Wed, November 6, 2024 | 7:45AM ET

Polymarket shows 54% probability election decided by Wed evening... positive "market surprise." Stocks rally into YE regardless of winner

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Tom Lee, CFA ^AC

Head of Research

Polymarket shows 54% probability election decided by Wed evening... positive market surprise. Stocks rally into YE regardless of winner

VIDEO: We wanted to provide you the fundamental rationale why stocks rally with either candidate winning (duration: 5:18).

Polls close Tuesday evening and investors now wait to see who is elected our next President and Congress. Media outlets are predicting an election outcome will take some time and similarly, investors are largely expecting the outcome to take several days:

Polymarket.com offers a wager “When will AP (Associated Press) call the election”?
– this is an interesting bet
– Tue 11/5 18%
– Wed 11/6 46%
– Thu 11/7 17%
– Fri 11/8 8%
– etc 11%
This is interesting as 54% are betting on an election decision within the next 24 hours. And media outlets like NBC.com are warning that a decision might be delayed for some time. And many harken this to 2000 when the election was not declared until more than a month later in December.
One possible explanation is betting markets see a “landslide” winner.
– plenty see a Harris landslide –> one example
– plenty see a Trump landslide –> one example
Perhaps the surprise for markets is a “landslide” winner that is declared within the next 24 hours. This would be a positive for financial markets, removing the uncertainty that overhangs a delayed election outcome. And the VIX would similarly fall, further supporting upside for markets which is currently at 20.5
Personally, I would be surprised. But then again, a lot of things this election cycle have surprised me. So, we will soon find out. And the VIX term structure has “uninverted” and now the 4M contract is lower than the 1M contract.
In any case, we expect stocks to finish strong into YE regardless of either candidate. Why? Consider this rationale.
If Harris wins:
– continuation of existing policies
– fiscally loose spending
– Technology + Healthcare
If Trump wins
– lower taxes, end of SALT deduction cap
– “animal spirits” as de-regulation drives M&A
– strong US corporate relative position vs rest of world
There are fundamental rationale for stocks to rally either way.
This is supported by historical precedent, consider this:
– since 1900, 31 elections
– 3M/win ratio post-election: +5.5%/61%
– if no recession (n=13): +5.9%/77%
– if markets down into election (n=6): +3.7%/67%
– if BOTH no recession and down (n=1): +7.2%/100%
See the picture? Equities do well into year-end regardless.
– the only question is the near term path
– contested election likely means near-term downside

BOTTOM LINE: This is a strong market

Bottom line. We are glad the election is finally here. This remains a strong market. So stay on target.

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Key incoming data November:

~~11/1 8:30 AM ET: Oct Non-Farm Payrolls~~ Tame
~~11/1 9:45 AM ET: Oct F S&P Global Manufacturing PMI~~ Tame
~~11/1 10:00 AM ET: Oct ISM Manufacturing PMI~~ Tame
~~11/4 10:00 AM ET: Sep F Durable Goods Orders~~ Tame
11/5: US Presidential Election 2024
~~11/5 8:30 AM ET: Sep Trade Balance~~ Tame
~~11/5 9:45 AM ET: Oct F S&P Global Services PMI~~ Tame
~~11/5 10:00 AM ET: Oct ISM Services PMI~~ Mixed
11/7 8:30 AM ET: 3Q P Non-Farm Productivity
11/7 8:30 AM ET: 3Q P Unit Labor Costs
11/7 9:00 AM ET: Sep F Manheim Used vehicle index
11/7 2:00 PM ET: Nov FOMC Decision
11/8 10:00 AM ET: Nov P U. Mich. Sentiment and Inflation Expectation
11/12 6:00 AM ET: Oct Small Business Optimism Survey
11/12 11:00 AM ET: Oct NY Fed 1yr Inf Exp
11/13 8:30 AM ET: Oct CPI
11/14 8:30 AM ET: Oct PPI
11/15 8:30 AM ET: Oct Retail Sales Data
11/15 8:30 AM ET: Nov Empire Manufacturing Survey
11/18 10:00 AM ET: Nov NAHB Housing Market Index
11/18 4:00 PM ET: Sep Net TIC Flows
11/19 9:00 AM ET: Oct M Manheim Used vehicle index
11/21 8:30 AM ET: Nov Philly Fed Business Outlook
11/21 10:00 AM ET: Oct Existing Home Sales
11/22 9:45 AM ET: Nov P S&P Global Manufacturing PMI
11/22 9:45 AM ET: Nov P S&P Global Services PMI
11/22 10:00 AM ET: Nov F U. Mich. Sentiment and Inflation Expectation
11/25 8:30 AM ET: Oct Chicago Fed Nat Activity Index
11/25 10:30 AM ET: Nov Dallas Fed Manuf. Activity Survey
11/26 9:00 AM ET: Sep S&P CoreLogic CS home price
11/26 10:00 AM ET: Nov Conference Board Consumer Confidence
11/26 10:00 AM ET: Oct New Home Sales
11/26 2:00 PM ET: Nov FOMC Meeting Minutes
11/27 8:30 AM ET: Oct PCE Deflator
11/27 8:30 AM ET: 3Q S 2024 GDP
11/27 10:00 AM ET: Oct P Durable Goods Orders

