Page 16 - ISQ UK JANUARY 2020

INVESTMENT STRATEGY QUARTERLY

Charting the Course for the

2020 US Presidential Elections

Ed Mills, Managing Director, Washington Policy Analyst, Equity Research

2020 kicks off an election campaign cycle that will
determine the trajectory of the Trump policy agenda and While the race for the presidency will dominate the
its associated impact on the market. We believe Trump’s headlines, the ultimate market and economic impact
will be decided based upon the outcomes of the
reelection campaign will center on a message of positive
majorities in the House and Senate.
economic and market performance — a virtual necessity
from a historical standpoint for the reelection of an
incumbent president. Democrats will be looking to see if While the race for the presidency will dominate the headlines,
they can continue the momentum from the 2018 and the ultimate market and economic impact will be decided
2019 elections, where suburban voters have swung away based upon the outcomes of the majorities in the House and
Senate. The ability for any candidate to enact his or her agenda,
from Republicans and toward Democratic candidates.
especially through the confirmations of key cabinet and
regulatory posts, runs through the Senate.
THE PROOF IS IN THE NUMBERS
In the Senate, Republicans will be on the defensive as they are
Before we get to the general election, Democrats will first need
to choose a nominee, which could lead to increased volatility in defending 23 of the 35 seats on the ballot in 2020, but are
the first half of 2020. With a large field of candidates swapping viewed as being well-positioned given the geographical
frontrunner status and party rules that disburse delegates on a distribution of races. Democrats will need to net three or four
proportional basis, there is an elevated probability than none seats, depending upon the outcome of the presidential election,
of the candidates are able to achieve a majority of delegates to win the majority. Adding significant intrigue to the Senate
prior to the convention. Alternatively, the battle to win the fight is the future of the filibuster, which maintains a 60 vote
majority could reinforce some divisions within the Democratic (out of 100) threshold for the passage of legislation. Should
Party. Should Democrats fail to produce a candidate that the either party control the House, Senate, and presidency, we
party can rally behind, or should a contested primary process expect a significant debate on lowering the threshold to a
give rise to a legitimate third party candidacy, both could be simple majority. This becomes more likely if the Democrats are
seen as benefiting the reelection chances of President Trump. able to secure a two-three seat edge in the Senate, which would
increase the probability of major reform passing into law.

15