U.S. Equity Election Risk is Subsiding

We would imagine the best possible outcome of the election as it pertains to U.S. equities is gridlock.

White House: Clinton / Kaine

As of this morning Clinton is leading in the polls of most battleground states. If we award her FL, OH, NC, NV, MN and ME (states where she is marginally leading) she wins. Trump is still slightly ahead in AZ and GA.

If the polls stand where they are we see Clinton with 340 electoral votes vs. 198 for Trump. Clinton will handily get the 270 votes that are needed.

The House: Republicans

While nothing is impossible, the odds of Democrats taking control of the House is a long shot. House Democrats will need to all fifteen toss-up districts. They will also need to win all the districts that are leaning Republican. Additionally, they will need to pick up an additional four districts that are likely Republican to hold the majority. Probably not going to happen.

The Senate: Republicans

Of the eight battle ground states up in the Senate, Democrats need to win five. As of this morning’s polling figures, Democrats are leading by a marginal spread in only two states, WI and IN. Republicans hold slight leads in PA, NV, NC, NH, MO and FL.

Should the polling figures hold, Republicans would retain a 52/48 majority in the Senate.

Bottom Line: We continue to believe the election risks that could potentially depress equity prices has been minimized.

Joseph S. Kalinowski, CFA