According to mainstream media – if all voters participate in the election presidential then Donald Trump is doomed. Thing is in presidential elections crucial voters are cast by the states through the Electoral Colleges. As you can remember, in 2016 Donald Trump won 2.9 Million less votes than Hilary Clinton but he got 306 electoral votes against 232 of Hillary’s. If President Trump manages his Electoral College losses to Michigan and Arizona, still he would need 279 to 259 votes to get rid of doubts.
Allan Lichtman 2020 Prediction
Since 1984, American University (Washington, D.C) history professor Allan Lichtman predicted every U.S. president correctly. Well, he is telling that Donald Trump will be beaten and Joe Biden will become the 46th President of the United States. He proposed 13 leading keys to determine next president in the white house. According to the Professor- if five or fewer statements are false, the government party (Now Republic) wins. When six or more are false, the opposition party (Democratic Party) may won. To mention yourself, the 1h3 keys as follows-
Allan Lichtman 2020 Prediction Keys
- Party Mandate: After the midterm elections, the incumbent party holds more seats in the U.S. House of Representatives than after the previous midterm elections.
- Contest: There is no serious contest for the incumbent party nomination.
- Incumbency: The incumbent party candidate is the sitting president.
- Third party: There is no significant third party or independent campaign.
- Short-term economy: The economy is not in recession during the election campaign.
- Long-term economy: Real per capita economic growth during the term equals or exceeds mean growth during the previous two terms.
- Policy change: The incumbent administration effects major changes in national policy.
- Social unrest: There is no sustained social unrest during the term.
- Scandal: The incumbent administration is untainted by major scandal.
- Foreign/military failure: The incumbent administration suffers no major failure in foreign or military affairs.
- Foreign/military success: The incumbent administration achieves a major success in foreign or military affairs.
- Incumbent (party) charisma: The incumbent party candidate is charismatic or a national hero.
- Challenger (party) charisma: The challenging party candidate is not charismatic or a national hero.
Market Impacts from Election Presidential
There is no doubt that next 3rd of November will play a big play on the markets. If you’re as the most of investors in equity market, you’re looking forward to the fate of this year’s race for the Oval Office. Almost 99% finance traders assured that the race will affect the stock market, liquid and all other markets globally. According to Hartford Funds survey, 84% said they expect that it could change investors’ habits. Half of those participant investors will change their plan before the poll, 62% will make changes in next year.
According to Brian Kraus (head of investment consulting at Hartford Funds) a Democratic president typically tends to have a higher U.S. equity market than a Republican president. “There is a perception that party affiliations of presidents are going to impact stock market returns much more than actually has played out in the numbers,” Kraus said.
Traders who take a long term trade eye and hold, it should be a profit for them. Yet, we don’t know for sure who is going to win but it is certain that markets never like uncertainty.
How the Election Affects the Markets
There are three possible outcomes in terms of market influences from this presidential election. First one is if Joe Biden can win, what are common expectations?
Scenario A - Due to the Coronavirus case, it will not be easy for him to hike more taxes on corporate companies. The market might sell off for the first few weeks because of his tax proposals.
Giant companies like Amazon, Apple, Google, Facebook, and Netflix could dip for a while but health care services, clean energy and infrastructure category companies may do well under the Biden administration. Also, there is a probability that pharmaceutical companies could lose for a while in his time.
Scenario B - Let’s guess Joe Biden won the election but Congress stays split between Republican and Democrat. Maybe most people won’t like it but history tells us a divided government causes better performance in spite of market returns.
Hartford Funds’ Survey found many people trusts Republic party to gain market returns. If you are a stock trader and considering rebalancing portfolios you should rethink it because the election outcome is still uncertain and positioning a portfolio right now for a specific result may leave the attempt vulnerable of fair chances.
Scenario C - Finally the remaining outcome, what if Donald Trump wins again?
In this scenario Congress may remain split between two parties and no major changes will be expected. Small companies and traditional fuel, gas energy as well as financial, technological companies will do well.
One concern may arise after the election, what would be new with China because the gaps between two governments may tend to more complex and outcome trade conflicts.
Well, if you follow the history then you know it is difficult to dethrone a president in power. It happens because if the man in charge needs votes in some specific area he can develop as people want, in a result he earns voters’ attention. So as mainstream media spreads positive news for Joe Biden it couldn’t be just true. He has said he will raise taxes a lot and no investor, no economy likes taxes neither the market nor voters.
It is true that stocks seem to never go down currently, some are going to go down very dramatically. Maybe they are going to stay down a lot some day and many are going to suffer because of it. It will go up and stable in a period of time - no doubts.
Under Donald Trump stocks was record high before the Covid-19 stake, he can do better in second term despite media opposition.
In a final thought, Joe Biden or Donald Trump both aren’t big changing factors for markets and there is nothing to expect a catastrophe yet.