Yeah this is kind of a controversial article and at the end it is just guessing about the presidential election outcome and predicting the future (which we can't), but thinking about different outcomes is part of the job and it kind of belongs to an election year, in my opinion.
The reason for me to make this fundamental analysis is that in my opinion too many market participants and news agencies already seem to me like they already expect a big “blue wave” win, which would mean a Biden win and on top of that a majority for the Democrats in the senate.
All possible and if we take a look at the latest polls we see that a Biden win is more than likely. But I'm currently swimming against that mainstream thinking, not because I like one presidential candidate more than the other one, just because of facts and my willingness to see the election based on facts and not based on emotions.
In times of Covid-19 I have experienced that alternative facts become more important and usable than ever.
The "standard way" of measuring information becomes more and more inaccurate.
That's the reason why I base this thesis on alternative facts. So let me explain:
The best two indicators for the outcome of a presidential election in the US in the past 16 years, were Google Trends and the stock market performance itself.
First, take a look at my Google Trends analysis, based on search volume and on the combination of presidential candidate and the year of the election as parameters within the search.
If you go through the elections since 2004 you see that we had a stunning 100 percent win rate in predicting the winner of the presidential election, based on the search volume in the election year of each candidate!
On the other hand the performance of 3 months in front of the election date was a pretty good forecasting tool too. If the performance during these 3 months was positive, the incumbent president or party was elected in over 87 percent of the cases!
In general, Trump voters are seen as more cautious in expressing their beliefs in public. Therefore it can happen that the polls don't really reflect the current status of the distribution of votes between Trump and Biden. This is a phenomenon we already saw in 2016 when it was Trump vs. Clinton. In the middle of October 2016, Trump only had a 15 percent chance of winning the election, but as we all know today, he made the race in the end.
Currently it looks like Trump has a reelection chance of round about 40 percent, which is much higher, but you definitely can argue that the calculation method has changed significantly.
Like Mark Twain already said many many years before. History doesn't repeat itself but it rhymes. Keep that in mind on the 3rd of November. The event will be definitely quite important for the whole world and exciting at the same time.
However, one should not write off the incumbent president for a long time, whether you like him or not...