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Outcome: Biden 306 EV (D+1.2% from toss-up), Senate 50 D (D+1.0%)
Nov 3 polls: Biden 342 EV (D+5.3%), Senate 50-55 D (D+3.9%), House control D+4.6%
Moneyball states: President AZ NE-2 NV, Senate MT ME AK, Legislatures KS TX NC

Is a Biden win good for financial markets?

October 17th, 2020, 1:27pm by Sam Wang

I’ve been talking with analysts and risk managers at major financial firms. They don’t seem to be very focused on the stability of our democratic system. But they do like to talk about markets. Their outlook is strongest for single-party control of Congress, since that leads to Congressional action on covid-19 relief and economic stimulus. Further substantial lawmaking will likely require doing away with the legislative filibuster, but it is said that five Democratic Senators are against such a change. So unless some of those Senators change their minds, Democrats would need to get to at least 55 seats to do away with that rule.

Here’s a look by JP Morgan analysts at the Presidential race. After looking at undecided voters (the lowest in 50 years) and likely polling error, they conclude that a Trump win is about as likely as a double-digit win by Biden.

One question on my mind these days: how long might single-party Democratic control last? Based on upcoming races, 50-51 Senate seats gets them to 2022, but maybe not further. 52 seats or more seems likely to get them to 2024. Another question: how long will conservative dominance of the Supreme Court last? That’s both a political and a demographic question. More coming soon.

Tags: 2020 Election

15 Comments so far ↓

  • Bob Grundfest

    From what I’ve read, the financial markets are already pricing in a Biden win, and financial firms are giving increasingly large contributions to the Biden campaign.

    If the Democrats can pass a middle class tax cut and a public option health care plan, then they can probably hold on to the Senate.

    As for the court, Thomas is the oldest conservative. so there’s a potential seat (not that I am wishing bad health on anyone) and Gorsuch looks like he might be more moderate than advertised. Then again, since most voters do not generally agree with the conservative view on the issues, if presidential popular votes are any indication since 1992, we could see a popular backlash if the court overturns Roe or Obergfell, or allows religion to take precedence over racial or gender discrimination. My sense is that the larger change in the court will be in their rulings on administrative and regulatory power. Democrats are going to have to pass climate regulation bills with that in mind.

    In the end, though, Supreme Court justices live in this country with the pollution and with friends and acquaintances who are of other races, genders, religions, and sexual orientations. My optimistic side says that they will weigh the social effects of their rulings carefully, despite what Judge Barrett said. Sometimes that will mean a ruling I disagree with and sometimes not. It has ever been thus.

    • Ebenezer Scrooge

      Gorsuch is not more moderate than advertised. He has always had a libertarian streak, so he shows occasional dissent from Republican orthodoxy. But the Republicans are the Party of Mammon, and Gorsuch is a Mammonist, dedicated to tearing down the administrative state.
      Btw, there is only one Justice who never dissents from Republican orthodoxy: Sam Alito. As long as there are six Republican justices, an occasional individual dissent is irrelevant.

  • Paras

    There is no evidence that financial soothsayer can forecast anything. There are huge leads and lags between economic action and outcome. The danger is that biden gets sacked into feeding wall street.

  • 538_Refugee

    The map is gone?

  • TC

    The “financial markets” have already won the election. That was determined in the primaries, by their defeat of Bernie Sanders. Both Trump and Biden will prop up the “financial markets.”

    “Single party Democratic control” will last as long as progressives continue to increase in power, since they have all the popular policy proposals. Obama-type, financial-market-friendly representatives growing in dominance would likely lose “single party Democratic control” immediately, just as they did under Obama, due to their “financial market” friendly unpopular messaging and actions.

    “How long will conservative dominance of the supreme court last.” The answer is bleak. It will last as long as the Democrats tolerate it, by declining to expand the number of judges on the supreme court, and other courts. The progressive representatives are not numerous enough to force the party to act responsibly on this issue or most others. The only hope is if people stay in the streets and disrupt society to the point that the Democratic party is forced to act responsibly on their behalf. Ever is it so.

  • Steven

    The only way for the majority to rule is to abolish the filibuster, then add DC and Puerto Rico as states, get rid of the Electoral College, and add 3 seats to the Supreme Court. Otherwise McConnell will block everything again. But my gut tells me Dems won’t do this. The Feinsteins of the Dem party will preach decorum and precedent scuttling any chance for progress which will lead to a real populist revolt in 2024 with a smarter and more dangerous autocrat.

    • Sam Wang

      I agree that the legislative filibuster is the limiting factor in most systemic reforms.

      Your list makes sense, though practically speaking a frontal attack on the Electoral College requires Constitutional amendment. In some sense it only matters when elections are within about 3 percentage points in terms of the popular vote.

      If one were going to change the Supreme Court, an argument could be made for adding 4 seats to match the number of circuit courts. The original reason for nine justices was to have one per circuit.

    • Siobhan McLaughlin

      Three seats?

  • 538_Refugee

    I’m not sure you need to keep the number odd to avoid ties but I always thought it would go that way.

    Even Democrats avoid reform of the electoral college. I think the rational is being able to focus election efforts. When this is all over I’d like to see a discussion about how ranked choice would work in our one national race.

    • ArcticStones

      Here is a radical thought for election reform: How about adding the option of None of the above.

      If None of the above receives a plurality, then new elections must be held – with all of the previous candidates seen as “Rejected” and barred from running.

    • JBL

      None-of-the-above is not radical, they do it in Nevada and it has no major consequences ever, for obvious reasons.

    • anapleion

      What problem would none-of-the-above solve?

    • ArcticStones

      Longer term, the “None of the above” option would allow voters to force better candidates. That said, it would obviously take a lot of revulsion to compel a plurality of voters to choose that option.

  • George Bussey

    I note that at the same time the national poll average remains steady or even shows some increased spread, the meta-margin has lost about half a point. Earlier – about a week ago – you hypothesized that it would move towards 7. And yet here we are. My thought is that is a consequence of more Trafalgeresque polls at the state level, thus artificially dropping the meta-margin I the face of a widening national lead. Your thoughts?

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