Unbelievably, it’s time. An insane year is about to go through its latest gauntlet, as America votes for its next president.
US
There’s been so much going on in the run up to the election that the markets have struggled to fully focus on the vote itself. And though it will still have stiff competition this week due to the ongoing covid-19 crisis, there’s only one headline story this week.
At the time of writing, SpreadEX has Joe Biden at a fixed odds price of 4/11 to become the next President of the United States, compared to Donald Trump at 15/8.
More important, however, is the size of any potential Biden victory, as that will be what impacts the next few years of governance. SpreadEX has the Democrat at an Electoral College Votes spread of 312-320, with the incumbent Trump at 218-226.
For context, in 2008 Barack Obama won 365, in 2012 he won 332, and in 2016 Trump won 304.
As for Total States Won – including DC, but with the congressional districts of Nebraska and Maine based on state-wide popular vote – Biden is at 25.5-27 to Trump’s 24-25.5.
That stacks up against 28 (plus DC and Nebraska’s 2nd congressional district) for Obama in ’08, 26 (plus DC) for the Democrat in ’12, and then 30 (plus Maine’s 2nd congressional district) for Trump in ’16.
SpreadEX even has spreads on key swing states, where the winning party would receive 25 points and the losing party 0. Closest are Georgia and Iowa, which both have the Democrats and Republicans at 11.75-13.25 apiece.
Something that could be a key market mover during the tumultuous hours after the votes start coming in is how Trump acts if he loses. Any sign that a potential handover will be plagued by resistance from the incumbent will be a real worry for investors – the last thing the market needs at the moment is more uncertainty.
If investors can pull themselves away from the two Ps – politics and the pandemic – there is plenty of data to sink their teeth into. The final Markit and ISM manufacturing PMIs are out on Monday, with factory orders on Tuesday, the final Markit and ISM services PMIs on Wednesday, jobless claims on Thursday and October’s nonfarm jobs report on Friday.
If that wasn’t enough, the Federal Reserve also have their latest meeting on Thursday night – though it is hard to see it being a noteworthy get together given the proximity to the election. Still, investors will be curious to see what Jerome Powell and co. have to say about the new political landscape (it’ll likely be further drum-beating about the importance of a stimulus package, regardless of who wins).
UK
As the world turns its eyes to Washington, the UK is in for a rather big week itself thanks to Thursday’s Bank of England meeting. With the economy flagging, Andrew Bailey and his MPC chums are set to unleash another blast of stimulus, likely in the form of a £100 billion expansion of its asset purchase programme.
Beyond that, the FTSE is probably going to be led by macro matters, be it the election results or covid-19 restriction concerns, with the country creeping towards a nationwide lockdown. If it is up for something more local, the final manufacturing PMI is released on Monday, with the services equivalent on Wednesday, and the construction PMI on Thursday.
Eurozone
Like the UK, it will be hard for the Eurozone to do its own thing due to the pressures of the election and covid-19. In terms of data there are the manufacturing PMIs on Monday, services PMIs on Wednesday, retail sales on Thursday, and German industrial production on Friday.
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