The majority of polls show Joe Biden, the Democratic challenger with a large lead over President Donald Trump. Yet there are indications that all is not quite as it seems. The pollsters who called the 2016 election for Trump to have a tied race and other signs are mixed, from voter enthusiasm which favors the President to the surge of early voting which tilts to the Democrats. Join FXStreet senior analysts Yohay Elam and Joseph Trevisani for a breakdown of the state of the electorate one week from the historic vote.
Yohay Elam: One week to go until Election Day, and over 66 million Americans have cast their ballots. That represents around 48% of the total vote count in 2016, and it implies turnout will be even higher. It seems Americans are fully tuned into the elections. Are the markets also following election news closely?
Joseph Trevisani: Perhaps. Yesterdays's equity loss was probably due to COVID fears rather than a judgment on the election.
Yohay Elam: I think it was a mix of rising covid cases and also a bit of a late realization that stimulus is not going to happen before the elections, something that should have been obvious already last week. We are now witnessing some stability, perhaps the calm before the storm.
Joseph Trevisani: Currencies and credit have not moved from their ranges. With the Biden polling lead unchanged, it's possible that a Democratic victory is priced, but given the volatility lately and the uncertainty of the elections, I doubt it. Yes, the stimulus is finished.
Yohay Elam: According to FiveThirtyEight, Biden has an 88% chance of winning the presidency, but Democrats have only a 73% probability of winning the Senate, which is crucial to passing any relief bill. According to Nate Silver.
Joseph Trevisani: As you know I have small faith in those predictions. I believe 538 had a similar prediction before the 2016 election and I believe the New York Times was 95% certain Clinton would win...
Yohay Elam: FiveThirtyEight had Trump at around 30%, and they said that he is only a standard polling error from winning the electoral college. The NYT was far more bullish on Clinton. Several things have changed since 2016.
Joseph Trevisani: Well to be fair to the NYT they are not a news organization and were only promoting their chosen candidate. In contrast, the only major polling group that predicted a Trump win, Trafalgar, has the national race at +1 for Trump I believe and the latest Rasmussen poll, the second-most accurate in2016 has Biden up 2. I think the race is far closer than the RCP polling average. I said the same thing last time in print in 2016, though I did not predict a Trump win. Do you think the confirmation of Barrett will have any effect?
Yohay Elam: I think that the picture of Trump with a female justice alongside a Black justice is a good move. It could help convince some reluctant Republicans that Trump is not so bad. On the other hand, now that the Republicans got what they wanted, they do not need Trump anymore.
Joseph Trevisani: Agreed and his performance in the last debate was impressive, both personally and politically.
Yohay Elam: McConnell clearly took his own path – focusing on the nomination and shunning Trump's stimulus desires. There is nothing in the polls so far to show Trump's performance impressed many voters. The bar was low after the first debate.
Joseph Trevisani: The one thing that is easy to forget in the polemics of the parties is that the election is a binary choice. It is as much for a candidate as against the other. I wrote a piece at the beginning of the campaign and asked... Will Trump hate be enough? I am not sure it will.
Joseph Trevisani: For Republicans and Conservatives and conservatives, the choice represented by Biden and more so by the every more leftward Democratic Party, is a powerful motivator, Trump or no...
Yohay Elam: It is still mostly a referendum on the incumbent. A return to normality is Biden's message, and I think the message is getting through.
Joseph Trevisani: Almost the entire Democratic campaign is anti-Trump. It is one reason Biden's people are keeping him in the basement, they want the focus to be entirely on Trump.
Yohay Elam: Biden is campaigning, just not contributing to spreading covid in his rallies. Biden is leading in favorability.
Joseph Trevisani: I do not agree. He is to shield his incapacity.
Yohay Elam: So far, Trump tried to shield himself by calling off the second debate. Biden was ready to do a virtual one, Trump opted not to.
Joseph Trevisani: Favorability is, in my mind not useful. As I said the election is binary.
Yohay Elam: And there seems to be significant enthusiasm to vote for Biden, whether against Trump or for Biden, it doesn't matter. Democrats are banking in votes. Democrats are +27.5% on returned ballots so far, but a narrower +12.7% on ballots requested but not yet returned. Moreso in swing states than elsewhere, a sign of Dems' strong ground game.
Joseph Trevisani: Oddly enough a Gallup poll of two weeks ago showed 56% of respondents expected Trump to win. Certainly, an odd statistic gives the overall polling.
Yohay Elam: Everybody is taking Trump's chances seriously. Some hopeful after 2016, others traumatized. I think that the generals are fighting the previous war.
Joseph Trevisani: There is also the Hunter Biden problem. Twitter, Facebook, and the media have tried to censor the story but it does not seem to have worked. General and politicians.
Yohay Elam: Sticking false corruption charges to Hillary Clinton succeeded in 2016 due to years of hate against her. That isn't working with Biden. Even something real and Russian-made is unlikely to stick this time.
Joseph Trevisani: The FBI has said the laptop is not Russian,
Yohay Elam: As "Sleepy Joe" failed.
Joseph Trevisani: As has the Director of National Intelligence.
Yohay Elam: In 2016 Trump was the new guy draining the swamp, it is hard for him to stick anything corrupt to somebody else, As far as we know, he's not a billionaire,
Joseph Trevisani: It's hard to believe the Russians faked the pictures of Hunter in various poses, and far more logical to believe it is exactly what has been represented. Just because it is being used by one campaign does not discredit it. At any rate, it is not likely to be decisive unless something more concrete comes out. I doubt many folks care about Trump's finances unless they already despise him.
