Charlotte Street Partners

DAILY BRIEFING

DAILY BRIEFING

Don't stop the count

Written by Javier Maquieira, senior associate 
Edited by Kevin Pringle, partner
6 November 2020

Good morning,

At the time of writing, Joe Biden is edging closer towards becoming the 46th president of the United States of America. However, millions of votes are still being counted, with all eyes on four key battleground states where projections remain unclear, and the race seems to be getting tighter by the minute.
 
In Georgia, a long Republican stronghold, where President Donald Trump is still marginally ahead, his lead has shrunk by 90%. Pennsylvania, the state with the highest number of electoral college votes of those remaining to declare, has also seen Trump’s lead narrowed as mail-in ballots are counted, with Arizona being the only state where the president appears to be clawing back votes. Meanwhile, Biden has increased his lead in Nevada, a state Hillary Clinton won in 2016.
 
But President Trump is dead set on undermining a potential Biden victory. He has been claiming, without evidence, that current election projections are based on fraudulent votes, filing ill-founded lawsuits, demanding recounts, and dramatically calling for vote counting to stop in those states where his Democrat challenger has won or is projected to win.
 
Whatever the final result, it seems clear from the closeness of the vote that the populist movement behind Trump’s victory in 2016 wasn’t the product of a single moment in time, but a potentially durable bloc, as Julie Bykowicz puts it in the Wall Street Journal.
 
In fact, the president has managed to win millions more votes than he did in 2016, with the Republican party set to keep control of the Senate. Trumpism might not sit in the Oval Office during the next four years but may live on as part of a broader ideological shift in the GOP.
 
Importantly, the assumption that the more diverse America becomes, the easier will be for the Democratic party to win elections, doesn’t seem to hold. One of the takeaways from this election is that minority and ethnic groups are not monoliths. A look at the exit poll shows that black and Hispanic voters shifted towards Trump compared to the previous election.
 
As vote counting extends into the weekend and beyond, and assuming Biden eventually wins the White House, we’re set to witness a far-from-normal transition. The grace of political deference and concession speeches has been officially cancelled. It will take time and democratic regeneration to bring it back.

News

Boris Johnson has insisted on his intention to ease current national lockdown restrictions in England on 2 December, promising “light at the end of the tunnel”. Despite holding out hope for a normal Christmas, the prime minister admitted failings in the test and trace system are holding back the fight against Covid-19.
 
Denmark has been removed from the UK’s coronavirus corridor list, meaning passengers arriving from there will need to self-isolate for 14 days from 4am on Friday. Transport secretary Grant Shapps said it was an “urgent decision”, taken overnight after health authorities in Denmark found a mutated form of coronavirus in mink farms that can pass to humans.
 
A new Survation poll has suggested support for independence in Scotland is holding steady in favour of ‘yes’ at 54%. The survey has also found support for the SNP above the 50% mark in the constituency vote, while the pro-union vote will likely be split between the Scottish Conservatives and Scottish Labour, which received 19% and 18% support in the same poll, respectively.

Business and economy

The chancellor of the Exchequer, Rishi Sunak, confirmed in the House of Commons yesterday that the furlough scheme will be extended across the UK until the end of March 2021. As part of the revised scheme, 80% of a person’s wage up to £2,500 a month will be paid “to give businesses security through the winter”. In addition, anyone made redundant after 23 September can be rehired and put back on furlough. The chancellor also announced more money for self-employed people and a raise in guaranteed funding for the UK’s devolved administrations by £2bn to £16bn.
 
The National Audit Office (NAO) has warned of “significant” border disruption after the Brexit transition period ends in January 2021. The government spending regulator said it was “very unlikely” that UK traders would be ready for EU border checks, as there remains “limited” time for UK ports to test new IT systems. Even if a trade deal is finally struck between the UK and the EU, the watchdog expects traders to face new hurdles, including customs declarations.
 
The former owner of BHS, Dominic Chappell, has been convicted of evading £584,000 in taxes after a trial at London’s Southwark crown court. A judge said Chappell, who has been jailed for six years, had pursued a “long and consistent course of conduct designed to cheat the revenue” while splashing out on a luxury lifestyle, which included the purchase of a £90,000 yacht, a Bentley Continental car, and a Bahamas holiday.

Columns of note

In the GuardianDavid Smith recounts Donald Trump’s Thursday night speech as a “downright dangerous and dishonest” intervention. During his 16-minute press briefing, the US president made unfounded claims with massive implications, accused the media of election interference, called the cities of Detroit and Philadelphia “the most corrupt political places anywhere in our country”, and insisted on his own circular argument that he had predicted the “disaster” of mail-in ballots before the election, according to Smith. The author concludes that Trump’s claims of fraud might eventually allow him to save his face by dwelling on the story that his re-election was impeded by establishment forces beyond his control.
 
Tim Harford explains in the Financial Times why pollsters seem to get it wrong so often, after the landslide win projected for Joe Biden failed to materialise. One of the reasons he tentatively gives is that the adjustments pollsters make to ensure the demographics of the poll match the demographics of the census can improve or worsen predictability in equal measure. Yet Harford cautions that we shouldn’t exaggerate the problem: opinion polls do generate information but can’t do away with an uncertainty we must learn to live with. (£)

Cartoon source: The Times

Markets

What happened yesterday?

London stocks extended earlier gains on Thursday as investors bet on a victory for Joe Biden in the US election and after the Bank of England boosted its bond-buying programme, injecting an extra £150bn into the economy. The FTSE 100 was up 0.39% at 5,915.08, while sterling was stronger against both the dollar by 0.20% at £1.298 and the euro by 0.15% at €1.106.
 
In the US, Wall Street’s Nasdaq gained 2.6% while the S&P 500 rose 1.9%, with both benchmarks on track for their best week since April. The performance gap between both indices is partly explained by the prospect of Republicans keeping control of the Senate, which has raised doubts over the likelihood of substantial fiscal stimulus to help soften the coronavirus pandemic’s negative impact on the US economy.
 
In company news:
 
Sainsbury’s announced it was axing up to 3,500 jobs as part of a shakeup of its fresh fish and meat counters and Argos stores, while reporting a 6.9% rise in first-half retail sales.
 
RSA said it is in talks with Canada’s Intact Financial and Denmark’s Tryg over a £7.2bn takeover deal that would break up the 300-year-old insurance group.
 
Bentley promised to stop making fossil fuel cars by 2030 as it aims to be completely carbon neutral at the same time.

What’s happening today?

AGMs
Adriatic Metal.
Redrow

UK economic announcements
(08:30) Halifax House Price Index

Int. economic announcements
(07:00) Industrial Production (GER)
(13:30) Non-Farm Payrolls (US)
(13:30) Unemployment Rate (US)
(15:00) Wholesales Inventories (US)
(19:00) Consumer Credit (US)

Source: Financial Times

did you know

MI5 initially worked with Boy Scouts for information gathering during the second world war but found they were unreliable spies and inclined to brag about their work. The British security service then replaced the Scouts with Girl Guides, who proved much more reliable. (@qikipedia)

Parliamentary highlights

House of Commons

No business scheduled

House of Lords 

No business scheduled

Scottish Parliament 

No business scheduled

Share this post

Share on facebook
Share on twitter
Share on linkedin
Share on email

Copyright© 2020 Charlotte Street Partners