US Election Day – Current Projections

Nov 4, 2008: 10:57 AM CST

It’s certain that the US Election will have an effect on the equity markets and markets beyond, as the market anticipates the next president’s administration and shifts to reflect perceived policies he might create.  Let’s turn to the current state-by-state polls to give us an overall electoral vote projection to see who that next president might be when polls close later this evening… provided we don’t go into recount mode.

I’m pulling non-partisan data from Real Clear, which aggregates multiple polls into a broad state-by-state average and then computes these onto an “electoral map” that shows the current standing in the “Race to 270.”  The US elects its leader through the “Electoral College,” where each state is given a number of electors who, in turn, vote to elect the President.  There are 538 total votes, and 270 are required to become elected – each state is delegated electors based on population (or more specifically, its Congressional representation delegation of two senators per state and a population allocated number of House members).

With that bit of data out of the way, let’s look at the current projection from RCP:

This map represents the ‘poll of poll’ averages and allocates the winner of each state based on who is currently leading in the poll, even if the margin is less than 1%.  I wanted to highlight the ‘closest’ polling states according to their averages currently:

North Carolina (NC):  McCain +0.40%
Missouri (MO):  McCain +0.70%
Indiana (IN):  McCain +1.40%

Florida (FL):  Obama +1.70%

If these numbers hold – remember there are various factors that could lead to inaccurate polling this year (such as the “Cell Phone” effect and the “Bradley” effect or models that don’t incorporate many new voters – then Democratic Senator Barack Obama would defeat Republican Senator John McCain by 338 votes to 200 votes, winning a clear majority of the Electoral College and the Presidency.

Regardless of the Presidency, most political analysts are projecting Democrats to gain 5 to 8 seats in the US Senate and perhaps as much as, or more than 20 seats in the US House of Representatives.  Democrats currently hold majorities in both Congressional chambers and would be expanding upon their current margin.

Real Clear Politics also allows you to view the Electoral State-by-State vote by pulling out states where no candidate leads by more than a 5% margin, and – though it may be confusing at first – it gives a more accurate view of the possibilities that could occur today when all votes are counted.  States where no candidate leads by 5% or more are colored gray and are deemed “Toss-Up” States.

Given this count, Senator Obama is more likely than Senator McCain to win the Presidency, which currently gives Senator Obama 278 ‘solid’ votes (leading by more than 5%) to Senator McCain’s 132 votes.

By this count, Senator McCain would need to win each and every gray ‘toss-up’ state and then pull away Pennsylvania (PA – 21 votes) and/or Colorado (CO – 9 votes).  McCain’s campaign made an aggressive push in Pennsylvania recently, and polls have narrowed there, but perhaps not enough for a clear victory – the RCP average in Pennsylvania shows Senator Obama leading by an average of 7.3%.  In my personal count, if Senator McCain cannot win Pennsylvania, he cannot win the Presidency.

What’s troubling for him is that Senator McCain’s home state of Arizona (AZ – 10 votes) is listed by RCP as a “toss-up” state, showing him up by an average of 3.5%.  The last time for a Presidential candidate to lose his home state – and I do not forsee McCain losing AZ – was Vice-President Al Gore who lost Tennessee and its 11 electoral votes in 2000, which would have been sufficient to grant him the Presidency (President Bush won the 2000 election by four electoral votes).

Being a political buff as well, I’ll be anxiously awaiting election results as polls close at different times across the US.

Generally, a ‘clean’ election (and certainty in the winner) benefits the Market short term while uncertainty (such as occurred in 2000) is detrimental to the market, though in both cases, the market rallied quite sharply once a winner was declared.  Keep that in mind as we may be entering a natural counter-trend swing up (retracement) in the equity markets.  As of 11:00am EST, we’re already up over 2% on the day.

Let’s see how all this will affect the stock market!

Update: As the polls predicted, Barack Obama is now President Elect of the United States of America and will be sworn in on January 20th, 2009.

1 Comment

One Response to “US Election Day – Current Projections”

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