State of 2020 US Presidential Race and Potential Economic Impacts

It’s increasingly clear that Democrat Joe Biden is in the pole position for the moment.

USA (2)

With civil protests still raging and the US experiencing a massive resurgence of COVID-19 cases, the 2020 US Presidential election in November is a distant blip for many traders at the moment. While markets are more focused on other developments for now, the election will soon be one of the biggest market-moving events, so we wanted to check in on the state of the race and the possible market implications.

It won’t become official until the Democratic and Republican National Conventions in August, but the two main parties’ Presidential candidates will almost certainly be incumbent Republican President Donald Trump and Obama’s former Vice President, Joe Biden. As polling has started to pick up in recent weeks, it’s increasingly clear that Democrat Joe Biden is in the pole position for the moment.

According to the polling mavens at FiveThirtyEight, Biden holds about a 9-10% advantage in the popular vote; the RealClearPolitics average shows a similar 51%-41% deficit for Trump, with the incumbent President trailing in every single included poll over the last four months. Of course, Trump was able to overcome a deficit in the popular vote to upset Hillary Clinton four years ago on the back of a late shift in undecided voters (of which there are far fewer this time around) and an advantage in the makeup of the Electoral College (something that’s likely to play a role in 2020 as well). Regardless, it’s worth noting that Clinton never held a lead this large in the final six months of the race, so Trump certainly has his work cut out for him:

Source: FiveThirtyEight, GAIN Capital

As we’ve seen in recent weeks, the state of the race can change rapidly in our current chaotic environment, so we’ll continue to monitor the polls periodically over the coming months.

Potential Economic Impact

At this point, neither President Trump nor Joe Biden have had the opportunity to explicitly outline their economic and social policies for the next four years, but given their political prominence over the past decade, we can make certain assumptions about them:

  • Neither candidate appears particularly concerned with the federal budget deficit at the moment, with Trump outlining another $1T+ stimulus package focused on state/local governments and infrastructure spending, while Biden appears to support elements of the “Green New Deal” spending plan.
  • Likewise, neither candidate has outlined plans for any meaningful tax increases, though given the positioning of the parties, tax hikes would be more likely under Biden than Trump in our view.
  • On regulations, Trump has aggressively cut red tape for businesses, whereas Biden may be more likely to impose new rules to protect individuals and the environment. This dynamic could be very significant for companies in the energy and financial sectors.
  • Biden is more likely to support increased immigration than Trump, which studies suggest can support long-term economic growth at the expense of short-term disruptions for domestic workers.
  • Both candidates seemingly view China’s rising prominence as a potential threat, so tensions between the world’s two largest economies may remain elevated after the election regardless.

At this point in the race, that’s about as much as we can say with any confidence (and even some of these takeaways involve a bit of conjecture!). As the candidates outline their agendas in more detail in the coming months, we will revisit these topics, as well as specific market implications under each candidate – stay tuned!

Build your confidence risk free

More from US Election

Join our live webinars for the latest analysis and trading ideas. Register now

StoneX Financial Ltd (trading as “City Index”) is an execution-only service provider. This material, whether or not it states any opinions, is for general information purposes only and it does not take into account your personal circumstances or objectives. This material has been prepared using the thoughts and opinions of the author and these may change. However, City Index does not plan to provide further updates to any material once published and it is not under any obligation to keep this material up to date. This material is short term in nature and may only relate to facts and circumstances existing at a specific time or day. Nothing in this material is (or should be considered to be) financial, investment, legal, tax or other advice and no reliance should be placed on it.

No opinion given in this material constitutes a recommendation by City Index or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although City Index is not specifically prevented from dealing before providing this material, City Index does not seek to take advantage of the material prior to its dissemination. This material is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.

For further details see our full non-independent research disclaimer and quarterly summary.