US Congressional election update: Is geography destiny?

With three weeks to go before American voters go to the polls predictions have moved slightly in favor of Republicans in the Senate and Democrats in the House. The changes point to the dependence of the outcome on the particular layout of the election, the closeness of the contest and the likelihood that neither side will possess the strength to move beyond their geographical advantages. 

The motivation edge of the Kavanaugh confirmation hearing seems to have moved to the Republicans in the Senate contests. In the far more numerous House elections a decisive shift is hard to discern. The House remains a more difficult forecast despite the small movement to the Democrats since last week. Both sides seem to have shored up their standings in districts that historically favored one party. There does not appear to be a large move brewing that might switch numbers of traditionally Republican or Democratic seats to the other side, the so-called wave election. As it stands now the House will be decided in the swing districts that can vote for either party. Much will depend on the individual candidate in each contest.

The market implications of the three possible election scenarios are unchanged.  Markets by and large prefer Republican control of the economy, taxes, the budget and legislation, so the statistically disfavored outcome of a Republican House and Senate would still provide the most positive effect on equities and the dollar.  The uncertain nature of the election may be one of the factors contributing to the recent equity volatility.

The favored scenario remains the Democrats winning control of the House and the Republicans retaining the Senate.  Let’s look at the changes in each case.

Democrats take the House, Republicans retain the Senate

Last Friday the statistical election analysis site FiveThirtyEight had the odds of a Democratic House at 81.4 percent.  Those odds are now 84.5 percent. RealClearPolitcs (RCP) showed a gain of 24.5 seats for the Democrats, just over the 23 needed for a majority. That average increase is now 26, with the range of probability now 10 to 42, up from 10 to 39. Three more seats have moved into contention.

At FiveThirtyEight Republican chances in the Senate were 79.9 percent last week, today they are 78.7 percent. RCP disagrees. Last week it predicted a gain of two seats in the Senate with North Dakota and Missouri turning out their Democratic Senators for 53 Republicans and 47 Democrats.

Since then RCP has shifted Florida for 54 Republicans and 46 Democrats. RCP averages recent polls and whichever candidate is ahead is awarded the state. In several of the contests the lead is quite small, (see accompanying graphic for details)

Five of the six contests with serving Democratic Senators in states won by Donald Trump in the 2016 election have had new polls posted. In all except one, Indiana, the count has moved to the Republican candidate. Nevada, Arizona, Tennessee and Missouri now have Republican leads of varying amounts. Florida is tied but the more recent polls is Republican. The Indiana poll, which confirmed a Democratic lead may or may not be an outlier, only another poll can tell. Montana has not been polled since September 22^nd, before the televised Kavanaugh hearings, so the 3 percent Democratic lead is questionable. In addition President Trump has made three visits to the state in support of the Republican candidate. Montana has to be considered undecided until new information is available.

Democrats take the House and the Senate

With the Democratic chances in the House moving to 84.5 percent and the Senate shifting to 21.4 percent from 81.4 percent and 20.1 percent respectively at FiveThirtyEight the odds of a double takeover are slightly improved.

RealClearPolitics agrees on the House side with 205 seats now considered leaning or likely Democratic and 198 for Republicans with 32 considered toss ups and an average gain of 26 for the Democrats.  On the Senate side however the edge goes to the Republicans who have added one seat to 54.

Republican keep the House and retain the Senate

Odds here have slipped for the Republicans. FiveThirtyEight now gives them just a 15.4 percent change of retaining control, down from 18.6 percent last week. RCP also has moved the House away from the Republicans by three seats.

In the Senate the 1.2 percent decline in odds for the Republicans to keep the Senate from 538 cannot be considered meaningful. The increase in one seat for the Republican in the RCP stake more than compensates for it.

Generic vote

This tracks the preference for a generic Republican or Democratic candidate. Due to the larger number of registered Democrats than Republicans this poll has historically overstated the Democrats advantage by about 7.2 percent in post war elections. In practice that means a Democratic lead in that neighborhood probably indicates an electorate nearly tied.

Last week the spread was 7.3 percent in favor of the Democrats. That has widened slightly to 7.6 percent. The inconsequential difference underlines the closeness of the decision and the decreasing chance of decisive more to one party or the other.

US Congressional Election: Can the Republican economy hold off the Democrats? October 14, 2018   

https://www.fxstreet.com/analysis/us-congressional-election-2018-preview-october-14-2018-201810150033 

Political Map - Senate

Political Map - House

Political Map - Generic Vote