The US Presidential and Congressional election results this evening will undoubtedly be the most closely watched event this week. Due to the potential for a higher than typical turnout and the high amount of mail-in and early voting, it is possible the winner may not be apparent on election night. Developments in macro data announced may therefore also shape risk appetite for the rest of the week.
Last night’s October US ISM Manufacturing PMI and US Employment report showed another month of firm expansion. Notably, US manufacturing expanded at the fastest pace in more than 2 years, fuelled by the strongest orders growth since early 2004 and a pickup in employment. Meanwhile, a FOMC decision is due on Thursday night, but should not unveil any major policy changes.
The Eurozone October Manufacturing PMI however, should be helpful to gauge to the extent of the damage caused by new lockdown restrictions in key European economies.
Finally, China trade numbers released over the weekend may shed on the progress of the Phase-One deal between the US and China.
Now back to the elections – it looks like either candidate may not have a significant lead over the other going by a summary of poll results across news agencies.
Bloomberg collates the latest poll results done on the weekend by major US news agencies.
While polls results show Biden running better than Hillary Clinton did four years ago, Trump still has a narrow but viable path to an election win through the states considered “toss ups” by nonpartisan election handicappers, according to analysts asked by Bloomberg.
National polls cannot indicate a winner, since presidents are chosen by state, but they can suggest trends. An NBC/Wall Street Journal poll showed Biden up a full 10 percentage points, 52% to 42% for Trump. His lead was built by support from Black voters, 87%-5%; young voters, 60%-32% for Trump; seniors, 58%-35%; women 57% to 37%; White voters with college degrees, 56% to 41%; and independents, 51% to 36%.
A CBS News poll showed that Biden has support from 66% of those who’ve already voted to 32% who backed Trump. The breakdown of early voting in person versus through the mail was not indicated.
Based on Bloomberg’s economists, here are some scenarios of the post-election results, and how will they translate to impact the new stimulus decision and the GDP.
The bulk of a USD2-trillion package is allocated to states and localities, with generous unemployment benefits and stimulus payments to American. The boost to GDP growth in 2021 is roughly 1.5% on an annual basis, and nearly 2% between the 4th quarters of 2019 and 2020 (4Q-over-4Q). Instead of 3.5% GDP forecast for 2021, growth comes in at 5.4%.
Congressional Republicans might be unwilling to give the new Democrat President a stimulus win, and fiscal stimulus will be smaller. Forecast of USD1 trillion in additional stimulus and 2021 GDP growth at 3%.
With control over the White House, the pro-stimulus Republicans in the senate might re-look into the stimulus numbers. If President Trump rallies his party around a USD1.5 trillion stimulus, growth would be 0.8% at the end of 2021, with the 4Q-over-4Q expansion up to 4.3%.
With both Trump and Congressional Democrats currently calling for a larger stimulus, a bigger package might be expected. However, a bipartisan clash is likely to cap the size of the stimulus. Instead of 3.5% in 2021, growth comes in at 3.2%.
As the results of both the presidential election and a number of Senate seats might take weeks to be revealed, a close-to-call race between the nominees would cause uncertainty to build in financial markets. Business sentiment and household spending could retrench, dragging 2021 GDP growth down to 2.3%. Stimulus news is also expected to be further pushed back and come in smaller.
Source: Macquarie Research - 3 Nov 2020
enning22
polls numbers are fake
2020-11-03 10:04