Steen’s Chronicle: This election more up in the air than many believe

Steen’s Chronicle: This election more up in the air than many believe

Macro
Steen Jakobsen

Chief Investment Officer

Summary:  The outcome of the 2020 US Election is highly anticipated, but there is far too much that will not change after Election Day, even if we get a shock victory from Trump, a victory I still maintain is more likely than most believe, even if Biden likely to eke out a weak victory.


I, like fivethirtyeight.com have mixed feelings about 2020 election

  • In 2012 the consensus was for a close race, despite Obama ending up winning and by a solid, no doubt margin.
  • In 2016 the overwhelming consensus for a Clinton win was incredibly wrong, as she was most unelectable official in US history.

So my call and the fivethirtyeight.com calls have been based on who would lose, not win!

The 2020 US Election sees two old white men from the elite side of US battling for the Presidency, my take is:

  • A Biden win de facto means more K-shaped economy, society and lack of deep reforms
  • A Trump win de facto means more K-shaped economy, society and lack of deep reforms

Yes, it’s all the same. Yet another round, even if a super-sized one, of extend-and-pretend. The Fed balance sheet, currently $7 trillion, will go to $30 trillion before the next election, the government deficit will still be at 8-10% of GDP, social riots, a youth revolt and no Green transformation. When you elect from small pool of elitist politicians you will get elitist governments!

A President Biden would look like a President Carter in 1977-1980. Lots of hope but the domestic economy, severe acceleration of inflation (and stagflation) and external factors (China, anti-globalisation) will make him a one-period President delivering few or no reforms.

A President Trump would look like …well… like a Trump President from 2016-2020, but this time entirely bypassing Congress and Senate through wider and wider use of executive orders and policies rooted in a waning respect for rule of law. We can forget any reforms, much less any healing from the divisiveness of the last four years. Rather, we’ll simply see another Fed-issued blank check for infinite financial leverage without accountability, a process started by the worst central banker ever, Mr. Alan Greenspan when he bailed out LTCM in 1998.

The 2020 election, according to fivethirtyeight.com and other polling analysis outfits, sees Trump at about a 10% probability of winning. It’s still a probability which could happen. The mathematical odds are more difficult, but the “animal spirits” on both sides of a very divided America will see both camps activated and aggressively trying to cement their vote – mostly on the anti-Trump/pro-Trump fault-line. Biden is even less inspiring, if less hated than Hilary Clinton.

  • There is too much focus on high turnout being Biden positive. It seems to me that there are surprisingly many Trump people turning up, maybe for the first time in years as they feel the naïve narrative of “the American Dream” is about to die with a “Communist left” taking over (not my definition!)

  • There is definitely 10-15% of Trump voters who have been hiding in what they see as “False Polls” – this we have shown before in our Election coverage.

For more on a scenario which could see Trump regain the White House read this excellent road map.

Also please, pretty please check out John Hardy’s Election coverage since a week ago. All details of the scenarios are discussed, with extensive coverage of when different states report. Simply stunning work by Mr Hardy (In full disclosure I should mention that John believes firmly in Biden sweep, and his premise and forecast is thoroughly documented below).

Conclusion

This time tomorrow we won’t have a true paradigm shift as regardless of the outcome, the US has simply quickened its march another step further into the end game of its extend-and-pretend financial and political model. No outcome will change that.

Market and consensus says Biden sweep. My gut tells me, not so fast. I still see highest odds scenario one of a contested/narrow Biden win overall, but damn it’s going to be long night.

Quarterly Outlook

01 /

  • Equity outlook: The high cost of global fragmentation for US portfolios

    Quarterly Outlook

    Equity outlook: The high cost of global fragmentation for US portfolios

    Charu Chanana

    Chief Investment Strategist

  • Commodity Outlook: Commodities rally despite global uncertainty

    Quarterly Outlook

    Commodity Outlook: Commodities rally despite global uncertainty

    Ole Hansen

    Head of Commodity Strategy

  • Upending the global order at blinding speed

    Quarterly Outlook

    Upending the global order at blinding speed

    John J. Hardy

    Global Head of Macro Strategy

    We are witnessing a once-in-a-lifetime shredding of the global order. As the new order takes shape, ...
  • Asset allocation outlook: From Magnificent 7 to Magnificent 2,645—diversification matters, now more than ever

    Quarterly Outlook

    Asset allocation outlook: From Magnificent 7 to Magnificent 2,645—diversification matters, now more than ever

    Jacob Falkencrone

    Global Head of Investment Strategy

  • Macro outlook: Trump 2.0: Can the US have its cake and eat it, too?

