Highlights

- Trump’s low to mid six percent lead overall is now a Harris lead of 1-2% (FiveThirtyEight as of 11 August).

- Trump’s lead by various margins in all the swing states has apparently been overturned. A NY Times/Siena poll between 5-9 August of approx. 650 likely voters in Wisconsin, Pennsylvania and Michigan has Harris at +4% in each state (just within the margin for error in each).

- On 6 August, Harris chose Tim Walz, a gun-owning hunter, social studies teacher, football coach and Governor of Minnesota as her VP choice. Some criticised the selection because he doesn’t come from a swing state and doesn’t bring Electoral College votes. Walz propelled himself into the picture by coming up with the Trump/Vance ticket “weird” – now part of the core D lexicon. In the intervening week since he was picked, Walz seems to have solidified D support in Midwest Rust Belt states which carried Biden en route to the White House but which were drifting away.

- Trump seems baffled as to how to attack Harris. He tried ‘Laughin Kamala’, but this is now a D meme. He went to a conference of Black journalists and said Harris had only recently turned Black. And he recalled very negative comments about Harris by a Black leader on a helicopter ride, but the Black leader wasn’t on board.

- With Biden’s withdrawal, Trump is now the old candidate, and his misstatements and physical mis-queues are now getting the attention Biden’s used to attract.

- Harris has, so far, few posted policy positions and the Republicans (R) are trying to demonize the two D candidates as far-left socialists. This is proving difficult, as Harris’ few policy positions are less left of centre than her 2020 positions (remember, in our last US Election Update, we commented on Harris moving to the left, entirely unsuccessfully, in the 2020 D presidential primary season). Harris has adopted Trump’s proposal to exempt service industry tips from taxable income and has promised to hire many more border guards at the Mexican border to diffuse the immigration issue. As we predicted, she is running as the moderate Attorney General she was before the 2020 campaign.

Harris may still be in the ‘honeymoon period’ of her campaign. However, the early polling indications are that she has momentum among several key constituencies where Biden was not polling as well as he needed, including with women (boosted by Vance’s comment about “childless cat women”), young, Black and Hispanic people. However, there are indications she may be polling less well than Blue-collar Biden with white men with no college degree and with Black men.

The Harris resurgence also appears to be having ‘down-ballot’ impact. The race to control the Senate was always going to be a challenge. Nine of the ten most likely flip seats are currently held by D. One almost certain loss is West Virginia – a very solid R state – where the D incumbent, Joe Manchin, is retiring.

Two Senate seats held by D (Montana and Ohio) are strong Trump states. The D incumbents in those two states have faced tough conditions before. Jon Tester, the D incumbent in Montana, has won three Senate elections in this very red state which Trump carried by 16% in 2020. Tester currently trails his opponent by 2% (FiveThirtyEight, 5 August).

Sherrod Brown, the D incumbent in Ohio, has also won three Senate elections but is currently leading his challenger by 4.7% (elections2024.com, 12 August). In 2020 Trump carried Ohio by 8.3%. According to 270towin.com, the current Senate forecast is 48 D and 50 R seats, with Montana and Ohio both rated toss-ups. Several D Senate candidates, who were distancing themselves from Biden, have embraced the Harris candidacy. Assuming the expected winners win, and D hold the two toss-up states, it would be a 50/50 Senate. Where ballots are tied, the VP, Vance or Walz, would cast the deciding vote. Our view? R will probably control the Senate.

Similarly, although there is currently little reliable polling for House of Representative races post Harris’ entrance, the outpouring of campaign contributions, volunteers and the generally more upbeat mood would appear to put more wind in D sails. According to the US House of Representatives Press Gallery, there are currently 220 R and 212 D Representatives with three seats vacant. D has a list of approx. 20 ‘Red to Blue’ target seats, and R has a comparable list. However, if Harris wins and has ‘coat-tails’, D could obtain a House majority. To put this in context, two of the three vacant seats were D. If those two seats remain D, the House is 221 R and 214 D. A net gain of four seats would give D the majority in the House. Our view? If Harris wins, D control of the House is well within reach.

There is still almost three months before Election Day, and anything can happen. There is expected to be at least one televised debate; all four candidates will be on the hustings and the media will be looking for gaffes and weaknesses. But, for investors, assuming Harris maintains her current momentum, the changing landscape should not be ignored. We will look more closely at the implications of a Harris win – the so-called Kam-arket. For now, we suggest maintaining an agnostic approach to the election outcome.

Austin Erwin

12 August 2024