We’re within the calm earlier than the storm now

The pollsters are indicating that it is going to be a very tight race between Harris and Trump. And that will definitely keep markets on edge until we get to the early round of votes until midday later. The next 24 to 48 hours is potentially going to be havoc in markets, as traders and investors will cling on to every little result detail and swings in sentiment.

It’s the final countdown stretch now before we get to that. And I would expect markets to stay somewhat more paralysed in European morning trade today as such.

It’s been quite a while since we’ve seen polls showing such a close race for the US presidency. So, what are the key points to look out for?

As always, it’s going to be the key battleground states i.e. swing states that will be the ones to pay close attention to. According to the latest NY Times/Siena poll (which suggests a “photo finish” race), here is the latest sway:

Some other polls might have Trump in the lead, switching positions with Harris but in terms of closeness, all of the polls are indicating that the key battleground states will likely be a toss up. So, let’s take a look back at how things have played out in the last few elections in these states.

Arizona
– 2008: McCain (R)
– 2012: Romney (R)
– 2016: Trump (R)
– 2020: Biden (D)

Georgia
– 2008: McCain (R)
– 2012: Romney (R)
– 2016: Trump (R)
– 2020: Biden (D)

Michigan
– 2008: Obama (D)
– 2012: Obama (D)
– 2016: Trump (R)
– 2020: Biden (D)

Nevada
– 2008: Obama (D)
– 2012: Obama (D)
– 2016: Clinton (D)
– 2020: Biden (D)

North Carolina
– 2008: Obama (D)
– 2012: Romney (R)
– 2016: Trump (R)
– 2020: Trump (R)

Pennsylvania
– 2008: Obama (D)
– 2012: Obama (D)
– 2016: Trump (R)
– 2020: Biden (D)

Wisconsin
– 2008: Obama (D)
– 2012: Obama (D)
– 2016: Trump (R)
– 2020: Biden (D)

As seen from the above, it’s clear how the final presidency result plays out depending on who wins these states.

Given the latest polling data, it’s hard to draw much conclusions from the above though. In 2020, Biden has held the lead in terms of polling all the way and that might be indicative of how underlying sentiment is really playing out across these key areas. But at the same time, the pollsters had largely underestimated Trump once already in 2016 and got burned bad for that.

As such, that is not helping markets to get a firm grip of things over the last two weeks as well. And that is evident by the kind of swingy movement we saw at the open for the dollar and Treasuries yesterday.

Either way, the formula to at least have a chance of winning is to at least grab three swing states. That being said, some holds more significance than others depending on the number of electoral college votes up for grabs.

In total, there are 93 votes between these key battlegrounds and the magic number to win is 270 votes. Harris is likely to take around 226 votes in Democratic strongholds and Trump to take 219 votes in Republican strongholds.

And that means if Harris takes all of the Rust Belt states i.e. Michigan, Pennsylvania, and Wisconsin, that will lead to the 270 votes needed. The key state to watch here will be Pennsylvania as it holds 19 votes. If Harris takes that and either Michigan or Wisconsin, it means Trump will have to win all the other swing states to stand a chance of a reverse sweep.

As for the Sun Belt states i.e. Arizona, Georgia, Nevada, and North Carolina, the main focus will be on North Carolina. It is one where Trump managed to defend in the 2020 election and was largely written off to be his before Harris took over from Biden. If the race there proves to be much closer or if Harris produces an upset to take the state, it will likely be a premonition for Trump to lose the election.

I’ll update in a separate post on key voting and result times to watch out for later in the day.