Key incoming data October:

~~10/1 9:45 AM ET: Sep F S&P Global Manufacturing PMI~~ Tame
~~10/1 10:00 AM ET: Sep ISM Manufacturing PMI~~ Tame
~~10/1 10:00 AM ET: Aug JOLTS Job Openings~~ Tame
~~10/3 9:45 AM ET: Sep F S&P Global Services PMI~~ Tame
~~10/3 10:00 AM ET: Sep ISM Services PMI~~ Mixed
~~10/3 10:00 AM ET: Aug F Durable Goods Orders~~ Tame
~~10/4 8:30 AM ET: Sep Non-Farm Payrolls~~ Hot
~~10/7 9:00 AM ET: Aug F Manheim Used Vehicle Index~~ Tame
~~10/8 6:00 AM ET: Sep Small Business Optimism Survey~~ Tame
~~10/8 8:30 AM ET: Aug Trade Balance~~ Tame
~~10/9 2:00 PM ET: Sep 18 FOMC Meeting Minutes~~ Dovish
~~10/10 8:30 AM ET: Sep CPI~~ Hot
~~10/11 8:30 AM ET: Sep PPI~~ Tame
~~10/11 10:00 AM ET: Oct P U. Mich. Sentiment and Inflation Expectation~~ Tame
~~10/15 8:30 AM ET: Oct Empire Manufacturing Survey~~ Tame
~~10/15 11:00 AM ET: Sep NY Fed 1yr Inf Exp~~ Tame
~~10/17 8:30 AM ET: Sep Retail Sales Data~~ Tame
~~10/17 8:30 AM ET: Oct Philly Fed Business Outlook~~ Tame
~~10/17 9:00 AM ET: Sep M Manheim Used Vehicle Index~~ Tame
~~10/17 10:00 AM ET: Oct NAHB Housing Market Index~~ Tame
~~10/17 4:00 PM ET: Aug Net TIC Flows~~ Tame
~~10/23 10:00 AM ET: Sep Existing Home Sales~~ Tame
~~10/23 2:00 PM ET: Oct Fed Releases Beige Book~~ Dovish
~~10/24 8:30 AM ET: Sep Chicago Fed Nat Activity Index~~ Tame
~~10/24 9:45 AM ET: Oct P S&P Global Manufacturing PMI~~ Tame
~~10/24 9:45 AM ET: Oct P S&P Global Services PMI~~ Tame
~~10/24 10:00 AM ET: Sep New Home Sales~~ Tame
~~10/25 10:00 AM ET: Oct F U. Mich. Sentiment and Inflation Expectation~~ Tame
~~10/25 10:00 AM ET: Aug F Durable Goods Orders~~ Tame
~~10/28 10:30 AM ET: Oct Dallas Fed Manuf. Activity Survey~~ Tame
~~10/29 9:00 AM ET: Aug S&P CoreLogic CS home price~~ Tame
~~10/29 10:00 AM ET: Oct Conference Board Consumer Confidence~~ Tame
~~10/29 10:00 AM ET: Sep JOLTS Job Openings~~ Tame
~~10/30 8:30 AM ET: 3Q A 2024 GDP~~ Tame
~~10/30 10:00 AM ET: 3Q24 Treasury Quarterly Refunding Press Conference~~ Tame
~~10/31 8:30 AM ET: Sep PCE Deflator~~ Tame
~~10/31 8:30 AM ET: 3Q Employment Cost Index~~ Tame

Economic Data Performance Tracker 2024:

Economic Data Performance Tracker 2023:

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