JPMorgan-Global Thematic Strategy Key Upcoming Elections,Equity Implications,Policy- Linked Stock Ideas-此为英文文档

GlobalMarketsStrategy

07May2024

GlobalThematicStrategy

KeyUpcomingElections,EquityImplications,Policy-

LinkedStockIdeas

Theglobalelectioncycleisjustwarmingup,with60of77electionsstillremaining

EquityMacroStrategy

acrosskeygeographiesincludingtheUS,UK,India,MexicoandSouthAfrica(see

DubravkoLakos-BujasAC

Report).Whilemacrothemesremaindominant,focusisbeginningtocenteronthe

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USPresidentialandCongressionalelectionsgiventhepolicydifferencesbetween

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theleadingcandidates,thesizeoftheUSequitymarket,andthepotentialknock-on

J.P.MorganSecuritiesLLC

effectstoothergeographies,particularlyinEM.Inthisreport,weexplorevarious

KamalTamboliAC

electionscenariosandprovide11keythematicstockbaskets,11stockscreensandsector/stylerecommendationsthatalignwithmajorpolicyproposalsacross

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geographies(seeFigure1forfulllistofthemes).Further,wepreviewkey

upcomingelectionsandtheirimplicationsacrossDMandEM,includingtheUS,

MislavMatejka,CFAAC

(44-20)7134-9741

UK,India,MexicoandSouthAfrica(seedetailedbreakdownbelow).

mislav.matejka@

J.P.MorganSecuritiesplc

USElections(Nov5).IntheUS,alossfortheincumbentcoulddrive

PedroMartinsJunior,CFAAC

substantialchangesinareassuchastradepolicy(e.g.US-China),foreign

(55-11)4950-4121

policy(e.g.,MiddleEast/Israel,Russia/Ukraine,etc.),regulation(e.g.

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environment/energy,anti-trust)andfiscal/taxpolicy(e.g.TCJAsunseton12/31/25).Thefactthatsuchahigh-stakeelectioncannotbecalledatthispointin

BancoJ.P.MorganS.A.

RajivBatraAC

timeshouldbesomecauseofconcernforequityinvestorslookingtomanage

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exposuretokeyUSpolicythemes.Whilebettingoddsandpollingprovidesome

J.P.MorganSecuritiesSingaporePrivateLimited

realtimevisibilityintotheoutcome,thereremainssignificantuncertaintyand

DavidAserkoff,CFAAC

roomforaNovembersurprisegivenhownarrowtheleadsareforeithercandidate

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andforbothchambersofCongress.EspeciallyforPresidentialelections,theresult

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willlikelybedrivenbytensofthousandsofvotes,notmillions,across4-5swing

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states.Inourview,weviewgridlockasthemostneutraloutcomeintheshort/

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mediumterm,asitwouldlimitchangestoexistingpoliciespassedunderthe

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currentadministrationandlimittheimplementationofnew,andpossiblyvolatile

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J.P.MorganCasadeBolsa,S.A.deC.V.,J.P.

ones,thoughrisksremainaroundunilateralexecutiveand/oragencyaction.Fora

MorganGrupoFinanciero

fullbreakdownofkeyscenarios,seeUSEquityStrategy.Forafullbreakdown

BhupinderSinghAC

ofkeythematicpolicyequitybasketsconstructedincollaborationwithJPM

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stockanalysts,seeFigure19toFigure28.ForJPMproprietaryNLPtool-

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basedstockscreensonUSpolitics,TradepolicyandChinabasedoncorporate

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andnewssentiment,seeFigure40toFigure45.

