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.
With the presidential primary season winding down, attention has begun to turn to the fall’s head-to-head match-up in what is shaping up as one of the most unusual and unpredictable elections in recent history.
Assuming both candidates formally receive the nominations of their parties at their respective national conventions in July, presumptive nominees Donald Trump and Hillary Clinton will spend roughly four months competing to hold the highest office in the nation.
At Schwab, we recognize that this is a highly unusual election, one that has many individual investors uncertain about just how politics and the markets might interact.
That’s why Schwab’s Insights & Ideas is launching an Election 2016 section. For at least the next six months, Schwab will provide regular perspective about the election and its impact on investors.
While the presidential race will be a primary focus, we will also provide regular updates on an aspect of the 2016 election that we think is not yet getting the attention it deserves: the race for control of the Senate and the House of Representatives. No matter who wins the White House, the likelihood of achieving his or her priorities will rest heavily on the composition of Congress.
Schwab, as a company, does not endorse any candidates for political office. We plan to be as nonpartisan as we can, to give you perspective on the election that you won’t get anywhere else.
An unprecedented election
For a variety of reasons, from the number of candidates running to the level of voter anger driving the campaign, the media and the pundits have been proven wrong about this election time and time again during the past year.
Here are some of the factors that have made—and will continue to make—this election unlike any in recent history:
Trump’s refusal to run a traditional campaign. Trump has eschewed the traditional campaign model of a large campaign staff of number-crunchers and the disciplined, stay-on-message style of most modern-era candidates. Instead, he has a relatively small staff, his campaign events are rarely scripted, and he has a willingness to say just about anything that comes into his mind. All indications are that he doesn’t plan to change in the general election.
The two candidates are unusually unpopular. A Quinnipiac poll1 conducted at the end of May with more than 1,500 registered voters found that 59% of those surveyed had an unfavorable opinion of Trump, while 57% viewed Clinton unfavorably. Those are unprecedented negatives for the two presumptive nominees in a presidential race.
Voters who don’t traditionally vote have been coming to the polls. The combination of the large field of candidates and Trump’s near-universal name recognition helped produce a significant uptick in voter turnout for Republican primaries and caucuses, including many voters who had never shown much interest in politics.
On the Democratic side, the campaign of Vermont Senator Bernie Sanders may not have won him the nomination, but he has built an unusually loyal and passionate following, particularly among young voters. How Sanders and his supporters react in the weeks ahead will be an important subplot as Hillary Clinton attempts to unify the Democratic party behind her candidacy.
The influx of new voters makes it harder to rely on traditional campaign metrics, such as past turnout numbers. For example, the California secretary of state announced recently that a record number of Californians registered to vote in that state’s June 7 primary, and that nearly 650,000 new voters registered in the 45 days leading up to the registration deadline. But it’s not certain how many of those voters will actually cast ballots in November.
Voter anger is dominating the campaign. Again and again, polls show an angry electorate, frustrated with Washington’s inability to get things done. That’s been true for years, but we think something feels different this time around. It’s an anger that helped the rise of “outsider” candidates like Trump and Sanders, who threaten the establishment of their parties.
A match-up of polar opposites. Trump and Clinton could hardly be more different in politics, temperament, background, campaign style and personality. Moreover, they are two figures who have been in the public eye for decades. That should lead to a campaign that has a number of unforeseen twists and turns.
In the weeks ahead, we’ll try to sort through all the noise and nonsense, offer a sense of what to pay attention to (and what to ignore) amid the 24/7 coverage of politics, and try to connect it back to what it all means for investors and the markets.
Welcome to Schwab’s Insights & Ideas: Election 2016.
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