NPR’s Ashley Lopez today published a piece discussing the possibility of neither Donald Trump or Kamala Harris receiving the required 270 votes from the Electoral College to be declared President-Elect. Ms. Lopez describes the process where if neither candidate receives the minimum 270 votes, then it would be up to at least 26 congressional delegations to choose the President-Elect. Amendment XII and Amendment XX of the U.S. Constitution provide the process for determining the president and vice-president under this circumstance.
With fifteen days left until the general elections, data from prediction market Polymarket gives the Democrats a .51 probability of winning the House, while prediction market Kalshi gives the Democratic Party a .50 probability of winning the House. If, however, the House GOP retains its current 26 delegation lead, Mr. Trump may not need 270 Electoral College votes.
The best strategic political position for a retail trader is to ignore the campaign noise and to stay focused on proposals that have a chance to be funded. For example, if a proposal is made to start an educational program and $500,000 in bond issuance is necessary to get it off the ground, and the proposal has enough bipartisan support such that the proposal is passed, that announcement represents an increase in bond supply which may likely result in downward pressure on bond prices and an increase in yields. That is information you can trade on.
Or, if the government is facing shutdown, the history tells you that there is a high likelihood that Congress will approve some stop gap measure that keeps the government open. Noise. What you should be paying attention to is the impact on bond prices, bond yields, and money supply stemming from the proposal. Ignore the back and forth and focus on the factors that will impact the contract that you are buying or selling.
If we go through the process where the House makes the call on who is President-Elect, there will be a lot of noise. While the likelihood is low (it has not happened in 200 years), the noise will be deafening.
Alton Drew
21 October 2024
Reach out to me for a consult on how political events may impact your trade. Reach me at altondrew@altondrew.com.
Disclaimer: Views expressed are for informational purposes only. Consult an investment advisor or attorney before making a trade.
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