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UKElections(before1/28/25).Labourismaintainingasizeableleadinthecurrent

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electionpollingovertheincumbentconservatives.Inthelastelectionsheldin

ArunJainAC

2019,thegeneralconsensuswasthataLabourvictorywouldbeanegativeforthe

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overallequitymarket.Therewereconcernsaroundnationalizationofkey

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industriesandalsothepossibilityofhighertaxes.Inourassessment,thecurrent

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LabourleadershipunderKierStarmerismuchmorecentristthanthemanifesto

MarkoKolanovic,PhDAC

goingintothe2019electionswouldsuggest.Theyhavealreadydistanced

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themselvesfrommuchoftheCorbynEranationalizationpromises,withthe

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exceptionoftherailways,forwhichthereappearstobebroadpublicsupport.Wedonotseethemtakingabig-bangapproachtowardstheeconomygivenfiscal

constraints,butratherfocusingonslow-movingsupply-sidereformsthat

encourageprivateinvestment.Nevertheless,avictoryforLabourwouldlikelybe

Seepage57foranalystcertificationandimportantdisclosures,includingnon-USanalystdisclosures.

J.P.Morgandoesandseekstodobusinesswithcompaniescoveredinitsresearchreports.Asaresult,investorsshouldbeawarethatthefirmmayhaveaconflictofinterestthatcouldaffecttheobjectivityofthisreport.Investorsshouldconsiderthisreportasonlyasinglefactorinmakingtheirinvestmentdecision.

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Figure1:KeyThematicPolicyStockBasketsandScreens

CountryTheme

BasketTicker

(BBG<Index>)/Screen

UnitedStates

USCompanieswithHighDirectChinaRevenueExposure

JPAMCREV

UnitedStates

CHIPSActBeneficiaries

JPAMCHIP

UnitedStates

EnergyCompaniesMostSensitivetoGeopolitics

JPAMGNRG

UnitedStates

EnergyPermittingReformSensitive

JPAMPERM

UnitedStates

IRAGreen/EV/ClimateBeneficiaries

JPAMIRAG

UnitedStates

IRAHealthcareReformSensitive

JPAMIRAH

UnitedStates

USFederalBudgetSensitive

JPAMGOVT

UnitedStates

ChildTaxCreditBeneficiaries

JPAMCTCB

UnitedStates

De-Globalization/ReshoringBeneficiaries

JPAMDGLO

UnitedStates

LargestUSImporters

JPAMUSIM

UnitedStates

StockswithPositiveSentimentonUSPolitics

Screen

UnitedStates

StockswithNegativeSentimentonUSPolitics

Screen

UnitedStates

StockswithPositiveSentimentonTradePolicy

Screen

UnitedStates

StockswithNegativeSentimentonTradePolicy

Screen

UnitedStates

StockswithPositiveSentimentonChina

Screen

UnitedStates

StockswithNegativeSentimentonChina

Screen

India

IndigenousDefense

Screen

India

SaverstoInvestors

Screen

India

Waterways

Screen

India

AffordableHousing

Screen

India

ManufacturingRenaissance

Screen

Mexico

MexicoElectionandNearshoringOutperformers

JPAMXELC

Source:J.P.MorganEquityMacroResearch;J.P.MorganResearchdoesnotprovideresearchcoverageofthesebasketsandinvestorsshould

notexpectcontinuousanalysisoradditionalreportsrelatingtothem.

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TableOfContents

USEquityStrategy

5

USPresidentialElection–BettingsOddsandPolling

11

Performance–KeyUSThematicBaskets

12

CorporateandNewsSentiment

28

UKEquityStrategy

32

IndiaEquityStrategy

39

MexicoEquityStrategy

44

Mexico’sElectionStocks(JPAMXELC)

47

SouthAfricaEquityStrategy

48

EmergingMarkets

50

USEquityGravity

51

5

SwingState(Avg)

Michigan:(15)

Wisconsin:

(10)

Pennsylvania:

(19)

Arizona:

(11)

Nevada:

(6)

Georgia:

(16)

Minnesota:

(10)

NorthCarolina:

(16)

NewHampshire:

(4)

2.3

8.0

Ohio:(17)

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DubravkoLakos-Bujas

dubravko.lakos-bujas@J.P.MorganSecuritiesLLC

KamalTamboli

kamal.r.tamboli@

J.P.MorganSecuritiesLLC

BhupinderSingh

bhupinder.singh@

J.P.MorganSecuritiesLLC

ArunJain

arun.p.jain@

J.P.MorganSecuritiesLLC

NarendraSingh

narendra.x.singh@

J.P.MorganSecuritiesLLC

MarkoKolanovic,PhD

marko.kolanovic@

J.P.MorganSecuritiesLLC

Figure2:2024PresidentialElection-AveragePoll

RealClearPolitics;(ElectoralVotes)

