Conference Presentation, Fireside Chat, Interview
US presidential elections outlook: Implications for policy and markets
- U.S. presidential elections on November 5th are associated with market weakness at the start of the year due to uncertainty, followed by expected market strength late in the year.
- The Republican nominating contests begin with the Iowa caucus on January 15th, followed by New Hampshire on January 23rd, Nevada on February 8th, and South Carolina on February 24th, with Super Tuesday occurring on March 5th across 15 states including California and Texas.
- Donald Trump is projected to win the Iowa caucuses, while Nikki Haley faces an expectation that failing to win New Hampshire will effectively end her campaign; winning both New Hampshire and South Carolina is deemed necessary for her to compete through Super Tuesday.
- A weak performance by Governor DeSantis in Iowa could lead to his withdrawal before New Hampshire, potentially altering the dynamics of the subsequent primary contest.
- Independent and third-party candidates, including Robert F. Kennedy Jr., Cornel West, and Jill Stein, may dilute the major party vote, with potential national vote shares for the winner dropping to the low 40s or high 30s.
- Polling data from November indicates Robert F. Kennedy Jr. holds support in the low to mid-20s in a three-way matchup across Georgia, Arizona, and Wisconsin, though his ability to maintain this as election day approaches is uncertain.
- The Democratic Party holds a slight advantage in House elections due to congressional map redrawing, though the outcome is expected to be extremely close and heavily influenced by the top-of-the-ticket results.
- Republicans are favored to gain control of the Senate, potentially securing a 52 or 53-seat majority, with specific target seats in West Virginia, Montana, and Ohio.
- Democratic defense of seats in hyper-red states like West Virginia, Montana, and Ohio, combined with potential Republican primary setbacks, could alter the Senate balance.
- Policy outcomes depend on the level of government alignment: an all-Republican government may extend the 2017 tax cuts entirely, whereas a divided Congress might extend cuts favoring middle and lower-income earners with potential corporate tax adjustments.
- A Donald Trump presidency could see the unilateral imposition of a 10% across-the-board tariff generating over $300 billion, though such measures may not be sustainable long-term without legislative action.
- An all-Democratic sweep is considered less probable than a divided government or an all-Republican outcome.
- Historically, S&P returns in presidential election years average 8%, which is weaker than the 11% average observed in other years since the mid-1970s.
- A close election result is expected to trigger legal challenges and recounts, potentially followed by protests from disgruntled voters on either side.