    Quarterly Outlook

    Macro outlook: Trump 2.0: Can the US have its cake and eat it, too?

    John J. Hardy

    Global Head of Macro Strategy

  • Equity Outlook: The ride just got rougher

    Quarterly Outlook

    Equity Outlook: The ride just got rougher

    Charu Chanana

    Chief Investment Strategist

  • China Outlook: The choice between retaliation or de-escalation

    Quarterly Outlook

    China Outlook: The choice between retaliation or de-escalation

    Charu Chanana

    Chief Investment Strategist

  • Commodity Outlook: A bumpy road ahead calls for diversification

    Quarterly Outlook

    Commodity Outlook: A bumpy road ahead calls for diversification

    Ole Hansen

    Head of Commodity Strategy

  • FX outlook: Tariffs drive USD strength, until...?

    Quarterly Outlook

    FX outlook: Tariffs drive USD strength, until...?

    John J. Hardy

    Global Head of Macro Strategy

  • Fixed Income Outlook: Bonds Hit Reset. A New Equilibrium Emerges

    Quarterly Outlook

    Fixed Income Outlook: Bonds Hit Reset. A New Equilibrium Emerges

    Althea Spinozzi

    Head of Fixed Income Strategy

None of the information provided on this website constitutes an offer, solicitation, or endorsement to buy or sell any financial instrument, nor is it financial, investment, or trading advice. Saxo Capital Markets UK Ltd. (Saxo) and the Saxo Bank Group provides execution-only services, with all trades and investments based on self-directed decisions. Analysis, research, and educational content is for informational purposes only and should not be considered advice nor a recommendation. Access and use of this website is subject to: (i) the Terms of Use; (ii) the full Disclaimer; (iii) the Risk Warning; and (iv) any other notice or terms applying to Saxo’s news and research.

Saxo’s content may reflect the personal views of the author, which are subject to change without notice. Mentions of specific financial products are for illustrative purposes only and may serve to clarify financial literacy topics. Content classified as investment research is marketing material and does not meet legal requirements for independent research.

Before making any investment decisions, you should assess your own financial situation, needs, and objectives, and consider seeking independent professional advice. Saxo does not guarantee the accuracy or completeness of any information provided and assumes no liability for any errors, omissions, losses, or damages resulting from the use of this information.

Please refer to our full disclaimer for more details.

Saxo
40 Bank Street, 26th floor
E14 5DA
London
United Kingdom

Contact Saxo

Select region

United Kingdom
United Kingdom

Trade Responsibly
All trading carries risk. To help you understand the risks involved we have put together a series of Key Information Documents (KIDs) highlighting the risks and rewards related to each product. Read more
Additional Key Information Documents are available in our trading platform.

Saxo is a registered Trading Name of Saxo Capital Markets UK Ltd (‘Saxo’). Saxo is authorised and regulated by the Financial Conduct Authority, Firm Reference Number 551422. Registered address: 26th Floor, 40 Bank Street, Canary Wharf, London E14 5DA. Company number 7413871. Registered in England & Wales.

This website, including the information and materials contained in it, are not directed at, or intended for distribution to or use by, any person or entity who is a citizen or resident of or located in the United States, Belgium or any other jurisdiction where such distribution, publication, availability or use would be contrary to applicable law or regulation.

It is important that you understand that with investments, your capital is at risk. Past performance is not a guide to future performance. It is your responsibility to ensure that you make an informed decision about whether or not to invest with us. If you are still unsure if investing is right for you, please seek independent advice. Saxo assumes no liability for any loss sustained from trading in accordance with a recommendation.

Apple, iPad and iPhone are trademarks of Apple Inc., registered in the U.S. and other countries. App Store is a service mark of Apple Inc. Android is a trademark of Google Inc.

©   since 1992