RepublicanFavored(-ve)DemocratFavored(+ve)

-2.6

-1.2

-1.8

-1.0

-5.0

-4.5

-3.8

-5.4

-10.0

-10.0-5.00.05.010.0

Source:J.P.MorganEquityMacroResearch,

RealClearPolitics

Note:KeySwingStatesdefinedasMichigan,Wisconsin,Pennsylvania,Arizona,NevadaandGeorgia

USEquityStrategy

Lock,Top,Surge,Tail.Unlikepastelectioncycles,whenthedebatefocusedonwhichsetofpoliciesaremorepositiveforequitymarkets,thecurrentscenariosseemtobe

moreneutral,withthepotentialformeaningfulnegativeoutcomes.Anincumbent

Presidentialvictorywouldlikelybemoreofthesamegivenacontinuedgridlocked

Congresslimitingthepassageofnewtransformativepolicies.Wehavealreadyseentheimpactofthispoliticalgridlockgiventhedifficultyinpassingnewlegislationsincethe2022midterms(seeFigure3).Therefore,investorsshouldfocusonmanagingthe

risksofaRepublicanPresident(with/withoutaRepublicanCongressionalmajority),asitwouldbeamoremeaningfuldeparturefromthestatusquo.Itisworth

highlightingthatbothcandidatescontinuetobehawkishonChinawithoutaclearpathbacktonormalizedpre-US/Chinatradewarrelations,thoughthemethodsofpursuingtradepolicydiffer(e.g.,executiveorders/exportcontrolsvs.tariffs,etc.,seeReport).

Extraneousfactorssuchasthird-partyruns(i.e.,Independentcandidates)willlikelytilttheelectionatthemargin,especiallyinkeyswingstates,butasuccessfulthird-party

challengetotheexistingtwo-partysystemremainsalowprobabilityoutcomeduetoitsnarrowroadtovictory(i.e.,eligibilityinstateballots,failureofeithermajorcandidatereaching270andelectionintheHouse,whichwillvotebyStatedelegation).

•BluelockScenario.AvictorybytheincumbentDemocraticpartyinthePresidentialelectionislikelythemostmarket-neutralscenarioandcementskeylegislative

achievementsofthepastfewyears,includingtheBipartisanInfrastructureLaw,

InflationReductionActandCHIPSandScienceAct.Thelattertwoshouldcontinuetodrivede-globalization/reshoring.Avictorybytheincumbentpartyforthe

PresidencyislikelytobeaccompaniedbyagridlockedCongressoroutright

RepublicanCongress,butwithnarrowmajorities.UnderasplitCongressscenario,

follow-onlegislationtotheCHIPSandScienceAct,ChildTaxCreditexpansion,

changestocorporateR&Ddeductibility,andindustrialpolicyaddressingCritical

Mineralscouldstillbepassedonabipartisanbasis.Theincumbentcouldalsolooktoprioritizepolicyinitiativesontrade,anti-trustandstudentdebt,whichcouldbe

actionedbyexecutiveauthorityalone(e.g.,recentSteel/Aluminumtariffproposal).Lookingattheimplicationsofgridlockonthelongerterm,provisionsoftheTax

CutsandJobsAct(TCJA)thataffectindividualincometaxrates,Alternative

MinimumTax(AMT)exemptionsandcertainbusinesstaxcutsareautomatically

expiringattheendof2025(seeReport).Democratshaveindicatedthattheywouldnotwanttofundpermanentindividualtaxratesbyhikingtaxesonthosemaking>

