1. McConnell has the Republican votes to pass and will push for vote before 11/3. The US will need to have 9 jurors before election or run risk of 4-4 on election court cases, causing more confusion. Roberts is not a done deal for conservatives and is a risk to vote to not rule on state election cases.

2. Presidential and senate election outcomes will not be known until PA(11/6), NC(11/6) and MI(11/17) have gathered all mail-in votes. MI allows mail-n ballots to be counted until 11/17! 11/17!

3. Both sides will contest vote outcomes in court as 31 states have changed their way they do mail-in ballots and will have problems. The NY primary is a great example of the train wreck coming. 500k votes were disallowed.

Don’t expect a compromise by either side on SCOTUS. You will hear Democrats talk about packing the court if they take back the Senate as a threat to the nomination. Former Sen. Reid’s reversal of a compromise with McConnell in 2014 will be fresh on the Majority Leader’s mind.

I expect the process to help bring about a potential “Blue Wave” for Biden and Democrats. Prior to RBG, AZ, CO and ME were likely to flip from Republican to Democrat with AL flipping from Democrat to Republican. This would’ve meant Democrats would be 1 short to make the Senate 50/50. Also prior to RBG, I had these states in play, but not necessarily flip from Republican to Democrat: IA,NC,MT,AK,FL,IN,KS,MO,SC.

Due to the SCOTUS fight, my theory is that the Democrat base will be further inflamed and motivated to turn out either by mail or in-person to vote. Republican base will not be as excited as they will get their SCOTUS seat. Yes, a Blue Wave that makes Biden president and captures 6-8 seats in the Senate.

9/29 is likely to be the first and only debate. It will be Trump’s chance to engage Biden on policy.

12/15 Electoral college must certify election. Here’s a great primer on the process CRS.

For the markets, they have finally awoken to the risk of both a disputed election and a Biden victory with a Democratic Senate. Fed is still driving cheap money and acting as the stabiliser, but there will be no new stimulus coming from Congress until after January. New virus outbreaks in Europe and US adding to market unease. The latest jobless claims underscores how we’ve stalled getting those hurt by the shutdown back to work.

Bottom line: financial markets will remain volatile with more bouts of wild sell offs and muted rallies.

S&P and VIX

Folks, this election process will be ugly. President Trump’s comment yesterday that he wouldn’t commit to a peaceful transfer of power is emblematic of what is to come.

As we’ve been warning clients for over a year, a Biden victory will initiate the largest swing in public policy in our lifetimes.

If we learned anything from 2016 it’s this: prepare for the outlier outcome.

Blue Wave.