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Inside The Broker

Trump, Biden and US Durable Goods


Inside the Broker

Trump, Biden and US Durable Goods

This week brought a mixed bag of economic reports from the US and across the Euro zone. Now the highlight in terms of data is Friday’s US Durable Goods release. This measures the value of goods ordered from manufacturers with a life expectancy of at least three years. Such products include computers, kitchen appliances, white goods, motor vehicles and aeroplanes.

The Core Durable Goods number is released at the same time. This excludes transportation items such as aeroplane orders as these can make the data particularly volatile on a month-on-month basis. While both data sets have shown sharp bounce-backs in the last three months following their unparalleled slump in May, analysts are expecting Durable Goods to rise just 1.1% this time, well below the previous month’s rise of 11.4%. Core Durable Goods is expected to rise by 1.0% against +2.6% previously.

Why the data matters

So why are the Durable Goods numbers important? Well there’s no denying that next week’s Non-Farm Payroll update (the last before the US Presidential Election takes place on 3rd November) will eclipse it in terms of significance. Getting America back to work is a key aim for President Trump and the US Federal Reserve, but the closer we get to the election, the more important every piece of US economic data becomes. Mr Trump has spent the last four years boasting about his management of the economy. Everything looked fine until the coronavirus hit with the US enjoying its lowest unemployment rate in over fifty years. Then the pandemic sent the economy reeling. This led to a sharp drop in President Trump’s poll ratings.

Biden leads polls

As unreliable as polls can be, they currently give Donald Trump’s challenger, Joe Biden, a decent lead. The latest results show Biden with average leads of more than six points in the national polls and four points across the battleground states. He also has substantial leads with a clutch of important demographic groups. For instance, he’s 16 points up with women, 20 points up amongst graduates, 39 points ahead among Hispanic and Latino voters and has a lead of 67 points with African Americans.

Trump trusted with the economy

Yet there’s another side to this. When the polling focuses on specific issues to do with the US economy, Trump has the upper hand. In a recent poll commissioned by NBC and the Wall Street Journal, the president leads Biden by 10 points on the economy, 9 points on dealing with China and 2 points on crime and violence. Mr Trump also leads his challenger by 16 points on immigration. On the other hand, Joe Biden has the edge on healthcare, coronavirus and race relations. But the real worry for the Democrats is that when voters are asked what their biggest concern is when it comes to voting, they choose the economy by a full 16 points ahead of coronavirus. This is a problem for the Biden campaign as the majority of people asked in this poll believe that the economy would deteriorate under the Democrats.

Poll reliability

If there’s one thing the polls have taught us over the last four years, that is how predictably unreliable they are. Just consider how misleading most were ahead of the last presidential election in 2016 and the referendum on the UK’s continued membership of the European Union. This is why many forecasters keep a very close eye on the betting markets. While far from infallible, this is where real people back their judgement with real money. Comparing the polls and the bookmakers this time round, the pollsters give Biden around a 75% probability of winning the presidency. But the betting odds suggest the race is much closer. Oddschecker.com calculates that current UK betting prices (political gambling is illegal in the US) give Trump a 45% chance of winning and Biden around 55%. The percentage of all bets backing Donald Trump has fallen to 52% this month, down from 58% in August and Joe Biden's share is up to 40% from 33.5% over the same period. While the gap between the two has narrowed significantly, it’s worth noting that in overall money terms, 80% of all funds wagered so far have been for a Donald Trump win, with only 18.6% backing Biden.

The image shows a list of subjects ranked in order by the number of times they are mentioned by social media

Social media

When we analyse the data provided by our Smart News widget, we see a similar disparity in popularity. Despite the election being a two-horse race between a couple of highly entertaining and voluble characters, social media mentions of Donald Trump vastly outnumber those of Joe Biden. This is significant given that this election is proving to be even more polarising than the 2016 contest.

As you can see from our market screener, Donald Trump comes second (admittedly by quite a distance) only to coronavirus as a discussion subject across social media on Smart News. Joe Biden comes in 8th, beaten by a slew of political topics across the UK, and mentions of Tesla. In fact, Trump gets over five times as many mentions as Biden. Now it may help that ‘The Donald’ has a predilection for tweeting and is already ensconced in the White House. But there’s no denying that he attracts the most attention. We will continue to monitor the popularity of the two candidates across social media and see if there’s a connection between this and the movement in betting odds.

In the meantime, make sure you keep up to date on all the social media that’s important to financial markets. Simply click on the Smart News widget at the bottom right of our trading platform. Here you can follow specific feeds and even create your own from your watchlists. Then you can follow the news as it happens in real-time.

 

 

 

 

 

 

 


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