Record turnout could delay winner announcement

3rd November 2020

On the eve of Election Day across the United States, over 93.5 million votes have already been cast, representing about 68% of the total votes cast in the 2016 election. Pre-election voting was expected to favor Democratic nominee Joseph R Biden Jr, while Election Day voting projects to bode better for President Trump. The national and battleground state polls have steadily pointed to a Biden victory over the last month, with President Trump narrowing the gap in Florida, North Carolina, and Iowa. This election will deliver an all-time high voter turnout that could exceed 150 million votes.

With Democrats leading the voting charge, a lot will have to break in Trump’s favour in order for him to emerge victorious. In the last week of the campaign, Trump has been focused on the electorate in Michigan, Iowa, North Carolina, Georgia and Florida. President Trump is trying to make a comeback in the Midwest and if his rallies are a sign of his support, he should feel confident that his base is not fraying.

The path to 270 electoral votes for President Trump will require a tremendous Election Day turnout. If Biden can hold the Clinton states from 2016, Trump still can win it if he wins Arizona, Texas, Florida, Georgia, North Carolina, Nebraska, and Pennsylvania. There is a big difference with the polls of 2020 and the polls when President Trump upset Hillary Clinton. In 2016, the polls missed a large part of Trump’s base and there were many more undecided voters in the final stages of the campaign. After some tweaking, the polls did a better job in the 2018 midterms. It is still possible for a big surprise, but a lot has to go right for President Trump to be victorious.

Finding out who won the presidential election will be a lengthy process. It is unlikely we will know who won on election night, but we should have a good idea if the polls in the battleground states lean towards one candidate. Mail-in ballots will take a long time to be counted, and some states won’t even begin counting until after the last vote is in. Election officials for Michigan and Pennsylvania are expecting the results to be tallied in full closer to the end of the week. Some states, such as Florida and North Carolina, will begin processing their mail-in ballots in advance and should deliver the results more quickly.

In Georgia and Texas - big, traditionally red states - the presidential race is very tight, and while a lot of the ballots will be counted on Election Night, the massive number of mail-in ballots in those states could dictate that days pass before the results can be declared.

Not to be lost on US Election Day 2020 is the importance of the handful of Senate races that will determine how much power the winner of the presidential race will have over the next two years (if the Republicans lose control of the Senate, they could very much win it back in 2022). The polls for the Senate races have been all over the place, with Democrats projected to gain anywhere from one to eight seats. Republicans seem poised to only win Democrat Senator of Alabama Doug Jones’s seat.

The Republicans currently hold the Senate 53-47. In order for Democrats to ‘flip’ the Senate, they would need to win four seats, or three seats and control of the White House, which would give the vice president the deciding vote in a 50-50 Senate tie. It is possible that some Republican voters may choose to vote for Biden, but not the Democratic candidates for Senate. For many Republicans it is far more important to make sure they do not lose the Supreme Court’s current nine-member bench, which could be entering a new judicial era following Amy Coney Barrett’s fast-tracked appointment and its resultant 6-3 conservative majority. If Biden is elected president he will face pressure from his own party to consider expanding the court, and for some Republicans that is reason enough to support conservative senators.

Wall Street could see a tremendous amount of volatility if Republicans are able to hold on to the Senate. The month of October saw many investors start to price in a ‘blue wave’, driving up utilities and real estate stocks, making them the best performing sectors on the S&P 500 index. A Biden administration with a Republican Senate would mean less infrastructure spending and fiscal support, no corporate tax hikes and less regulation. Renewable energy stocks could lose some interest as Biden’s clean energy initiatives will not be as robust as initially planned.

Risky assets are expected to thrive under a Trump victory that would be accompanied with tax cuts, not increases, and some infrastructure spending. A Biden win is priced-in and could see a ‘buy the rumor, sell the event’ type of reaction.