The election analysis provided by Charles Schwab & Co., Inc., does not constitute and should not be interpreted as an endorsement of any candidate or political party.
August has historically been the “quiet period” of the presidential election season. With the party conventions wrapped up, the campaigns have traditionally slowed down a bit in anticipation of a grueling sprint from Labor Day to Election Day.
But if the first few days of August 2016 are any indication, this election may end up breaking with tradition.
In the social-media-dominated, instant-news era in which we live, the campaigns never really switch off. Still, it’s important for investors not to get too distracted by the day-to-day minutiae of the race and instead pay attention to the bigger picture.
Here’s our take on some of the key trends to watch between now and the first debate on Sept. 26:
Are the parties lining up behind their candidates? Republicans continue to struggle with intraparty divisions, a point underscored this week when Donald Trump pointedly refused to endorse party luminaries like House Speaker Paul Ryan and Arizona Sen. John McCain in their re-election bids.
But Hillary Clinton still has work to do as well. While the Democratic Party tried to present a unified front at its Philadelphia convention, disappointed supporters of runner-up nominee Bernie Sanders were defiant, both inside and outside the venue. A post-convention poll by CBS News showed that 73% of Sanders supporters would back Clinton—an improvement from a few weeks earlier, but still not where Clinton would like it.
Expect Trump and Clinton to take different approaches to such divisions in August. Trump has made clear that he doesn’t feel it necessary to woo Republican leaders in the name of party unity. He’s counting on support from a broad cross-section of Americans who feel disillusioned with Washington and traditional politics.
Clinton, on the other hand, will likely try to reassure Sanders voters that she can represent them, while also reaching out to disaffected Republicans concerned about Trump’s temperament.
How are the third-party candidates doing? It is nearly impossible to win as a third-party candidate in the U.S. But the unpopularity of the two major-party nominees leaves a narrow sliver of opportunity for third parties in 2016.
In recent four-way polls, the Libertarian candidate, former New Mexico Gov. Gary Johnson, and the Green Party candidate, Jill Stein, garner a combined 10%–14% of the vote. That’s an outcome-changing percentage of the electorate. In a CBS News poll taken right after the two conventions, Johnson pulled 10% by himself.
That’s significant because third-party candidates must have the support of at least 15% of the nation—based on an average of five polls—in order to participate in the fall debates. It’s an extreme longshot, but if Johnson were to get on the debate stage in September, it could really flip the race on its head.
Usually, third-party candidates see their support peak in the summer and then fade as voters start to focus more on the race. So keep an eye on the polls to see how Johnson and Stein are doing as fall approaches.
The national polls may change, but are they really saying anything? There will be a new national poll nearly every day between now and November 8. But while those polls may indicate how the race is trending, we don’t elect our president via a national poll. Instead, we have the Electoral College. Each state is allocated a certain number of electoral votes based on population. There are 538 electoral votes up for grabs, and the candidate who captures at least 270 wins.
As a result of demographics and past voting history, most of the states are solidly “red”—Republican—or “blue”—Democratic. Only eight to 12 states are considered toss-ups. So the question becomes ...
How are the candidates doing in the battleground states? As the race heads into the fall, expect both candidates to focus their attention on the small number of key states that could swing the outcome: the so-called battleground states. Florida, Ohio and Pennsylvania will likely top the list, along with Iowa, New Hampshire, North Carolina, and Virginia. Arizona, Colorado, Georgia, Michigan, Nevada and Wisconsin—states that have voted more consistently one way or the other but could be in play in 2016—represent the next tier. Polling within those states will be a lot more revealing than the national polls.
What you can do next
- If you’ve built a solid financial plan and a well-diversified portfolio, it’s best to ignore the political noise and focus on your long-term goals. Want to talk about your portfolio? Call our investment professionals at 800-355-2162.
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