US Election 2020: Prepare for a change in the White House
The US election is coming up and trusting polls and betting markets it looks like Joe Biden will become the 46th US President. Much can still happen in the run up to November 3, but without major surprises, we see a Biden-victory and even a Democratic clean sweep, i.e. majority in Congress, as the most likely outcome.
- Our base case is a Joe Biden victory and a Democratic clean sweep…
- …but much can still happen, and absentee voting will increase a lot.
- Likelihood of major political turbulence is low, but would affect financial markets most.
With that said, both the election and its aftermath can still be nasty. Because of the pandemic, absentee voting will increase much. This brings the attention to some challenges. Some states don’t have robust systems for in-mail ballots, the United State Postal Service (USPS) is in crisis and rejection rates tend to be high from time to time, the New York City’s primary election is one example. All this poses risks to a delayed result and a dragged-out process.
On top of this, there have been discussions that President Trump won’t respect the election result and commit to a peaceful transfer of power. Some GOP lawmakers have, however, dismissed this. We see low likelihood of major political turbulence, but a disputed election result would cause turbulence in the financial markets where safe-haven assets may be favoured.
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