$400k.Ifadividedgovernmentisnotabletoactinabipartisanmannertomake

theseprovisionspermanent,thiscouldpresentanincrementalfiscalheadwindfor

UShouseholds(e.g.,individualspayingAMTjumpfrom~200Kto~7.6M,seeTaxPolicyCenter)andcorporates.Note,statutorycorporatetaxesweremadepermanentwithintheTCJA.Itisplausiblethatanincreaseincorporatetaxescouldbeusedtofundamorepermanentcutinindividualtaxes/othercorporateprovisions,butthis

wouldrequireRepublicansupport.Overall,theJointCommitteeonTaxation(JCT)estimatesthatmakingpermanenteitherexpiringorlessgenerousprovisionsafterthesunsetwouldcost~$3.5T(seeCRS).ForinvestorslookingtomanageexposuretoDe-Globalization/Re-shoring(JPAMDGLO<Index>),theCHIPSandScience

Act(JPAMCHIP<Index>),ChildTaxCreditBeneficiaries(JPAMCTCB

(<Index),seeFigure27,Figure20andFigure26forcompaniessensitiveto

thesethemes.Forcompaniesthatcouldbesensitivetoanti-trust,seeReportpage6.

6

1973-1974

1975-1976

1977-1978

1979-1980

1981-1982

1983-1984

1985-1986

1987-1988

1989-1990

1991-1992

1993-1994

1995-1996

1997-1998

1999-2000

2001-2002

2003-2004

2005-2006

2007-2009

2009-2010

2011-2013

2013-2015

2015-2017

2017-2019

2019-2021

2021-2023

2023-2025

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Figure3:CurrentCongressionalGridlockEspeciallyPronouncedVersusPast50

Years

EnactedLegislationEnactedLegislationviaIncorporation

1,400

1,200

1,000

800

600

1,1381,170

1,221,9234

1,085

981

1,001

915

905928903

783754745776

662

611620589639

430506468500448

400

209

200

0

Source:J.P.MorganEquityMacroResearch,Govtrack

•RedTopScenario.ARedTopscenarioinwhichtheRepublicanchallengerwinsthePresidencywithdividedCongresswouldbeimpactfultothemarketthroughlikely

changesinUStradepolicy,foreignpolicy,energypolicyandadditionalscrutinyasitrelatestoanti-trust(e.g.,mediacompanies).Asitrelatestotrade,thesechangescouldmanifestintheformofraisingexistingtariffsonChinato60%,imposinga

10%universaltariffonallothertradingpartnersand/ora100%tariffonauto

productioninMexicobyChineseautomakers,whichwouldhavesignificant

implicationstoUSequitiesacrosssectors/styles(seehereandhere).The10%tariffalonecouldraise~$300Binrevenue(seeTaxFoundation)butwouldbeoffsetbysecondandthirdordereffectsoftheirimplementation.Theseareasarelargely

governedbytheexecutiveandcanbeinfluencedwithoutexplicitcongressional

approval.Whilestillunclear,changestoUSforeignpolicyonRussia/UkraineandtheMiddleEastcouldshiftperceivedgeopoliticalrisksinbothregions.ThiscouldbeespeciallytrueinthecaseofIran,wheremorehawkishresponseshavebeen

advocatedbyRepublicans.Lastly,asitrelatestopermittingreform,aRedTop

scenariocouldseesignificantbarriersliftedbysellingmorefederallandand

eliminatingclimateregulations.Forinvestorslookingtomanageexposureto

escalatingUS-Chinatariffs,seeUScompanieswithhighdirectrevenue

exposuretoChina(JPAMCREV<Index>)andUSImporters(JPAMUSIM

<Index>).ForenergynameswellpositionedforelevatedGeopoliticalrisksuchasIran,seeJPAMGNRG<Index>.Forenergynamesthatcouldbenefitfrompermittingreform,seeJPAMPERM<Index>.FullcompanyconstituentscanbefoundinFigure19,Figure28,Figure21andFigure22.

•RedSurgeScenario.ARedSurgescenariowouldunlockthelegislativepenfor

Republicans,whoarelikelytoretaketheSenatewiththepossibilityofkeeping/

expandingtheirmajorityintheHouse(discussedabove).Keylegislative

achievementsunderthecurrentadministrationwouldfacescrutiny,suchas

provisionsoftheInflationReductionAct.SomecorporateshaveindicatedthatgiventheamountoffundsgoingtoRedstates,theyarenotexpectingasignificantchangeinIRAspending,butperhapsaslowdown(seeReport).Theslowdownwouldlikelybetiedtotheopen-endedprovisionssuchastaxcreditbonusadders(seeReport).

