Before we dive into our special brief let’s explain why the election matters to investors and traders.
The stock market hates uncertainty. Any uncertainty surrounding the outcome of the election, coupled with the current spikes in Covid-19 cases creates a volatility nightmare for the S&P 500.
Remember what happened in February-March 2020 when the S&P 500 fell over 30% in just a few weeks? It is plausible that we could see that much volatility again if this election is turned into a tornado of doubt.
If you’re a Biden supporter, you should stop worrying about Pennsylvania or Wisconsin. Our analysis below will show you why neither state is critical at this point.
Instead, three states hold the key on election night to preventing President Trump from claiming victory:
Michigan, Arizona and Florida.
We explain why by looking at electoral vote leads hour by hour below.
The core argument President Trump and other Republicans lean on is that the election winner must be known on Election Night. We won’t waste time arguing the ridiculousness of that position.
It may not be such a good idea for Trump.
While it remains true that many states will not have complete results by midnight on Election night, and that “Winners” will not likely be called in many states, we can make some assumptions about which candidate will be LEADING by midnight.
That lead is, until all votes are counted, critical for former Vice-President Joe Biden as it can prevent Trump from claiming victory at any point on election night.
The numbers do not favor Donald Trump because the media focus at present remains on Wisconsin and Pennsylvania and not on states which process absentee ballots prior to election day.
That last point led us to Florida and Arizona, and in part, Michigan.
For the purposes of this model, we forecasted which candidate would hold an electoral vote lead for each state, based on polling numbers, early voting returns and probable outcomes, regardless of whether the final tally results in a state called for former Vice-President Joe Biden or President Trump.
The reason the lead is important is this: if Joe Biden holds a lead on election night, will Trump still call for vote counting to stop? Not a chance. The continuation of vote counting beyond election night, which is legal and necessary, will only serve to increase Biden’s electoral leads, in our analysis.
For now, here’s what you need to know for 11:59pm Eastern Time on November 3, 2020
For states with mixed poll closings due to time zone differences, we combined results in the later of the poll closings, consistent with poll reporting by states.
States with Poll Closings: (9) Indiana, Kentucky, S. Carolina, Virginia, Vermont, Georgia, N. Carolina, Ohio, W. Virginia
Trump Leading: 7 states (bolded)
Biden Leading: 2 states
Electoral Votes: 98
Unknowns: It is entirely possible that Biden could be leading in both N. Carolina and Georgia (31 electoral votes combined). Ohio is also a very tight race. For as much reality as possible, we gave all three states’ leads to Trump. Whether he holds those leads or not remains to be seen.
Early poll closings strongly favor President Trump, especially in Indiana, Kentucky, S. Carolina and Ohio. He will have a lead as we reach 7:59pm…
But it will shrink rapidly once the hour hits.
States with Poll Closings: (17) Alabama, Connecticut, Delaware, Florida, Illinois, Maine, Maryland, Massachusetts, Mississippi, Missouri, New Hampshire, New Jersey, Oklahoma, Pennsylvania, Rhode Island, Tennessee, Washington, D.C.
Trump Leading: 6 states (bolded)
Biden Leading: 11 states
Electoral Votes: 191
Trump: 63 + (82) = 145
Biden: 109 + (16) = 125
As East Coast polls close, this is Biden’s stronghold and the period where he’ll make up the most electoral vote ground the fastest.
Unknowns: Pennsylvania and Florida. We judge Trump to lead in Pennsylvania and Biden to lead in Florida.
Florida here is key because, unlike Pennsylvania, Florida processes absentee ballots prior to Election Day. As the early turnout via absentee ballot has favored Joe Biden, we view it likely he will hold a lead on Election night (we’re not calling the state for him; only a lead). Pennsylvania, we view in the opposite; that Trump will hold the early lead.
Should Biden unexpectedly carry a lead in Pennsylvania, however, the vote totals above would reverse (Biden 145, Trump 125); Should Trump lead in Florida and Pennsylvania, vote totals would be Trump 174, Biden 96.
Keep Florida’s 29 electoral votes in mind. They’re important.
States with Poll Closings: (16) Arkansas (8:30pm), Arizona, Colorado, Kansas, Louisiana, Michigan, Minnesota, Nebraska, New Mexico, New York, N. Dakota, S. Dakota, Texas, Wisconsin, Wyoming
Trump Leading: 9 states + Nebraska (split – 3) (bolded)
Biden Leading: 6 states + Nebraska (split – 1)
Electoral Votes: 162
Trump: 81 + (145) = 226
Biden: 81 + (125) = 206
As it happens, our model shows the two candidates splitting the total electoral votes (81 each).
Arizona, like Florida, processes absentee ballots prior to Election Day. We see Biden leading in Arizona, as he has maintained a polling lead throughout October.
Michigan: Michigan’s legislature passed a bill (a bipartisan bill, if you can believe it) to allow city clerks to begin processing (but not counting) ballots on November 2.
We see Michigan delivering a lead to Joe Biden in part because of that change. Wayne, Oakland and Macomb counties represent the majority of population share and will process ballots early enough, unlike Pennsylvania, for key areas to help Biden gain a statewide lead.
Again, we give the lead, but not the final count to Biden.
Wayne County, specifically Detroit, is notoriously slow in providing election numbers. Biden must run up the score in Detroit throughout the night. If he does, he will hold a lead.
