Election Day is approaching and a very long election campaign is about to come to an end. The recent development in both national and state polls shows that it is not over until the fat lady sings and one should not rule out a Trump victory. According to the average of national polls, Trump is enjoying the biggest support since the Republican convent and he has once again managed to comeback, exactly as we have warned about in recent editions.
According to the current projections of the electoral votes based on state polls, Hillary Clinton has 226 solid or likely electoral votes and Donald Trump has 180 solid or likely electoral votes (270 to win). Thus, there are still 132 toss-ups to fight for. Looking at the swing states, it is notably Trump who is ahead in Florida and Ohio, states that have historically voted for the winning candidate. If we distribute the electoral votes in the swing states based on who is leading in the state polls as of now, Clinton is only marginally ahead in the electoral vote count by 273 versus 265 to Trump. Clinton would win more comfortably if she manages to win one or two of the eight swing states.
In our view, it is also interesting that Trump's supporters are more enthusiastic than Clinton's, see link . In connection with the UK's referendum, we learned that Brexit voters would go through 'hell and high water' to vote while the turnout among remainers disappointed. If this is anything like Brexit, it is good news for the Trump campaign.
Currently, the election for the Senate looks very close with 46-46 likely seats to both sides, leaving eight on the battlefield (Republicans hold five of these). Current projections hand the majority to the Republicans with a 51-49 win but it is going to be close. The House is most likely going to the Republicans.
The lower risk appetite in recent days is, in our view, due to election jitters as markets have repriced the probability of a Trump win. We would expect a Trump victory to be a risk-off event. For more on our view on the economic and financial implications of the election, see our presentation Trump versus Clinton - the economic and financial implications of the 2016 US election , 7 October 2016.
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