Presidential campaign becomes debatable

25th September 2020

Most significantly, next week sees the first television debate between the two candidates on September 29th, moderated by Fox News’ Chris Wallace. Although two more debates follow later in October, the first one is usually the most closely watched.

We can expect fire and brimstone from President Trump if his campaign address’ on the road are anything to go by. Mr Biden has elected for a calmer rhetoric style thus far, portraying himself as a candidate who will bring maturity and calmness to the White House and repairing America’s fractured international relationships. While that may play well with an international audience, they are not his potential voters. Mr Biden will have a difficult choice to make as to whether to engage with President Trump in a more heated style to shake his “Sleepy Joe” persona, as portrayed by the President.

We expect President Trump to attack Mr Biden on taxes, the economy and law and order. For his part, Mr Biden will likely attack Mr Trump on his handling of the Covid-19 pandemic. Polling shows that the economy and the Covid-19 pandemic remain the two most important issues amongst voters. We expect both candidates to be tough on China, however, with the schism between the two powers rapidly evolving into a multi-year mega-trend.

The debate between Vice President Mike Pence and Senator Kamala Harris will also attract more attention then is usual. Mr Biden may well be a single term President and the American people will want to get a good look at what they might expect in the future from a President Harris, should the Democrats win the election. A poor showing from Ms Harris would be a major coup for the Republican campaign, and would almost certainly shave Mr Biden’s lead over President Trump.

National polls collated on www.realclearpolitics.com and www.fivethirtyeight.com suggest that Mr Biden still holds a lead over President Trump. FiveThirtyEight’s collated polling shows Mr Biden’s lead widened slightly at a national level to 7.1% this week. RealClearPolitics has Mr Biden’s lead widening slightly from 6.2% to 6.5% from a week ago. It is important to note though, that the headline figures reflect an aggregated number. A look at the universe of individual polls though, reveals a wide disparity in margins, although they all suggest a Biden lead.

The election will be won in the battleground states though, and here, polling remains much closer, further emphasising just how important the upcoming debates will be to the election result. According to RealClearPolitics, Biden leads by 1.3% in Florida and 0.8% in North Carolina. Meanwhile, President Trump leads by 1.0% with Iowa a dead heat. The margins are so small, within the actual polling margins of error, all four states are too close to call at this stage. Arguably Florida is the key to the entire election given its huge amount of Electoral College votes. Texas remains a Trump win at this stage, but Pennsylvania, Michigan, Wisconsin, Arizona, Ohio and New Hampshire show solid leads by Mr Biden.

Arguably, the Senate race remains the critical, yet most overlooked part of the election. With a majority of 51 seats needed for control, RCP polling suggests that the GOP has 47 seats versus 46 for the Democrats. Seven other senate seats though are a toss-up (too close to call), with six held by Republicans. With the Democrats expected to maintain control of the House of Representatives, a small swing could see them also win the Senate and potentially all three offices of power. That would allow a clear run on the legislative front, including higher taxes.

Markets, for their part though, appear more comfortable with a Biden presidency then previously. The assumption is that a Biden Presidency would be better for international trade then a Trump one, with Wall Street always finding the benefits of an isolationist United States, a debatable one.

Of course a Trump win and a GOP victory in the Senate would leave the United States in the same status quo as today. Similarly, a Biden victory, with the GOP holding the Senate would be a blocking factor to any radical legislative agendas that the Democrats may have. Arguably the latter scenario would be the most friendly for financial markets. Repairing international relations and trade, while blocking spending hikes and tax increases.

The tragic passing of Supreme Court Judge Ruth Ginsberg threatens to make the most divisive and fractious US election in recent history even more so. The Republicans are intent on driving through a conservative appointment before the election as they control the Senate which confirms Supreme Court nominations by the US President. That will set them on a collision course with the Democrats and much of the voting public. However, we do not believe this is a make or break issue for the GOP at the election, despite the emotionally charged debate around it. Short of a member of the Trump family that has a law degree being nominated, polling clearly shows that American’s highest concerns are the economy and Covid-19 and not the new Supreme Court justice, whomever that may be.

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