Yohay Elam: If people don't care about Trump's finances, they do not care about Biden's family either.
Joseph Trevisani: I think we can agree that the election is probably closer than the polls portray.
Yohay Elam: Just trust Biden to do a better job. Polls may be overestimating Trump's chances after 2016 the same as they underestimated him back then.
Joseph Trevisani: Well, just to finish the point, Trump's finances were from when he was a private citizen, Biden's involve his public position and responsibilities.
Yohay Elam: Trump's whole image is that he is a successful businessman, not someone in debt to who knows who.
Joseph Trevisani: Or they may be underestimating again. Polling like any modeling involves assumptions, assumptions mean opinions. Yes, you are right about Trump, but that decision was made in2016 by the electorate, no one is going to be swayed by it this time around.
Yohay Elam: I prefer models that accept the polls as they are and accept uncertainty.
Joseph Trevisani: I tend to prefer polls that have a successful track record. Hence my interest in Trafalgar and Rasmussen.
Yohay Elam: Rasmussen overestimated Trump in 2016. Gave him the popular vote. I think Marist was the most accurate, hitting 2% for Clinton. State polls were more off back then, and I believe they have made efforts to improve. Enough efforts? Too many? We don't know. In 2012 polls underestimated Obama.
Joseph Trevisani: What happened was unusual. Many polls tightened at the race closed, so either the electorate changed and the polls caught it or the polls changed their methods, moving to likely voter screens and thus caught an electorate that was far more pro-Trump than they originally portrayed.
Yohay Elam: There were more undecideds. Around 14%, now only 6-8%. They broke to Trump in the last days, not all polls caught that.
Joseph Trevisani: I agree, Trump is a singular politician. He stirs up such violent emotions that it seems to distort rational analysis, including polling. One more difficult polling topic is the 'shy Trump voter' notion.
Yohay Elam: I don't think there's such a thing, at least not in 2020.
Joseph Trevisani: I believe it is real, though difficult by its nature to quantify.
Yohay Elam: Morning Consult compared automatic polls and live caller ones, and found no difference. The shy Trump voter theory is also incompatible with Trump's boasts about his rallies.
Joseph Trevisani: Trafalgar does, and it is, according to their head pollster, why they caught the Trump vote in 2016. Whether one believes it not, Trafalgar does, and their chief pollster.
Yohay Elam: That's one pollster.
Joseph Trevisani: Robert Cahaly has said he believes it is much greater this year. I agree, it is one outfit, but it is the only outfit that called 2016 correctly.
Yohay Elam: So far, shy Trump voters are too shy to vote.
Joseph Trevisani: So their opinions count.
Yohay Elam: Dems are banking in votes and the Trump campaign is putting all its eggs in election day voting. And also hoping for Biden to make a big mistake. Trump still has a chance to win, but the hope is not a strategy.
Joseph Trevisani: Yes which is why his campaign is keeping him in the basement. Hope is not a strategy, but I think 2016 proved that Trump has a strategy.
Yohay Elam: He's just using the same one again.
Joseph Trevisani: Whether it works again this year is questionable.
Yohay Elam: Yep, Dems are trying to widen their coalition, Trump, not so much building on base turnout.
Joseph Trevisani: Politico has a story today headlined...Wall Street grows giddy about Biden... It is true that Wall Street has favored Biden 5 to 1 with contributions.
Yohay Elam: Markets usually prefer pro-business, pro-trade, low tax Republicans. Trump delivered low taxes, but also fruitless trade wars.
Joseph Trevisani: But I consider that just playing the odds.
Yohay Elam: I think the optimal scenario for markets is a Biden win with 50 or 51 Dems in the Senate, enough for generous stimulus, insufficient for long-term changes.
Joseph Trevisani: I think the optimal scenario is a Trump win and a Republican sweep, but that certainly has the lowest odds. After that a Trump win and Republican Senate which has better odds but not yet even.
Yohay Elam: If Trump wins, there is room for stimulus, but not as large as a blue sweep would do. The worst scenario is Biden with a GOP Senate. Deadlock guaranteed.
Joseph Trevisani: That is true, but Trump will not raise taxes which Biden has promised to do and he will continue to deregulate, which Biden will certainly reverse.
Yohay Elam: The legacy of Newt Gingrich is strong.
Joseph Trevisani: I'm not so sure, markets tend to like a deadlock. It preserves the status quo. And Reagan.
Yohay Elam: Reagan was a different age, far less polarization
Joseph Trevisani: Actually not that different. Reagan was vilified by the press and the Democrats called a dunce and a racist. He nominated Robert Bork whom Democrats and defeated in a media campaign that became the model of those used against Clarence Thomas and Bret Kavanaugh.
Yohay Elam: He worked with Democrats on taxes.
Joseph Trevisani: Politics has always been vicious from the Greeks who invented it on... Yes, his personality was far less confrontational...
Yohay Elam: Indeed. Politics can be more or less vicious. With more forbearance or less.
Joseph Trevisani: But it did not prevent the calumny. I remember my mother's comment about Reagan...He never got the girl...referring to his movie career.
Yohay Elam: Haha
Joseph Trevisani: Yet now he is remembered as an excellent president and often cited by Democrats. Yes, you can guess her politics.
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