Moreover,ontaxpolicy,aRedSurgecouldopenthedoorforpermanentindividualtaxcutsthataresunsettingattheendof2025.Further,thestatutorycorporatetax

ratewouldbemaintained(currently21%,previously35%pre-TCJApassagein

2017),withthepotentialfornewbusinessincentives/subsidiesfundedbyproceedsfromthetariffincreases.WhilemanyoftheactionsviableundertheRedTop

ScenarioremainvalidunderaRedSurgeScenario,anadditionaloptionfortrade

policywouldbetherepealofpermanentnormaltraderelations(PNTR)withChina,whichwouldrequirecongressionalsupport.ArepealofPNTRcouldbeanother

courseforinfluencingUS-Chinatradebutwouldrequireamitigationstrategyfor

thepotentialdetrimentalimpactifactionedalone(seeUS-ChinaBusinessCouncil,CatoInstitute,HeritageFoundation,AmericanActionForum).Lastly,whilenoclearpositionhasyetbeenstakedoutbyRepublicansregardingDefensespending,risinggeopoliticaltensionscouldtriggercallsforadditionaloutlays,especiallyfor

domesticinfrastructure.ThiswouldbeinthecontextofexistingissueswithkeepingUkrainesuppliedwithmunitionsandresumptionofgreatpowersecurity

competition.ArisktomuchoftheRepublicanagendawouldbethedifficulty

Republicanshavefacedinmanagingnarrowmajoritieswithintheirownparty(e.g.,debtceilingdeal/voteofnoconfidenceforHouseSpeakKevinMcCarthy).For

investorslookingtomanageexposure,seebasketsassociatedwiththeRedTopscenario,alongwithGreen/EV/IRA(JPAMIRAG<Index>)andUSGovt

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Spending(JPAMGOVT),seeFigure23andFigure25,respectively,forcompaniessensitivetothesethemes.

•BlueWaveTailScenario.Givenitisstill6monthsawayfromtheelection(11/5),thepossibilityremainsforDemocratstosuccessfullymanageasecondPresidentialterm,retaincontroloftheSenate,andwinbacktheHouse.Thedifficultiesfor

DemocratsretainingSenatecontrollimitsthisoutcome,buttheequitymarketimpacttotheheadlinepolicieswouldlikelybeneutraltonegative.However,itisworthexploringthepotentialpolicyoutcomes.AshighlightedintheStateofthe

Union,wereDemocratstoregainthemajority,keypolicyshiftscouldinclude

furtherde-globalization/onshoringinitiativesthroughgovernmentsubsidiesand

regulation(e.g.IRA/Chips2.0),raisingtaxes,andmoredirectlyaddressing

geopoliticalconcerns.Asitrelatestotaxes,wecouldexpect:1)raisingthecorporatetaxrateto28%from21%;2)imposing15%corporateminimumtaxforthose

makingmorethan$1Binearningsoverthepast3years;3)raisingthecurrent

buybacktaxof1%to4%;4)raisingthetopmarginaltaxrateto39.6%from37%

currentlyforthosemaking$400K(individual)or$450K(married);5)imposing

25%wealthtaxontotalincome(includingunrealizedcapgains)of>$100M;6)

closingthecarriedinterestloopholebytaxingcapitalgainsasregularincomefor

thoseearningmorethan$1M.Therehasalsobeenmentionofraisingthetopcapitalgainsrateto44.6%.Revenuesraisedcoulddriveamaterialexpansioninchildtax

credits.IRAprovisionsforhealthcarecouldalsobeexpandedto500drugsoverthenextdecade.Lastly,additionalfundingcouldbemadeavailabletoUkraine/Israel

goingforwardiftensionsremaininto2025.ForinvestorswhowanttomanageexposuretoIRAHealthcareprovisions(JPAMIRAH<Index>)andChildTaxCreditBeneficiaries(JPAMCTCB(<Index),seeFigure24andFigure26,

respecitvely.

