In anticipation of the upcoming presidential election, Chief Investment Strategist Scott Clemons provides a state-by-state analysis of the effect of polling outcomes on the presidential and key Senate races.
In keeping with previous presidential election cycles, we are pleased to present the 2016 edition of our election night scorecard. Many of you will intentionally find something (anything?) else to do Tuesday night rather than watch election results, but for those of you who are political wonks like us, we offer the following viewing guide to the election, leavened with equal dashes of history and levity.
Friends and clients of Brown Brothers Harriman (BBH) will know that we are fundamental investors, driven by the desire to own companies that have a greater-than-average degree of control over their own destiny and that trade at an appropriate discount to their intrinsic value.1 We do not position portfolios in anticipation of any particular economic or political development. Instead, we believe that the best way to pursue returns while mitigating risk is through rigorous analysis at the issuer level, coupled with a disciplined approach to identifying value. Having said that, changes in the political landscape warrant attention, and our bottom-up process is certainly informed by top-down risks. Politics matter.
What happens on Tuesday is not an election – it is 51 separate elections, in which each state (plus the District of Columbia) votes to appoint electors to select the president and vice president. In all but two of those states (Maine and Nebraska), the winner of the popular vote gets all the Electoral College votes, which makes some states more important than others. The tables that follow are arranged chronologically by when the latest polls in each state close. Analysts are generally reluctant to call a state for one candidate or the other until voting is complete, although in some states with two time zones the outcome can become evident even before the later time zone closes. The chronology of this table provides some idea as to how election night is likely to unfold. States are categorized and colored by their likely voting patterns, with expected Republican states in red, Democratic states in blue and toss-ups in gray.
The Senate is also in play. The Republicans and Democrats each control 46 seats that are either not up for re-election or are not competitive. That implies that the outcome of eight Senate races will determine control of the Senate. Those races are noted in the “what to watch” section of each hour.
It should go without saying, but for the record, nothing herein should be interpreted as an endorsement of any candidate for any office, either by BBH or by your faithful correspondent. But we do promise – regardless of the outcome – that the sun will rise on Wednesday morning.
The 7:00 hour should prove kind to Donald Trump. There are 60 Electoral College votes up for grabs, of which Georgia (16), Indiana (11), Kentucky (8) and South Carolina (9) are solidly in the GOP camp. Vermont (3) and Virginia (13), the home state of vice presidential nominee Tim Kaine, should break Democratic. That implies a lead for Trump in the Electoral College race once this group of six states weighs in, but the evening is young!
Watch the Senate race in Indiana. Evan Bayh (D) is consistently ahead in the polls to fill the seat vacated by the retirement of Dan Coats (R). A Bayh victory would be a gain of a Senate seat for the Democrats.
Three more states close their polls at 7:30, including the toss-up states of North Carolina (15) and Ohio (18). The outcome here may indicate how the rest of the evening plays out: Trump has surged in the North Carolina polls over the past week, but the most recent poll has Clinton regaining the lead. Trump has led Ohio polls since early October. It is hard, though not impossible, for Trump to get to 270 Electoral College votes without these two states.
The North Carolina Senate race will also influence the balance in the Senate, as Richard Burr (R) fights to retain his seat.
Now the evening really begins! Seventeen states and 172 Electoral College votes are on offer, including the perennially important states of Florida (29) and Pennsylvania (20). If Clinton wins these two states, the evening is all but over. These 49 votes, when added to the 226 likely Electoral College votes from reliably Democratic states, would put her in the White House, even if Trump wins Ohio and North Carolina.
Four competitive Senate races will close at 8:00 as well. Marco Rubio (R) should be able to hold his seat in Florida, and Republican incumbents Kelly Ayotte (R-New Hampshire) and Roy Blunt (R-Missouri) are ahead in the polls as well, albeit not comfortably. The Pennsylvania Senate race increasingly looks like another pickup for the Democrats, as the incumbent Pat Toomey (R) has lost ground to his Democratic challenger Katie McGinty (D).
Only one state ends voting at 8:30 Eastern time. Here’s your chance to get a bite to eat, take a walk or check Facebook to see if friends and family are still on speaking terms …
If Clinton has already won two of the four earlier big toss-ups (Ohio, Florida, North Carolina or Pennsylvania), the rest of the evening is just about margin of victory. Having said that, just because polls close doesn’t mean counts are final. Remember Florida in 2000! Indeed, unless the earlier states go overwhelmingly for Clinton, Trump is likely ahead in the Electoral College vote count even after the 9:00 states report results, as some larger West Coast states are still voting.
There is less drama in the 9:00 hour. Thirteen states will determine 153 Electoral College votes, but without the swing state drama of the previous hour.
Still with us? Not much to add to the Electoral College vote tally at the 10:00 hour but a few smaller toss-up states, as well as a Senate race in Nevada that might seal control for one or the other party.
Unless Clinton has swept the earlier swing states, the race will likely not be decided until the 11:00 state results are announced, and there aren’t likely to be any surprises at this hour. Six states close their voting at 11:00, awarding a total of 85 Electoral College votes. California is the big kahuna.
There’s no reason to be up this late unless some large state earlier in the evening is too close to call, or you’re actually voting in Alaska. Our 49th state gets the last word.
Even after the litany of October surprises, the Electoral College math remains firmly in Clinton’s favor. There are 19 states with 242 Electoral College votes that have voted for the Democratic candidate for president in each of the last six elections. If Clinton can maintain that “blue wall” of Democratic support, she only needs to pick up 28 more votes to reach the magic number of 270 and can do so with a combination of Florida (29), Pennsylvania (20), Ohio (18) and North Carolina (15). Trump has a steep wall to climb mathematically.
The Senate is less certain. The GOP can lose a few seats but needs to win five of the eight competitive races in order to retain 51 seats and control. Even if the outcome of the presidential race is clear earlier in the evening, the balance of the Senate may not be resolved until the Nevada polls close at 10:00. When all is said and done, we might very well end up with a status quo result, in which a Democrat occupies the oval office and has to work with a Congress controlled by Republicans in both houses.
And yet there are so many “firsts” in this election cycle (not all of which have been welcome), that in the words of that great American philosopher Yogi Berra, “It ain’t over till it’s over.” Enough analysis. Time to vote.
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© Brown Brothers Harriman & Co. 2016. All rights reserved. 2016.
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