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Elections & markets: The state of the race

Elections & markets: The state of the race

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This article was originally published by CIBC Wealth Managment Blog

As the Republican convention winds up, the two parties are presenting a divergent assessment of the current state of the nation, and an even more different vision for the future. With barely two months to go before the election, we assess the state of the race.

Former Vice President Joe Biden has a significant, but not insurmountable, lead in national polls (Exhibit 1). Prior to COVID-19 and the ensuing recession, Biden typically had a small polling lead, often within the margin of error. His lead has steadily grown since then, as the economic collapse that ensued weighed on President Trump’s approval ratings. The president’s net approval rating has fallen from -4% in late March to -11% in late August.1

Exhibit 1: Average of presidential election polls

U.S. electric sector emissions show by far the largest declines in recent years

Source:, as of August 25, 2020. Accounts for each poll’s quality, sample size and recency.

The president is behind in this race, but his campaign has accurately pointed out that he was well behind Hillary Clinton at this point four years ago. One difference—and it could be argued as an advantage or a disadvantage—is that President Trump is now an incumbent with a track record. Four years ago, he was a celebrity with no policy record to defend. At this point in his presidency, he is likely to tout three solid years of economic growth and wage gains (before COVID-19), tax reform, trade deals and toughening U.S.-China relations; however, he currently presides over a pandemic not yet under control, a double-digit unemployment rate and a highly uncertain outlook.

Another argument often made is that national polls should be ignored because they were so wrong in 2016. Though, in reality, they were pretty accurate. The final week of polling four years ago showed a 3.1% average advantage for Hillary Clinton. On Election Day, she won the popular vote by 2.1%.2

A better argument is that national polls sometimes measure the wrong thing. Donald Trump secured a comfortable victory in the electoral college (306 to 232) by winning a handful of large swing states by very small margins. Exhibit 2 shows the 2016 victory margin in those swing states for Trump versus where he stands in the polls today.

Read more

This is the second in a multi-part series:

Part 1: What history tells us

Dave Donabedian is chief investment officer of CIBC Private Wealth Management, serving in that capacity since 2009. His responsibilities include chairing the Asset Allocation Committee, as well as providing oversight of internal investment strategies and the external manager selection platform.


1, as of 08.25.2020.
2, as of 08.21.2020.

CIBC Private Wealth Management includes CIBC National Trust Company (a limited-purpose national trust company), CIBC Delaware Trust Company (a Delaware limited-purpose trust company), CIBC Private Wealth Advisors, Inc. (a registered investment adviser)—all of which are wholly owned subsidiaries of CIBC Private Wealth Group, LLC—and the private wealth division of CIBC Bank USA. All of these entities are wholly owned subsidiaries of Canadian Imperial Bank of Commerce.
This document is intended for informational purposes only, and the material presented should not be construed as an offer or recommendation to buy or sell any security. Concepts expressed are current as of the date of this document only and may change without notice. Such concepts are the opinions of our investment professionals, many of whom are Chartered Financial Analyst® (CFA®) charterholders or CERTIFIED FINANCIAL PLANNER™ professionals. Certified Financial Planner Board of Standards Inc. owns the certification marks CFP® and CERTIFIED FINANCIAL PLANNER™ in the U.S.

There is no guarantee that these views will come to pass. Past performance does not guarantee future comparable results. The tax information contained herein is general and for informational purposes only. CIBC Private Wealth Management does not provide legal or tax advice, and the information contained herein should only be used in consultation with your legal, accounting and tax advisers. To the extent that information contained herein is derived from third-party sources, although we believe the sources to be reliable, we cannot guarantee their accuracy. The CIBC logo is a registered trademark of CIBC, used under license. Approved 596-20. Investment Products Offered are Not FDIC-Insured, May Lose Value and are Not Bank Guaranteed.

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