The evening of Tuesday, 5th November 2024, will see polls close in the USA, marking the end of a nationwide vote for the President and a partial vote for both Houses of Congress. I forecast the results according to opinion polls, betting markets, and my gut feeling and analyse the implications of the anticipated result for the markets.

Opinion Polls 

Opinion polls have almost universally shown a statistical tie between the two major candidates, former President Trump and Vice-President Harris. The polls are especially close in the seven swing states, which will almost certainly decide the outcome of this election. This means that either the polls are right and the results in these key states will be extremely close and unpredictable, or it may mean that pollsters, in general, are getting it wrong by over or underestimating the likely vote for the candidates. This second scenario could mean a decisive electoral college victory and a total or near-total sweep of these states by one candidate.

The Trump campaign points to increased Republican voter registration in many of these states and strong participation rates of its voters in early voting. The Republican campaign also claims that men, where Trump enjoys a likely 18% lead over Harris, are turning out to vote strongly, while turnout has so far been lower than expected in likely Harris strongholds.

The Harris campaign points to data suggesting that late-deciding voters are breaking more for Harris than Trump by almost 10%, a key metric suggesting a likely Harris victory.

I have no reason to believe that the polls are incorrect. The near unanimity of all polls that the race is effectively too close to call looks like strong evidence to me.

Betting Markets 

Many analysts prefer to examine betting markets rather than polls. They think that bettors must put their money where their mouth is, and as a crowd, their implied forecast is likely to be more accurate than opinion polls.

However, if supporters or one candidate disproportionately influence betting markets, they may be biased in that candidate’s favour. This is certainly happening here, as bettors will overwhelmingly be male and, therefore, will be statistically biased towards being Trump supporters.

I also think that pundits see an easier “path” to victory for Trump, as he only has to win one of Pennsylvania, Michigan, or Wisconsin, assuming he wins Georgia, North Carolina, and the other states Republicans usually win. This is probably influencing the odds unduly.

My Forecast 

The opinion polls will likely be broadly correct.

President Trump will win Georgia, North Carolina, Arizona, and Nevada.

Vice-President Harris will win Michigan and Wisconsin.

In this scenario (and even if Harris wins Nevada), Pennsylvania will decide the result. I think the result here will be extremely close, and the first count will be decided by mailed-in Harris votes, which the Democratic machine can produce in surprisingly large numbers. Trump will also find grounds to challenge the legitimacy of a sufficient wedge of this vote to call the result into question. He will allege vote farming.

The courts will then decide the election result and will rule on the final certification of Pennsylvania’s votes.

Conclusion 

If my forecast is correct, there will be many days, possibly even a few weeks, during which the Presidency is truly in doubt. This will likely produce a volatile consolidation in the Forex and commodities markets and a short-term bear market in US stocks.

If I am also right about Harris eventually being awarded the win, that will produce a minor recovery in US stock markets and begin a selloff in the US Dollar and a rise in the Euro and the Japanese Yen.

Should Trump finally prevail, expect a stronger rally in US stocks and a rally in the US Dollar.