The candidates are out on the campaign trail

11th September 2020

We expect both candidates to concentrate on battleground states such as Pennsylvania, Wisconsin, North Carolina, Florida and Arizona as the campaign progresses.

The contrast between the two candidates’ campaign styles could not be more stark though. President Trump hosting larger meetings with a notable lack of face masks and social distancing. Mr Biden choosing smaller meetings complete with masks and distancing. Both play to their respective supporter bases.

Although national polls collated on www.realpolitics.com and www.fivethirtyeight.com suggest that Mr Biden still holds a comfortable 7.50% lead over Mr Trump, that does not tell the entire story. The polls within the swing states are much closer than the national ones are suggesting. And after the 2016 elections, where the polls were almost entirely wrong, the feeling is that this election will still be much closer than expected, with the President still well in the game if he carries the swing states.

The real story in my opinion remains the Senate race. Montana, Colorado, Arizona, Iowa, North Carolina, Maine and Georgia all remain too close to call at this stage. A clean sweep of the Presidency and both Houses of Congress by the Democrats has not been priced into the markets as yet, but is a statistical possibility. That would give them a clear run on the tax front which is unlikely to play well with Corporate America or financial markets. Should the polls be correct in predicting a Biden win, the Republicans maintaining control of the Senate would be a buffer against the perceived worst fiscal excesses of the Democrats and financial markets will take a change of Presidency in their stride.

Mr Biden announced that he intends to partially repeal the Trump corporate tax cuts should he be elected. Given the state of the Government’s books, made worse by the Covid-19 pandemic, that should surprise nobody. Announcing tax hikes in an election campaign is a brave move at the best of times, but may well play well with hard-hit workers in the Rust Belt states.

Mr Biden is partially emulating Mr Trump though by announcing his intention to penalise American companies that shift operations overseas at the expense of American jobs, or who create jobs overseas instead of creating jobs in the United States. Again, that should play well with voters in the swing states.

Both candidates have stated that they will be tough on China. Therefore the doctrinal space between both parties is less polarised than in years past. Although Mr Trump wants a full disengagement economically from China, that is likely to prove impossible. Nevertheless, a trend of polarised trading blocs between the US and China started during the Trump administration, is likely to continue for years to come.

In theory, the arrival of viable Covid-19 vaccines on the market in Q4 should assist Mr Trump’s re-election prospects. Allowing him to claim credit for bringing the end in sight to the Covid-19 pandemic that has ravaged the United States. Realistically, such vaccines are unlikely to be finished with phase-3 trials, approved by the FDA in accelerated circumstances and mass-produced and in use in the community in time for the election. Nevertheless, even a December arrival should benefit the Trump campaign.

The phrase immortalised by Bill Clinton’s campaign manager, James Carville, rings as true today, as in previous elections. Initial Jobless Claims rose slightly overnight, ending a streak of improving data. With no fiscal stimulus package in sight, no amount of vaccine or law and order rhetoric will help the Trump campaign if job losses take another turn for the worse. We are still nearly two months away from election day, and polls at this stage have a large amount of leeway, with three presidential debates to come. This issue, however, is the single largest threat to President Trump’s re-election hopes.

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