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Election Trends

- September 13, 2020

WHITE HOUSE

HOUSE + SENATE

MARKET TRENDS

HISTORICAL TRENDS

Summary

White House

  • Biden leading in polls, but 14 states (209/ 39% of electoral votes) still toss ups. slide 5
  • “Silent vote” could potentially be more of an issue in 2020 than it was in 2016. slide 6
  • Biden leading in polls by 7%, unchanged over last week. slide 7
  • Biden leading in betting markets by 15%, +1% over last week. slide 9
  • Trump trailing by 4% in key battlegrounds, unchanged over last week . slide 10
  • Trump’s approval rating is 44%, below historically significant 45%. slide 11
  • 5-day change in new Covid-19 cases is 159k (vs. 162k last week), a potential tailwind for Trump. slide 12
  • New Covid-19 cases are trending lower in battlegrounds, a potential tailwind for Trump. slide 13

Senate + House

  • Republicans with 46 seats “locked or likely” vs. 46 for Democrats, but 8 seats still in play – slide 14
  • Democrats leading Senate election race in betting markets by 9%, -1% over last week – slide 15
  • Democrats winning House is a foregone conclusion per betting markets (leading by 68%) – slide 16
  • Democrats have a 54% chance of a “blue sweep” per betting markets, +1% over last week – slide 17
Magnus-Market-Commentary-Election Trends-2020-1

The Battle for the White House

Magnus-Market-Commentary-Election Trends-2020-2

Biden Leading Trump in Polls

Magnus-Market-Commentary-Election Trends-2020-3

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

Magnus-Market-Commentary-Election Trends-2020-4

Biden Leading Trump in Betting Markets

Magnus-Market-Commentary-Election Trends-2020-5

Trump Trails in Battleground Polls, But By Narrowing Margin

Magnus-Market-Commentary-Election Trends-2020-6
Magnus-Market-Commentary-Election Trends-2020-7

June Approval Rating Tends to Correlate with Re-election Odds

Magnus-Market-Commentary-Election Trends-2020-8

Any Increase in COVID-19 Cases Could Hurt Trump

Magnus-Market-Commentary-Election Trends-2020-9

Coronavirus Trends in Battleground States

Magnus-Market-Commentary-Election Trends-2020-10

The Battle for the Senate

Magnus-Market-Commentary-Election Trends-2020-11

Democrats Leading Republicans in Betting Markets

Magnus-Market-Commentary-Election Trends-2020-12

Democrat Win in House is a Foregone Conclusion

Magnus-Market-Commentary-Election Trends-2020-13

“Blue Sweeps” Not Necessarily Bad for Markets

Magnus-Market-Commentary-Election Trends-2020-14

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

Magnus-Market-Commentary-Election Trends-2020-15

Stocks Back At Election-Year Average

Magnus-Market-Commentary-Election Trends-2020-16

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

Magnus-Market-Commentary-Election Trends-2020-17

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

Magnus-Market-Commentary-Election Trends-2020-18

Elections Can Reinforce Trends or Represent Key Inflection Points

Magnus-Market-Commentary-Election Trends-2020-19

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

Magnus-Market-Commentary-Election Trends-2020-20

Elections Can Reinforce Trends or Represent Key Inflection Points

Magnus-Market-Commentary-Election Trends-2020-21

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

Magnus-Market-Commentary-Election Trends-2020-22

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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.