Wisconsin, we handled in the opposite: That Trump will claim an early lead here as absentee ballots cannot be processed until Election Day.
Wild Card: Texas.
This could be a crazy call; however, we see Biden with an early lead in Texas upon polls closing, but that lead shifting to Trump as the night progresses. Thus, we counted Texas as a Trump lead; however, don’t be surprised to see Biden holding that lead into the midnight hour.
States with Poll Closings: (4) Iowa, Montana, Nevada, Utah
Trump Leading: 3 states (bolded)
Biden Leading: 1 state
Electoral Votes: 21
Trump: 15 + (226) = 241
Biden: 6 + (206) = 212
You can see the importance and impact of Florida’s 29 electoral votes here.
If Trump were to be leading in Florida, he would reach 270 (leading, not winning). Biden must build and maintain that Florida lead.
Nevada is still likely to fall Biden’s way early on due to processing absentee ballots early. Iowa and perhaps Montana, could be the wild cards in this hour. Iowa remains a tight race, however, we still Trump leading.
Montana has experienced record early voting turnout – whether that turnout changes the Presidential race is unknown (turnout appears to impact the Daines/Bullock senate race more than Biden/Trump).
Nevertheless, the Trump people prepare the champagne and the microphones…
States with Poll Closings: (4) California, Idaho, Oregon, Washington
Trump Leading: 1 state (bolded)
Biden Leading: 3 states
Electoral Votes: 78
Trump: (241) (4) = 245
Biden: (212) (74) = 286
The COW (California, Oregon, Washington) states shift the race in Biden’s favor.
Florida continues to loom large in this hour because California will put Biden in the lead should he maintain a lead in Florida.
Note here that neither Arizona nor Michigan alone would shift the lead; together, however, they would (27 electoral votes).
States with Poll Closings: (2) Hawaii, Alaska
Trump Leading: 1 (bolded)
Biden Leading: 1
Electoral Votes: 7
Trump: (245) (3) = 248
Biden: (286) (4) = 290
Trump wants desperately to be able to claim victory on Election Night. If he does not lead in enough states to reach 270 Electoral Votes, he can try to claim it, but the numbers won’t support him.
If Trump is trailing on election night, he will not want the “vote counting” to be stopped. He’ll need it to continue.
Much of the last three months discussion around this election has centered on contesting ballots sent by mail that are counted AFTER election day. What we’ve heard is the army of Trump lawyers ready to file lawsuits on the day after to stop ballot counting.
Trump’s probability problem lies here: he is likely to be trailing.
If Trump is still trailing on Wednesday morning; or if he has lost leads in states like North Carolina, Wisconsin or Pennsylvania (another 45 electoral votes), that extends Biden’s Electoral vote count to 335 and decreases Trump’s count to 203.
Trump’s second problem is this: he’s focused on the wrong states. Note that we’ve given him Pennsylvania and Wisconsin, the two states with the most contested absentee ballot issues.
And he’s still trailing Joe Biden by 11:59pm.
This is why the three key states to watch on Election night are Florida, Arizona and Michigan. If Biden holds a lead in all three, Trump cannot declare victory on election night.
Biden can afford to trail in one of Arizona and Michigan, but not both. Florida, however, holds the key.
Samples of Race Changes and Alternatives:
Biden Leads in Florida, Arizona and Michigan:
Biden Leads in Florida, Arizona:
Biden Leads in Florida, Michigan:
Biden Leads in Florida only:
Biden Leads in Arizona, Michigan:
Reminder: These are NOT final vote projections. They are only projections for the end of Election Day itself. It is widely anticipated that several states will ‘shift’ from Trump to Biden as absentee ballot counting is completed in the day(s) following November 3.
This is what the Republicans and Trump hope to stop.
Even if Trump leads in Florida, any of these three states would shift the Electoral Vote Lead when coupled with Arizona and Michigan.
North Carolina, Arizona and Michigan would give Biden a 276 to 262 lead. As Biden has led throughout October in these three states, this is his best alternate path if Florida is not in his column.
A surprise in either Georgia or Ohio would also shift the balance of electoral votes in Biden’s favor, however, these are less likely outcomes.
Best Case Scenario: Biden leads in Georgia, North Carolina, Florida, Michigan and Arizona.
This gives Biden a 321 to 217 lead; the expected vote shifts in Pennsylvania and Wisconsin over the ensuing days creates a potential electoral blowout lead of 351 to 187.
Of course, keep in mind what I said earlier…
Texas lurks. Any surprise in the Lone Star State to Biden’s benefit would upend every single projection and make it mathematically impossible for Trump to claim victory.
Texas, minus Florida, Michigan and Arizona, would give Biden a 272 to 266 edge. That includes Trump leading in every single swing state. That’s how much Texas could shift this race.
Election night will undoubtedly be long…we may as well call it Election Week. For Biden supporters, it is critical to build an electoral vote lead on election night to defend against the probability of Trump and his team challenging ballots post-election day or calling for an end to the election as the victor (which we still do not see happening).
Data Tables are below. We’ll remind you this is not a prediction of who will win the election. This is only projection of which candidate will lead in each state by 11:59pm Eastern Time (allowing for the extra hour for Hawaii and Alaska).
This model projects North Carolina and Georgia as a Biden lead. Whether he can hold those leads remains to be seen. Texas remains the wild card and could upend election night should Biden hold a lead in the state.