Countdown to the big vote

28 October 2020

John BriggsHead of Strategy, Americas

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Brian DaingerfieldHead of G10 FX Strategy

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With only days to go until election day, our US desk strategy team outline all the final need-to-know essentials.  

In this final pre-election quick-take we give you our latest outlook, remind you of which states and counties to look out for if you want a good early indication of who’s going to win, and also touch on why we believe a contested result is looking less likely.

Key takeaways

  • A Democratic sweep behind a Biden Presidential win is still our highest probability outcome.
  • Look to eastern state results for early indication of who will win.
  • Florida as a whole always plays a critical role in determining the outcome of the Presidential election.
  • Our base case is that the result of the Presidential election is effectively “known” by the time the US market opens on 4 November, even though official results in several states (including key battleground states in the upper midwest) may not be known for some time.
  • If the contest is so close it comes down to a handful of states, there’s an increased likelihood of not knowing who’s won until official results are certified. This would increase the odds of a contested result.

Who’s most likely to win?

In our original outlook,  we set out our expectations for the US election and the wide-ranging implications of what happens.

Developments since we published the outlook have only served to make us more confident in our initial forecast: we’ve raised the probability of a Democratic sweep – already our base case – from 40% to just over 50%, while the likelihood of a Biden Presidency has increased from 65% to 75%.

States to keep an eye on: look east

While there are key swing states across the US, it goes without saying that all eyes will at first be on the east of the country, where the polls close at 7pm EST – hours before they close on the west coast.

Early indications of results in major swing states Florida (7pm EST), North Carolina (7.30pm EST), Ohio (7.30pm EST) and Georgia (8pm EST for major cities) could set the tone for how the vote went across the nation.

So despite Nevada’s status as a swing state, for example, national election night trends will probably be apparent well before 10pm EST, when polls close in that state.

Counties to consider carefully         

We’ve identified 13 counties that we believe could provide valuable early clues about the results of the overall election. Let’s take a look at them.

Counties that Trump won from the Democrats in 2016

Of our 13 counties, three fall into this category, and two are old Pennsylvanian manufacturing areas that Trump appealed to in 2016: Erie County and Luzerne County. Early signs of Biden doing well here could signal the broader Rust Belt vote turning to the Democrats, which could spell trouble for President Trump among the similar demographic in Michigan and Wisconsin. The other county we highlight in this category is Caroline County in Virginia, which Trump took in 2016 after Obama won by 8 points in 2012.

Republican strongholds and the military vote    

Union North Carolina is a traditional Republican stronghold that Trump won by 31 points in 2016. If his margin here narrows significantly, it could be a sign of lack of energy among his base.

Trump also performed very well amongst the military in 2016. Two counties that could indicate if he continues to receive strong support from this demographic are Escambia County in Florida and Chesapeake County in Virginia.

Democratic strongholds

Three counties to watch to see if Biden performs as well as expected amongst his base are Lackawanna County in Pennsylvania and Fulton County and Gwinnett County, both in Georgia.

Florida: clues about how the elderly and Hispanics have voted

Florida as a whole always plays a critical role in determining the outcome of the presidential election, and 2020 is likely to be no different. But there are lots of different demographic clusters within the state.

Take the elderly. Pinellas Country around Tampa-St. Petersburg has a very high median age of 48 years. Who does well there could signal who’s proving most popular with older people. In 2016, Trump won the county by just one point.

Meanwhile, Miami-Dade, which voted for Clinton by 21 points in 2016, is likely to go Democratic again, but Biden has been finding it harder to attract the Hispanic vote than Clinton did in 2016. A weaker win for Biden here could spell trouble amongst this important voting group.

Swing counties in swing states

If you only want to look out for two counties for a good indication of what’s likely to happen, we’d urge you to plump for Peach County in Georgia and New Hanover in North Carolina. Peach County is a diverse rural community that Trump won by 50-47 last time, while New Hanover voted for the Republican candidate by 4 points in both 2012 and 2016 and historically has a strong military presence, but is becoming increasingly diverse.

You’ve got mail! Will the vote be contested?

Of course, more than ever this year, in-person voting must be considered alongside mail-in and absentee voting. The possibility of a contested election result has been a huge issue this time around, and almost all of the contested election scenarios involve mail-in-ballots in some fashion. Delays to the counting of mail in ballots, errors in the counting of ballots, or disputes about which ballots should be counted are central to the discussion about delayed or contested election scenarios.

Our position throughout the campaign has been that a delayed or contested Presidential election that opens up questions about the transition of power is unlikely. Recent developments have hardened our conviction.

Our base case is that the result of the Presidential election is effectively “known” by the time the US market opens on 4 November, even though official results in several states (including key battleground states in the upper Midwest) may not be known for some time.

A dominant showing by Biden across the nation on 3 November would significantly reduce the odds of a delayed or contested Presidential result, and recent polling has made such a result look more likely.

But if the election is so close it comes down to a handful of states, there’s an increased likelihood of not knowing who’s won until official results are certified. This would increase the odds of a contested result.

Control of the Senate (which appears likely to hinge on a number of votes that are much closer than the Presidential election appears to be) looks more likely to be subject to a delay.

Watch out for Florida!

The biggest battleground state – Florida – is among the states we expect to have a relatively complete picture of mail-in / early voting results on election night. The polls also happen to close relatively early in Florida, so what happens there will play an important role in shaping the market’s reaction as participants are likely to extrapolate early results into national trends.

For these reasons, Florida looks likely to be a critical state in terms of timing the market reaction – a combination of its large Electoral College vote count, early poll closings, and relatively complete mail-in ballot picture may mean results in this critical state are known relatively soon after polls close.

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