Tale of two needles: Trump and Biden locked in tight White House race

Mark Fry

Donald Trump and Joe Biden are locked in a tight race for the White House with early indicators that Trump has once again defied pollsters in his US presidential re-election bid, which this morning remains too close to call.

The stakes are high for the global economy and capital flows, the US’s worldwide trading relationships, including – for the UK – an all-important US–UK trade deal, as well as far-reaching geopolitical implications.

By 9pm EST it was clear that it was not going to be a Democratic landslide, with a rising chance of a contested election and an outcome that might take days to emerge and even the possibility of a divided government.

A tight race could lead to a period of market uncertainty and legal challenges which has implications for global market sentiment.

As of this morning, the historic 2020 US presidential election looks to be a tale of two needles. Biden had more paths to the White House than Trump, but his range of outcomes narrowed after Trump held Florida, where Biden underperformed with Latino voters, Texas and – crucially – Ohio.

Trump surpassed expectations in the Upper Midwest by leading in Wisconsin, Michigan, Georgia and Pennsylvania, which may prove to be the kingmaker battleground states of the 2020 presidential election.

However, voting pattern anomalies – due to the coronavirus – are believed to skew in favour of Trump for election day votes, and Biden from mail-in ballots.

Early mail-in ballots are still to be counted in Pennsylvania, where Republicans have already filed two lawsuits contesting ballot validity. It points to the possibility of a contested result which may head to the Supreme Court. Elsewhere, Michigan and Georgia also may not be called until Wednesday evening.

While Biden has narrowed the gap in many Red states, it is not yet clear whether the former vice president’s improved performance compared to Hillary Clinton four years ago will be sufficient to pass 270 electoral votes.

Another analysis suggests many of the key battleground states are trending Red, but this may prove to be a function of election day voting favouring Trump while Biden-favouring mail-in votes have yet to be counted.

As at 7 am GMT, the projected wins for Biden will sweep up 220 electoral votes, while Trump’s victories claim 213 electoral votes, according to CNN’s projection.

Speaking just after 12:30am EST, Biden addressed supporters to say: “We feel good about where we are. We really do. I’m here to tell you tonight, we believe we’re on track to win this election. As I’ve said all along, it’s not my place or Donald Trump’s place to declare who’s winning this election. That’s the decision of the American people.” Trump is due to speak soon.

Republicans were clinging to their Senate majority early Wednesday, as they fended off energetic and well-funded Democratic challenges in South Carolina and Texas, while losing in Colorado and Arizona. Democrats look set to retain control of the House of Representatives.

Global economic implications for a Trump re-election or a Biden win provide a stark contrast. If Trump wins, the US trade war with China may be extended while his approach to combatting the pandemic’s second wave also has implications for the US economy’s recovery.

A Biden win raises the prospect of a reversal of Trump’s corporation tax cuts. For the UK perhaps the most significant economic difference between a Trump or Biden presidency is the two candidate’s attitudes to a US–UK trade deal, which are informed by their position on Brexit.

Downing Street’s chess pieces have been positioned in alignment with Trump’s pro-Brexit inclination, who also favours a US–UK trade deal. By comparison, Biden is believed to consider Brexit less favourably and – possibly – a US–UK trade deal as a lower priority.

However, these differences may be less significant than the preoccupation the US likely faces over the next 12–18 months in its fight against the coronavirus.

A likely delay to the Downing Street’s hopes of a swift trade deal with the US will weigh on the outlook for the UK economy which is reeling from the second national lockdown in England, announced last weekend.

The uncertainty that has characterised 2020 continues. For corporates – large and small – attention is on navigating the uncertainty and economic restrictions. Yesterday, BTG Advisory begun a new series of articles – Surviving Corporate Hibernation – exploring corporates’ pathways to manage current uncertainty. Over the coming weeks, we will explore themes that include the return of distress in the commercial real estate sector, the UK banking environment, and the rise in SMEs’ adoption of alternative lenders. Stay tuned.

If you would like to speak with one of our experts on how fast-moving global and national events are shaping the business and financing environment, please contact us.

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