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Election Trends

- September 13, 2020

Summary

White House

  • Biden leading in polls, but 14 states (209/ 39% of electoral votes) still toss ups.
  • “Silent vote” could potentially be more of an issue in 2020 than it was in 2016.
  • Biden leading in polls by 7%, unchanged over last week.
  • Biden leading in betting markets by 15%, +1% over last week.
  • Trump trailing by 4% in key battlegrounds, unchanged over last week .
  • Trump’s approval rating is 44%, below historically significant 45%.
  • 5-day change in new Covid-19 cases is 159k (vs. 162k last week), a potential tailwind for Trump.
  • New Covid-19 cases are trending lower in battlegrounds, a potential tailwind for Trump

Senate + House

  • Republicans with 46 seats “locked or likely” vs. 46 for Democrats, but 8 seats still in play.
  • Democrats leading Senate election race in betting markets by 9%, -1% over last week.
  • Democrats winning House is a foregone conclusion per betting markets (leading by 68%)
  • Democrats have a 54% chance of a “blue sweep” per betting markets, +1% over last week
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The Battle for the White House

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How Big is the Silent Vote?

52% of Democrats & 77% of Republicans
have political opinions they are afraid to share” ¹

74% of Biden supporters & 37% of Trump supporters
would want their friends and family to know how they voted” ²

62% of Americans
say the political climate these days prevents them from saying things
they believe because others might find them offensive.” ¹

Source: ¹ Cato Institute https://www.cato.org/publications/survey-reports/poll-62-americans-say-they-have-political-views-theyre-afraid-share
² https://www.express.co.uk/news/politics/1292288/US-election-2020-donald-trump-poll-results-democracy-institute-of-america

Biden Leading Trump in Polls

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Trump Tracking 2016, Biden Ahead of Clinton, But Not Too Late For Big Swings

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Biden Leading Trump in Betting Markets

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Trump Trails in Battleground Polls, But By Narrowing Margin

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June Approval Rating Tends to Correlate with Re-election Odds

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Any Increase in COVID-19 Cases Could Hurt Trump

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Coronavirus Trends in Battleground States

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The Battle for the Senate

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Democrats Leading Republicans in Betting Markets

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Democrat Win in House is a Foregone Conclusion

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“Blue Sweeps” Not Necessarily Bad for Markets

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Investor Positioning Into Election: Winners Include Clean Energy, Big Tech and Firearm Stock

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Stocks Back At Election-Year Average

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Stocks Back At Election-Year Average

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U.S. Large Cap Stocks: 2020 vs. Past Election Years

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Tax Policy Under Potential a Biden/Harris Admin

We will work to reform the tax code to be more progressive and equitable, and reduce barriers for families who qualify to benefit from targeted tax breaks. Our tax system has been rigged against the American people by big corporations and their lobbyists, and by Republican politicians who dole out breaks to their biggest donors while leaving families to struggle. A guiding principle across our tax agenda is that the wealthiest Americans can shoulder more of the tax burden, including in particular by making investors pay the same tax rates as workers and bringing an end to expensive and unproductive tax loopholes. Corporate tax rates, which were cut sharply by the 2017 Republican tax cut, must be raised, and “supply-side” or “trickle down” tax cuts must be rejected. Estate taxes should also be raised back to the historical norm.

Biden-Sanders Unity Task Force ¹

I don’t think 500 billionaires are the reason why we’re in trouble.

Joe Biden ²

A lot of my supporters are not enthusiastic about Joe Biden

– Bernie Sanders ³

Source: ¹ : https//joebiden.com/wp-content/uploads/2020/08/UNITY-TASK-FORCE-RECOMMENDATIONS.pdf

² https://www.brookings.edu/wp-content/uploads/2018/04/biden-transcript.pdf

³ https://abcnews.go.com/Politics/bernie-sanders-acknowledging-progressive-disagreements-platform-joe-biden/story?id=72396119

Biden/Harris Tax Proposals

  • Repealing the Tax Cuts and Jobs Act (TCJA) individual income tax reductions for those earning over $400,000 and restoring the top marginal income tax rate to 39.6 percent from today’s 37 percent. The Section 199A deduction would also be phased out for those earning over $400,000.
  • Taxing capital gains at ordinary income tax rates—up from a top rate of 23.8 percent today—for those earning over $1 million. Biden would also eliminate step-up in basis for inherited assets with capital gains, instead taxing those gains at death.
  • Capping the value of itemized deductions to 28 percent for those in higher marginal tax brackets and restoring the Pease limitation on itemized deductions for those with taxable income above $400,000.
  • Raising the corporate income tax from 21 percent to 28 percent.
  • Imposing a 15 percent minimum book tax on corporations with $100 million or greater in income.
  • Doubling the tax rate on Global Intangible Low Tax Income (GILTI) earned by foreign subsidiaries of U.S. firms, from 10.5 percent to 21 percent.
  • Imposing the 12.4 percent Social Security payroll tax on wage and self-employment income earned above $400,000.

Source: ¹ https://taxfoundation.org/reviewing-joe-bidens-tax-vision/

U.S. Large Cap Returns During Select Presidential Term

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Elections Can Reinforce Trends or Represent Key Inflection Points

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U.S. Large Cap Stocks: 2020 vs. Past Election Years

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Elections Can Reinforce Trends or Represent Key Inflection Points

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U.S. Investment Grade Bonds: 2020 vs. Past Election Years

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DISCLAIMER

Magnus Financial Group LLC (“Magnus”) did not produce and bears no responsibility for any part of this report whatsoever, including but not limited to any macroeconomic views, inaccuracies or any errors or omissions. Research and data used in the presentation have come from third-party sources that Magnus has not independently verified presentation and the opinions expressed are not by Magnus or its employees and are current only as of the time made and are subject to change without notice.