CongressionalsetupremainsunclearbutisunlikelytofavorcompleteDemocrat

control.RepublicanshaveafavorableelectoralsetupintheSenategiventhenarrow

oneseatmajorityforDemocrats(i.e.51-49).Specifically,Democratsneedtodefend23seats(includes3independentsthatcaucuswiththeDems),whileRepublicansonlyneedtodefend10.ThecurrentmappointstomorevulnerableDemocratseats,includingWestVirginia,whereSenatorManchinhasdecidednottoseekre-election.Othervulnerable

seatsincludeMontanaandOhio,wherebothwerepreviouslycarriedbyTrumpinthe2020PresidentialElection.AsitrelatestotheHouse,bigswingsinthenumberofseatscontrolledhavebeenlessvolatileintherecentpastduringPresidentialelectionyears

versusmidtermelectionyears.Thissuggeststhatavictoryforeitherpartywilllikelystillresultinnarrowmajoritiesforthewinner.TheslightholdthatRepublicans

currentlyhaveintheHouse(i.e.218-213with4vacancies)meansthattheHousewould

stillbeinplayforbothpartiesinthiselectioncycleandperhapsevenfavoring

DemocratsgivenbeneficialredistrictingandlackofsignificantlegislativeachievementsforRepublicans.Wefinditinterestingthatsince1928,thepartyincontroloftheHouseafterthemidtermisusuallythepartythatalsocontrolstheHouseafterthesubsequent

Presidentialelection(exceptionsare1932,1948,and1952;seeFigure31).Givenhow

tightmajoritiesintheHousearecurrently,itwouldnotbesurprisingif2024isthefirstyearthatthisincumbentcontroloftheHousedoesnotholdduringaPresidential

electionyear.

Riskfactors.WeseeUSelectionsasoneofseveralunderappreciatedpolicyrisksinthesecondhalfofthisyear.Moreover,asinvestorsgrapplewiththepolicyimplications,itisimportanttokeepinmindthatthecombinedageofbothcandidatesof158yearswithhealthconcernsaveryliverisk.Theinabilityofeitherfrontrunnertobeontheballotin

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NovemberwouldcreateatougherroadtoelectoralvictoryforthePresidency.Ongoinglegalcases/litigationpresentadditionalvolatileheadlineriskintherun-uptoelection

day.Wealsocautioninvestorstoscrutinizepolicypromises/implementationstrategies,astheydonotalwaystranslateintomarketoutcomes.Forexample,cominginto2017,

therewereexpectationsofastrongpro-EnergyagendabytheRepublicanadministrationacrosspermittingreform,drillingonfederallands,etc.However,bythetimetheyleft

officein2021,Energywasdown-30%and-113%relativetothebenchmark(still-8%and-59%,respectively,pre-Covid).Inshort,othermacro/idiosyncraticdriversstillhavelargerolestoplaywherepolicyisoneofmanyinputs.Inaddition,nationalsecurity

prioritiesareincreasinglyfactoringintoeconomicdecisionsbybothcandidates,whichpresentsnewconcernsaroundcross-borderM&A(e.g.NipponSteel/USSteel).This

riskwilllikelypersistaseconomicpolicyrealignswithsecuritypolicy.Moreover,

unlikethelastfewadministrationsthathavebeenabletoexecutelargefiscalstimulus

(e.g.TCJA,Covid-relatedspending),thenextadministrationwilllikelybemorelimitedinitsabilitytodeficitspendgivengrowingdeficitconsciousness(e.g.risingdebt/GDP,deficitspendingweighingonlong-termeconomicgrowth)andpoliticaldivisionsevenwithinone’sownpartyonthetopic.Lastly,whilemarketshaveperformedwellduringaperiodofsplitCongress(+11%/year,onaverage,fortheS&P500,congresshasbeen

split~20%ofthetimesince1928),asplitcongressmaynotactuallybedesirablewhenkeylegislativeprovisionsexpirerequiringactiontorenewormakepermanent.For

example,theexpiringindividualandcertainbusinessprovisionsoftheTCJA,ifnot

renewed,wouldresultinasizeableincreaseintaxesformostAmericansandwouldcost

~$3.5Tifallprovisionsweremadepermanentthrough2033(seeCBO).Thisis

especiallytruewhenthecontrollingpartyhasonlyanarrowmajorityandincreasinglyfracturedunityacrosskeyissues.

