Charlotte Street Partners

DAILY BRIEFING

DAILY BRIEFING

Margin of doubt

Written by Scott Reid, chief of staff
Edited by Kevin Pringle, partner
16 October 2020

Good morning,

In the week when a poll shows Joe Biden a stonking seventeen points ahead of Donald Trump nationally just eighteen days out from this year’s presidential election; or that the former vice president is predicted as having a near nine in ten chance to win crucial Midwestern swing states; or that even ‘Bible Belt’ Georgia could go blue this year – you should feel confident that the Democrats have it in the bag, right?
 
And yet, for those who would prefer to see Biden home and dry on November 3, there is a nagging feeling that we’re headed for a rerun of 2016 when the polls pointed one way and the voters quite another. Pollsters, however, seem to have learnt their lesson in two ways.
 
This year, state-level polls have been extended to include even marginally competitive races – think traditionally Democratic ‘blue’ Michigan, Pennsylvania, and Wisconsin that stunned pundits by going Republican ‘red’ in 2016. And they have regeared to focus on education, rather than income, as the main predictor of a person’s voting intentions.
 
Certainty might be warranted, then, but for the one immovable in this race – the US electoral college. Trump’s victory was actually within the margin of error for most polls in 2016. The fact he got it over the line of 270 votes in the college was due to around just 77,000 ballots correctly configured in a few states in the midwest, even as his opponent Hillary Clinton won nearly three million more votes nationally. Surveys tell us that it unlikely to happen this time around, but it could.
 
And so what if Biden wins? The election of one president does not a reformed nation make. Instead, to avoid their agenda being hamstrung by the legislative process, it is crucial that Democrats also win both houses of Congress (where it should be said they are also modest favourites).
 
The Senate is key. After all, it is here where the decisions that define a presidency – on the future of healthcare or the next justices of the Supreme Court, for example – will be taken, including the likely confirmation of judge Amy Coney Barratt who finished her vetting yesterday. Indeed, precisely because Republicans have held the Senate since 2012 means they have been able to appoint, or block, their choice of justices and secure a conservative ascendancy on the bench that will long outlive Trump’s legacy.
 
And it is in the upper house that there are whispers of Democrats starting to get imaginative about breaking an in-built conservative advantage in America’s constitution, should they conquer on November 3. With it, they could mandate ‘court packing’ by increasing the number of Supreme Court justices (which Biden steered clear of during a ‘town hall’ debate last night). Or – more radically – confer statehood for liberal-leaning areas like Washington DC and overseas territories like Guam or Puerto Rico, which are impacted by US policymaking despite lacking the voting mechanisms of seats in the Senate and electoral college.
 
But heck, what do I know? Another poll this morning shows that a mere 12% of Scots would vote for Trump if given the chance. That demonstrates, I think, how little we really understand our cousins over the sea and why keeping an eye on what the polls aren’t telling us might be a good idea, too.

News

Conservative MPs have joined Labour leaders in northern English cities to oppose further lockdown measures by the UK government. Yesterday, London, Essex and York were among those cities announced as facing so-called Tier 2 restrictions from Saturday, with Greater Manchester and Lancashire moving into Tier 3. Labour mayor of Greater Manchester, Andy Burnham, said the measures disproportionately impacted the local economy, and that he would prefer a national lockdown.
 
A WHO study has shown that Remdesivir has little effect on Covid-19 mortality. The highly-anticipated Solidarity trial, which reviewed 11,266 subjects, concluded that a series of drugs also including hydroxychloroquine, lopinavir and interferon did not “substantially affect” the mortality or length of stay of hospitalised patients. Remdesivir was among the drugs prescribed to President Trump after he tested positive for Covid-19 earlier this month.
 
EU leaders have called for the UK to make concessions on a future trade agreement in order to avoid a no deal. UK chief negotiator Lord Frost was “disappointed” at a French demand that could giving French fishing fleets continued access to British water. Talks, which ended in Brussels yesterday, have been extended into next week.

Business and economy

The Commons Public Accounts Committee has found that a lack of proper economic planning may have resulted in around a tenth of the £35bn furlough scheme being paid-out in error or fraudulently claimed. The committee’s report published today says that a series of hastily-designed schemes which moved HMRC staff from tax collection to customer guidance resulted in a 51% drop in revenues for its compliance work during the first quarter, which may never be repaid.
 
Meanwhile, ministers have told Transport for London (TfL) that a £1bn bailout must come at the cost of fare hikes, the end of free ticket entitlements and structural reforms, Sky News reports. The figure offered by government is roughly equivalent to less than two months’ costs of running TfL, with the network understood to be holding out for a figure twice that sum.
 
And a 25% increase in third-quarter profits for Morgan Stanley has closed a standout Wall Street reporting season in Q3 of this year. The $2.7bn figure marks Morgan Stanley’s second-largest quarterly revenues ever, mirroring results from Goldman Sachs, which almost doubled its third-quarter earnings. Morgan Stanley chief executive, James Gorman, has now called for an end to the Federal Reserve’s moratorium of dividend payments until the end of the year.

Columns of note

In the latest Talking Politics podcast, David Runciman speaks to American history professor Sarah Churchwell on President Trump’s legacy and his chances for the election. They muse that what now looks like Trump’s impact on America is really that of Republican Senate leader Mitch McConnell, who has enabled the more erratic actions of the president in order to secure a so-called “conservative legal nationalism” on a string of US court circuits.
 
And in the FT, Simon Kuper writes that the onetime camps of Remainers and Leavers are united in their increasing pessimism around Brexit. Among middle and upper earners, focus groups revealed that a pre-Brexit mistrust of government has crept back in, with both groups agreeing to national “shame” and a hope that policy control returns to Britain’s regions.

Cartoon source: The New Yorker

Markets

What happened yesterday?

Tightening coronavirus restrictions across Europe led the FTSE 100 down by 1.73% to 5,832.52 points yesterday, with Sterling also weaker by 0.75% on the dollar at $1.29, and by 0.39% on the euro at €1.10.
 
In company news:

  • Stocks in the travel, hospitality and leisure sectors were among those equities worst hit by the news of restrictions in the UK, with Premier Inn-owner Whitbread (-2.98%), InterContinental Hotels (-3.1%), cruise operator Carnival (-2.35%) and Cineworld (-7.89%) all down.
  • Among the risers on the FTSE was Rolls-Royce Holdings (+8.39%), whose bond issue convinced investors in the long-term strategy of the UK-based engine maker.

What’s happening today?

Finals
Scancell Holdings

Interims
SpaceandPeople

AGMs
Ashmore
K3 Capital Gro.
Loungers Plc
Tungsten Corp

Trading announcements
Global Ports S

Int economic announcements
(13:30) Continuing Claims (US)
(13:30) Import and Export Price Indices (US)
(13:30) Philadelphia Fed Index (US)
(13:30) Initial Jobless Claims (US)
(16:00) Crude Oil Inventories (US)

Source: Financial Times

did you know

Mini-golf was invented for the ladies of St Andrews’ golf club in the 1860s because it was considered inappropriate for women to swing golf clubs up past their shoulders.
 
Source: @qikipedia

Parliamentary highlights

House of Commons

Private Members’ Bills
Various

House of Lords 

No business scheduled.

Scottish Parliament 

No business scheduled.

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