Chaos Cometh this November

The only way I see this scenario being avoided is with a Trump landslide victory. I don't see that as likely.
A Biden landslide would be disputed.
A Biden small victory would be disputed.
A Trump small victory would be disputed (although the fight will be shorter in this case).
Once the chaos begins there will likely be no safe haven to be found, all assets are going to dump.

Note

The scenario I mention in the chart bubbles with Faithless Electors is what I most expect to happen, but there are a whole bunch of different ways things can go sideways over the next few months.

This article lays out most of the possibilities: theatlantic.com/magazine/arc...

It will be really interesting to see what actually ends up happening.

Note

On a technical note, in 2000 it was roughly 4 years from SPX monthly RSI peak to the market peak two months before the election, with the biggest weekly drop in the NASDAQ occurring during November.

We're closing in on 3 years since the SPX monthly RSI peak with massive bearish divergence.

A big round of stimulus could blow this thing up through the roof, relative to M2 we're really high but still much lower than Dot Com Peak.

It's pretty much been said by both sides that more stimulus won't happen prior to the election, and if there is a massive Election Dispute then I don't see additional stimulus talks taking place prior to determining who controls the White House.

Note

Here's a calendar of relevant dates that could have market impacts.

cnn.com/2020/10/18/politics/electoral-college-timeline-2020-election/index.html

I'm thinking Jan 6 is the earliest we might know the outcome, but it's likely the fight only escalates from there.

Note

Based on trend data it looks like the USA will see a new daily high in COVID-19 new infections as early as Friday 2020-10-23.

If that happens it could lead to a significant market downturn even before the election chaos begins.

Note

Well I was correct in anticipating 2020-10-23 to be a new high for daily new infections. That trend will continue and I'd estimate we'll see a number over 100k before Election Day.

Shiller did an Op-Ed in the NYT on Friday talking about Investor Confidence trending down while prices are at historic highs which creates the perfect environment for external events to trigger a shift in market psychology. He mentioned the Election and COVID-19 infection rates being a potential trigger: markets.businessinsider.com/news/stocks/stock-market-outlook-crash-risk-shiller-investor-confidence-high-prices-2020-10-1029721688

Note

investopedia.com/the-impact-of-a-contested-election-on-the-stock-market-5084506

Note

COVID-19 new infections in the USA topped 100k on 2020-10-31 and look to be accelerating this week.
The Presidential Election is tight as expected. Serious FOMO in the markets to get in before a potential chaos free result.

Note

Looks like Biden will take the initial Electoral College win count.
Several State-wide recounts are likely.
Courts are all but guaranteed to get involved.

If Nevada goes for Biden and then Pennsylvania, Georgia and NC all go for Trump then we could be looking at a 270 to 268 result. It would then only take a single Faithless Elector to create an Electoral Tie.

I still see at least a month of uncertainty regarding the Presidential Election outcome.

Note

Trump claims massive fraud in his briefing last night. Nobody should be surprised.
Trump is telling people he has no plans to concede. Nobody should be surprised.

With Georgia and Pennsylvania tipping Biden's way it will all depend on what happens with the courts and recounts. If enough ballots are tossed out those states could go to Trump and put the nightmare scenario of an exact 270 Biden win into play.

If Biden ends up with NV and at least one of GA/PA then shenanigans with Faithless Electors becomes a lot less likely due to the number of Electors who would need to be swayed.

COVID-19 daily new cases in USA will likely hit ~125k today, roughly 25% more than last Friday. I'd expect Election Day might be linked to outbreaks next week in areas that had long waits.

New virus related shutdowns in the UK, Italy & Denmark. Talks of more shutdowns within the USA is bound to eventually consume the media, my guess is this will happen once the election counts/re-counts are completed.

RobBiddle

Disclaimer

The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.

RobBiddle