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“Disputed Election” Scenario is Still Alive

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Insights and Market Perspectives

“Disputed Election” Scenario is Still Alive

Author: Greg Valliere

October 27, 2020

THE FINANCIAL MARKETS HAVE PLENTY TO WORRY ABOUT: The raging Covid-19 epidemic, higher taxes if Joe Biden wins, the lack of any fiscal stimulus, etc.

AND THE MARKETS ALSO HAVE TO WORRY about a disputed election — “crooked, dishonest things will happen” in Pennsylvania, President Trump declared yesterday.

TRUMP ARGUED DURING THE SUMMER THAT the election will be “rigged” against him, and he has not abandoned that assertion. He believes mail-in ballots are fraudulent, and he has a handful of examples to cite where there were irregularities (despite a generally scandal-free history of voting by mail).

THERE ARE TWO TROUBLING SCENARIOS —

1. Scenario One: We probably won’t know the winner for several days after the election. This appears to be increasingly likely, as officials in several states concede that they can’t quickly count a tidal wave of mail-in ballots. Northern states like Pennsylvania are not expected to report final results on election night.

2. Scenario Two: Should Trump appear to lose narrowly in states like Arizona or Pennsylvania, and should he appear to lose narrowly in Electoral College votes, he has promised to seek a reversal in the courts, claiming that mail-in ballots were corrupted.

THIS SECOND SCENARIO IS THE MOST SERIOUS: Trump could instruct Attorney General William Barr to appeal all the way up to the conservative Supreme Court, demanding recounts in several states with high rates of mail-in ballots.

IT’S WORTH NOTING that in 2000, the high court did not declare until Dec. 12 that George W. Bush beat Al Gore in Florida.

GOING INTO THIS COMING WEEKEND, Biden needs to to be ahead in the popular vote by at least 4 or 5 points. That’s because he will win landslides in California and New York, good for 3 points of a 4 or 5 point win. So if Biden’s lead in the rest of the country, therefore, is only 1 or 2 points, that would be an indication that the battleground states could be close enough to warrant recounts — and litigation.

IF BIDEN’S FINAL MARGIN IS OVER 5%, recounts and litigation would seem unlikely. But Trump and his followers won’t accept defeat easily, and they will argue — during the period when a winner is not officially declared — that the election was rigged. And Biden’s supporters, embittered, could make a similar argument if it appears that they lost.

A VOLATILE PERIOD AHEAD: With the coronavirus again out of control and with no stimulus bill on the horizon, the markets have plenty to worry about. We may not know the winner of the election until Thanksgiving or later, and charges of fraud may not subside; angry partisans on the left and right may never accept the final verdict.


The views expressed in this blog are those of the author and do not necessarily represent the opinions of AGF, its subsidiaries or any of its affiliated companies, funds or investment strategies.

The views expressed in this blog are provided as a general source of information based on information available as of the date of publication and should not be considered as personal investment advice or an offer or solicitation to buy and/or sell securities. Speculation or stated believes about future events, such as market or economic conditions, company or security performance, or other projections represent the beliefs of the author and do not necessarily represent the view of AGF, its subsidiaries or any of its affiliated companies, funds or investment strategies. Every effort has been made to ensure accuracy in these commentaries at the time of publication; however, accuracy cannot be guaranteed. Market conditions may change and AGF accepts no responsibility for individual investment decisions arising from the use of or reliance on the information contained herein. Any financial projections are based on the opinions of the author and should not be considered as a forecast. The forward looking statements and opinions may be affected by changing economic circumstances and are subject to a number of uncertainties that may cause actual results to differ materially from those contemplated in the forward looking statements. The information contained in this commentary is designed to provide you with general information related to the political and economic environment in the United States. It is not intended to be comprehensive investment advice applicable to the circumstances of the individual.

AGF Investments is a group of wholly owned subsidiaries of AGF Management Limited, a Canadian reporting issuer. The subsidiaries included in AGF Investments are AGF Investments Inc. (AGFI), AGF Investments America Inc. (AGFA), AGF Investments LLC (AGFUS) and AGF International Advisors Company Limited (AGFIA). AGFA and AGFUS are registered advisors in the U.S. AGFI is a registered as a portfolio manager across Canadian securities commissions. AGFIA is regulated by the Central Bank of Ireland and registered with the Australian Securities & Investments Commission. The subsidiaries that form AGF Investments manage a variety of mandates comprised of equity, fixed income and balanced assets.

About AGF Management Limited

Founded in 1957, AGF Management Limited (AGF) is an independent and globally diverse asset management firm. AGF brings a disciplined approach to delivering excellence in investment management through its fundamental, quantitative, alternative and high-net-worth businesses focused on providing an exceptional client experience. AGF’s suite of investment solutions extends globally to a wide range of clients, from financial advisors and individual investors to institutional investors including pension plans, corporate plans, sovereign wealth funds and endowments and foundations.

For further information, please visit AGF.com.

©2023 AGF Management Limited. All rights reserved.

Written by

Greg Valliere

Greg Valliere

Chief U.S. Policy Strategist

AGF Investments

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