral College votes.

Looking more closely at the numbers, there is some cause for optimism for the blues.

Joe Biden has seen the number of solid votes rise from 190 to 194, with leaning votes falling by 4 to 114. As at 29th July, Biden had had 190 solid votes.

For U.S President Trump, the number of solid Electoral College vote count increased from 77 to 80. The number of leaning votes fell from 51 to 42, however.

Back on the 22nd July Trump had had 115 solid votes and 17 leaning votes.

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. Kansas had been a solid Republican state mid-way through July.

For Biden, Illinois, New Mexico, and Oregon remain solid blues, with New Hampshire becoming a solid blue. Michigan and Pennsylvania continue to lean in Biden’s favor.

The Road Ahead

It all looks to hinge on the COVID-19 pandemic, labor market conditions, and the economic recovery.

As Trump continues to state that the pandemic will go away soon, there’s a lot riding on a vaccine.

If there’s no vaccine by the time of election day then that should write off Trump’s chances of a 2nd term.

Economic Data

The hope remains, however, that the reopening of the U.S and a pickup in economic activity will shift sentiment.

That hope remains only slight at present, however. Labor market conditions remain dire, in spite of the better than expected weekly jobless claims figures this week.

In the week ending 31st July, initial jobless claims came in at 1,186k, a first weekly decline in 3-weeks. Claims had stood at 1,435k in the week prior.

Today’s stats make tomorrow’s nonfarm payroll figures and the unemployment rate all the more important.

Last month, we saw the U.S President hold an unscheduled press conference in response to the record jump in June. We will likely see the same tomorrow should the numbers impress.

If they don’t impress, we can expect some chatter on Twitter. There’s China and now the Democrats to target for a rising number of reasons.

Either way, the NASDAQ at record highs and record jump in nonfarm payrolls have done little to narrow the gap for Trump and the Republicans. If impressive numbers fail to drive support for Trump, the U.S President may need to change tact.

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