US Election Day! Regardless of if you’ve been following the race carefully for the past few months, or if you’re sick of hearing about it, it is impossible to have missed that the American Presidential election has been continuing in the shadow of the coronavirus pandemic.
With 538 electoral college votes for grabs from 50 states (plus The District of Columbia), the electoral system might be slightly confusing, but what is at stake isn’t; like it or not the winner will set the agenda of the entire world for the next four years.
An interesting aspect of this year’s race, is the unprecedented surge in early voting. According to reports, over 94 million Americans have already cast their vote, which is incredible compared to the 47 million that did the same in 2016. This has the potential to make things much more complicated on election night, as each state has different rules for processing and reporting ballots cast in advance.
Traditionally postal votes favour Democratic candidates, whereas Republicans usually do better with in-person voting, the early results might swing wildly in either direction before the overall winner becomes clear.
As with our own “swing seats” during a general election, America has “swing states” which can tip red or blue and are likely to decide the result of the election. As a large number of these important states are on the east coast of America, it will be relatively early on in the night when we start to get an idea of which way the wind is blowing. Florida, North Carolina and Ohio are processing early ballots in advance of election day so will report results soon after polls close.
The polls have had Biden in a stubborn lead for many months now, and unlike in 2016, there is no late trend towards President Trump. Also, pollsters believe they have learned their lessons, and now focus much more polling each state individually, so as to work out likely electoral college results, rather than national polls – don’t forget Hilary Clinton won the most votes in 2016, but she didn’t win the election.
However, many of us will still be wary of trusting polls after the shock of 2016 (Clinton was given a 98.1% chance of victory by some models) and indeed the betting markets don’t really reflect the polls at all. The 538 website which uses polling data to model likely outcomes calculates that if the polls are accurate, then Biden wins 89 times out of 100. But you can currently bet on Biden at 8/13, which implies only a 62% chance of a Democrat in the White House. This mismatch has led to some people betting big money on a Biden win, and come the result they’ll either be congratulating themselves on beating the market or they will become another cautionary tale regarding the dangers of gambling.
You would hope that the one thing is certain, we will know the result tomorrow. Unfortunately, that is not the case. With President Trump having already made clear he will challenge any result he feels is unfair, and the Democrats already litigating over what they claim is voter suppression in key states, we could find ourselves in the same position as the contested election in 2000, when George W. Bush’s election was confirmed by the Supreme Court after weeks of legal wrangling.
Whatever the result, on Thursday Arlingclose will be getting the lowdown on what it means for financial markets, interest rates and the UK’s much vaunted trade deal with the US on this Thursday’s #TrendingTreasury webcast. We’ll be joined by Arnab Das Invesco’s Global Market Strategist to talk about the result (or lack of one) and look ahead to 2021.
To register for our results webcast, please email firstname.lastname@example.org.