Trump victory in November is no longer base-case scenario, here’s why
The pandemic has made it more difficult for current President Donald Trump to be re-elected in November, this according to Matt Gertken, vice president of geopolitical strategy at BCA Research.
A Trump victory is no longer the base-case scenario, Gertken said, owing to the fact that a recession has traditionally made it difficult for an incumbent to be re-elected.
“President Trump was lined up to win the election,” Gertken told Kitco News. “We’ve got good data on [the elections], going back over a hundred years of very regular data. It shows that elections that are held during recessions are usually very negative for the incumbent. Trump will be trying to win and do something that has not been done since 1904, which is despite a recession, win re-election.”
As unemployment rises, he said, voter turnout will also rise proportionally.
However, voters will also take into consideration that the pandemic was not initially Trump’s fault.
“It’ll be important to see if his approval ratings continue to remain pretty firm in the wake of the crisis, but generally speaking you would expect that if unemployment goes up, the president’s approval goes down and he’s much less likely to win re-election,” he said.
Favor has now shifted in favor of the Democrats, Gertken said.
“I’d say the base case is that Biden wins simply because people look around in October…and they don’t have a job,” he said.
North Korea remains a major risk to global stability, Gertken noted. If North Korean leader Kim Jong-Un were to pass away, tensions on the Korean Peninsula could escalate.
“If he dies, if he is incapacitated, that is a threat to global stability, so that will inject a risk premium into assets in the region,” he said.
Importantly, China may step in to fill the void of North Korea should the need arise.
“Today, we’re in an environment in which the United States and China do not have stable relations. In that context, if you then lose the North Korean leader, you’d have a power vacuum,” he said.
By Kitco News
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