Message From Last Night: Closing Arguments Are Coming Into Focus

Insights and Market Perspectives

Author: 8

October 8, 2020

WHY LAST NIGHT WAS SIGNIFICANT: Let's call the debate a draw; both candidates got in some shots, both evaded a lot of questions, and they didn't move the needle much. What stood out to us is that the closing arguments from both parties are coming into focus.

FOR THE DEMOCRATS, it's clear that health care - pre-existing conditions, the handling of the pandemic, Obamacare - is the dominant issue. Female voters say that's their major concern, and Joe Biden is now doing better than Hillary Clinton in 2016 among women.

FOR THE REPUBLICANS, the message is that the Biden agenda has veered sharply leftward, promising to spend trillions on new progressive programs, while raising taxes more aggressively than the Democrats will admit. Candidates who promise to raise taxes often stumble on election day.

THERE ARE OTHER ISSUES, of course - race relations, urban crime, climate change, geopolitics, etc. And there's the issue of Donald Trump's temperament,
which has played a major role in the dramatic Biden surge in the polls; he leads by
8 to 12 points nationwide, and his margin in key states like Pennsylvania and Michigan has widened.

YET THERE'S STILL A CASE for Trump closing the gap in the next four weeks. First, he needs to change the subject, away from Covid-19, and there's still a chance for a modest stimulus bill that would be a win for Trump. More importantly, there's a chance to change the subject as hearings begin next Monday on Amy Coney Barrett's nomination to the Supreme Court.

TRUMP CLOSED A HUGE GAP WITH HILLARY CLINTON in final four weeks of the 2016 campaign, as the polls missed tremendous enthusiasm for Trump that was just under the radar screen. Could Trump still win Florida, Arizona, Georgia, North Carolina, etc.? He's within striking distance of Biden in those states; of course, Biden could lose all of them and still win the presidency.

THE KEY, IN OUR OPINION, is whether Trump can stay on message. He's making the election all about him and the virus, which is not a winning strategy. If he hammers Biden's left-leaning agenda, there's a chance that Trump could make this a photo finish. We still think Biden will win, narrowly - but we're not buying the hype that this will be a landslide.
* * * * *
STIMULUS HYSTERIA: The stock market reacts wildly to any little tidbit on a stimulus bill, apparently overlooking two crucial points: First, Nancy Pelosi doesn't really want a deal because it could help Trump. Second, even if there is a deal between Pelosi and Steve Mnuchin, Republicans in Congress have no stomach to spend big bucks.

THERE'S STILL A CHANCE of aid to the airline industry and small business, but
a but a truly significant deal - with a price tag of close to $2 trillion - will
have wait until after the election.

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