This report may include estimates, projections or other forward-looking statements, however, due to numerous factors, actual events may differ substantially from those presented. The graphs and tables making up this report have been based on unaudited, third-party data and performance information provided to us by one or more commercial databases. Except for the historical information contained in this report, certain matters are forward-looking statements or projections that are dependent upon risks and uncertainties, including but not limited to factors and considerations such as general market volatility, global economic risk, geopolitical risk, currency risk and other country-specific factors, fiscal and monetary policy, the level of interest rates, security-specific risks, and historical market segment or sector performance relationships as they relate to the business and economic cycle.

Additionally, please be aware that past performance is not a guide to the future performance of any manager or strategy, and that the performance results and historical information provided displayed herein may have been adversely or favorably impacted by events and economic conditions that will not prevail in the future. Therefore, it should not be inferred that these results are indicative of the future performance of any strategy, index, fund, manager or group of managers. Index benchmarks contained in this report are provided so that performance can be compared with the performance of well-known and widely recognized indices. Index results assume the re-investment of all dividends and interest.

The information provided is not intended to be, and should not be construed as, investment, legal or tax advice nor should such information contained herein be construed as a recommendation or advice to purchase or sell any security, investment, or portfolio allocation. An investor should consult with their financial advisor to determine the appropriate investment strategies and investment vehicles. Investment decisions should be made based on the investor’s specific financial needs and objectives, goals, time horizon and risk tolerance. This presentation makes no implied or express recommendations concerning the way any client’s accounts should or would be handled, as appropriate investment decisions depend upon the client’s specific investment objectives.

Investment advisory services offered through Magnus; securities offered through third party custodial relationships. More information about Magnus can be found on its Form ADV at www.adviserinfo.sec.gov.

TERMS OF USE

This report is intended solely for the use of its recipient. There is a fee associated with the access to this report and the information and materials presented herein. Re-distribution or republication of this report and its contents are prohibited. Expert use is implied.

DISCLAIMER

Magnus Financial Group LLC (“Magnus”) did not produce and bears no responsibility for any part of this report whatsoever, including but not limited to any macroeconomic views, inaccuracies or any errors or omissions. Research and data used in the presentation have come from third-party sources that Magnus has not independently verified presentation and the opinions expressed are not by Magnus or its employees and are current only as of the time made and are subject to change without notice.

This report may include estimates, projections or other forward-looking statements, however, due to numerous factors, actual events may differ substantially from those presented. The graphs and tables making up this report have been based on unaudited, third-party data and performance information provided to us by one or more commercial databases. Except for the historical information contained in this report, certain matters are forward looking statements or projections that are dependent upon risks and uncertainties, including but not limited to factors and considerations such as general market volatility, global economic risk, geopolitical risk, currency risk and other country-specific factors, fiscal and monetary policy, the level of interest rates, security-specific risks, and historical market segment or sector performance relationships as they relate to the business and economic cycle.

Additionally, please be aware that past performance is not a guide to the future performance of any manager or strategy, and that the performance results and historical information provided displayed herein may have been adversely or favorably impacted by events and economic conditions that will not prevail in the future. Therefore, it should not be inferred that these results are indicative of the future performance of any strategy, index, fund, manager or group of managers. Index benchmarks contained in this report are provided so that performance can be compared with the performance of well-known and widely recognized indices. Index results assume the re-investment of all dividends and interest.

The information provided is not intended to be, and should not be construed as, investment, legal or tax advice nor should such information contained herein be construed as a recommendation or advice to purchase or sell any security, investment, or portfolio allocation. An investor should consult with their financial advisor to determine the appropriate investment strategies and investment vehicles. Investment decisions should be made based on the investor’s specific financial needs and objectives, goals, time horizon and risk tolerance. This presentation makes no implied or express recommendations concerning the way any client’s accounts should or would be handled, as appropriate investment decisions depend upon the client’s specific investment objectives.

Investment advisory services offered through Magnus; securities offered through third party custodial relationships. More information about Magnus can be found on its Form ADV at www.adviserinfo.sec.gov.

TERMS OF USE

This report is intended solely for the use of its recipient. There is a fee associated with the access to this report and the information and materials presented herein. Re-distribution or republication of this report and its contents are prohibited. Expert use is implied.

DEFINITIONS

Asset class performance was measured using the following benchmarks: U.S. Large Cap Stocks: S&P 500 TR Index; U.S. Small & Micro Cap: Russell 2000 TR Index; Intl Dev Large Cap Stocks: MSCI EAFE GR Index; Emerging & Frontier Market Stocks: MSCI Emerging Markets GR Index; U.S. Intermediate-Term Muni Bonds: Bloomberg Barclays 1-10 (1-12 Yr) Muni Bond TR Index; U.S. Intermediate-Term Bonds: Bloomberg Barclays U.S. Aggregate Bond TR Index; U.S. High Yield Bonds: Bloomberg Barclays U.S. Corporate High Yield TR Index; U.S. Bank Loans: S&P/LSTA U.S. Leveraged Loan Index; Intl Developed Bonds: Bloomberg Barclays Global Aggregate ex-U.S. Index; Emerging & Frontier Market Bonds: JPMorgan EMBI Global Diversified TR Index; U.S. REITs: MSCI U.S. REIT GR Index, Ex U.S. Real Estate Securities: S&P Global Ex-U.S. Property TR Index; Commodity Futures: Bloomberg Commodity TR Index; Midstream Energy: Alerian MLP TR Index; Gold: LBMA Gold Price, U.S. 60/40: 60% S&P 500 TR Index; 40% Bloomberg Barclays U.S. Aggregate Bond TR Index; Global 60/40: 60% MSCI ACWI GR Index; 40% Bloomberg Barclays Global Aggregate Bond TR Index.