Pollingvs.Ballots.Asdiscussedintherecentmarketvolatilityandcommentarynote(seeReport),therehasbeenmuchdebateovertheyearsonwhetherbettingmarkets(includingPredictIt,Smarkets,Betfair,Bovada)aswellastheiraggregators

Electionbettingodds(volumeweightedaverageofBetfair,PredictIt,Smarkets,and

Polymarket)orRealClearPolitics(simpleaverageofBetUS,Betsson,Bwin,PredictIt,SportingBet)havehistoricallybeenmoreaccuratethanpollssuchasYouGov,

RasmussenReports(andthosee.g.collectedonthe538website)inpredictingelectionoutcomes.Despitetheirshortcomings,suchasbansincertaincountries,fees,potentialvulnerabilitytomanipulation,etc.,academicresearchoverallfindsthatprediction

marketsoutperformpolls,particularlyearlierinthecycle.AccordingtoBergetal.

(2008),bettingmarketshavebeen“closertotheeventualoutcome74%ofthetime”

with“themarketsignificantlyoutperform[ing]thepolls”whenforecasting“morethan100daysinadvance.”Sethietal.(2021)foundthatinswingstates,marketsdata

outperformedpolls-basedmodelsfromApril(startoftheiranalysis)untilSeptember2020.Thislikelymakespredictionmarketsrelevanttoinvestorsnowandintothe

summer.AccordingtoaggregatorElectionbettingodds,over$400millionwasbetonthe2020election,withvolumesincreasingoverthepastelections.

•PresidentialBettingOddsandPollsTightening.Bettingoddspointtoadeadheatbetweenthecandidates,thoughpollingstillfavorsRepublicans,especiallyinswingstates.LookingatRCPaveragebettingodds,bothcandidatesarecurrentlyseparatedbyjust~1.5points,favoringRepublicansslightly(43.4vs.42.3,seeFigure5).Thishasbeenadramaticshiftgiventhenear-20-pointleadtheRepublicanchallenger

heldjustinmid-February.SomebettingsitessuchasPredictItactuallyhavethe

Democratcandidateleading,thoughthewidermarginjustafewweeksbackhasmeaningfullynarrowed(50.0vs.47.0,seeFigure4).Thoughnotasextreme,RCP

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averagepollingstillnarrowlyfavorstheRepublicancandidate(46.6vs.45.1),withthespreadwideningsincemid-April(seeFigure6).It’sworthkeepinginmindthattheRCPpollingshowedthecurrentDemocraticincumbentaheadatallpointsin

timeduringthe2020election(seeFigure7).

•SwingStatesStillFavorRepublicans.Verynarrowvotingblocsacrosskeyswingstates(asthenameimplies)havedrivenelectoraloutcomesinthelasttwoelectionsandshouldbefollowedcloselyasweneartheelection.Currently,averageswing

statepolling(e.g.Michigan,Wisconsin,Pennsylvania,Arizona,Nevadaand

Georgia)favorstheRepublicancandidateby2.6points,thoughthatmarginhasbeenshrinking(4.0threemonthsago).GiventheElectoralCollege,PresidentialelectionsintheUSaresettledbythousandsofvotesasopposedtomillions(seeReport).Forexample,the2020electionwasincrediblyclosedespitetheelectoralcount(306vs.232)andpopularvote(51.3%vs.46.9%)marginswouldleadonetobelieve.Infact,ashiftofjust~44Kvotesin3keyswingstates(Arizona,GeorgiaandWisconsin)

wouldhavethwartedaDemocratPresidentialvictory.Similarly,inthe2016electiontheRepublicanchallengerwontheele