The Election’s a Toss-up…

Voters don’t change their minds in October despite the occasional “October surprise.” Evidence shows that the debates don’t change many minds either despite their high profile.

Most voters make up their minds sometime between Labor Day and Oct. 1 based on overall impressions of the candidates without getting too bogged down in policy details.

One of the primary rules of politics is “You can’t beat something with nothing.”

Biden isn’t much, but at least he’s something. Voters perceive him as steady, experienced and somewhat of a “regular guy.” (Never mind that the reality is quite different and Biden is in a state of cognitive decline; it’s the perception that counts, not the reality).

Trump appears to be nothing. He has no program, no platform and no plan for the next four years.

Voters don’t blame him for COVID, but they will judge him by his response. Voters don’t blame him for the depression, but they will judge him by the recovery.

Right now, Trump is not responding well or showing leadership; he’s just blaming others and complaining about the Democrats.

We’ll learn a lot as Joe Biden picks a running mate and as the Democratic and Republican conventions approach in August. I won’t rule out a shock such as Democrats working behind closed doors to dump Biden in favor of someone they perceive as more electable, such as New York Gov. Andrew Cuomo, California Gov. Gavin Newsom, or popular favorite Michelle Obama.

But let’s consider the two different scenarios — a Trump win and a Biden win.

If Trump wins, the extent of Trump hatred and anti-Trump resistance will get worse, not better. The idea that the Trump-bashers will finally come to grips with reality and accept Trump as president (even one they don’t like) is fantasy.

The Trump-bashing has been a steady, never-ending 24/7 spectacle for the past four years. There’s no reason why the media, the Resistance and the Democrats in Congress can’t keep it up for another four years.

How about more impeachment hearings? (Don’t worry, those plans are already underway.)

The Antifa crowd will use a Trump victory as evidence that “democracy doesn’t work,” which will validate their violent tactics at least in their own minds. They’ll find plenty of supporters.

Get ready for more riots, urban looting and burning and “autonomous zones” in major cities by early next year if not sooner.

What about a Biden victory?

A Biden victory brings its own set of fiascoes waiting to happen. Biden’s cognitive capacity is clearly impaired at least to some extent. That can happen with age, sooner in some than others.

Supporters and the media have tried to cover up the Biden mental issues by saying he is “gaffe-prone” and that he has had a lifetime struggle with stuttering. Both statements are true and have been for decades.

But they don’t explain what we’re seeing now.

Biden can’t complete sentences, can’t remember well-known quotes, can’t construct a coherent argument and seems to drift off in the middle of answering a question. Those are all signs of a deteriorating mental capacity.

We’ll see how far this Biden-in-hiding can make it. The Democrats’ convention has already been turned into a “virtual” convention at which Biden can hide behind a teleprompter again.

The fall debates will be a huge challenge for Biden, except they may be rigged as to length, number and format to minimize the stress on Biden’s presence of mind.

Politics aside, the real problem is not the campaign but the election.

If Biden wins, his mental health issues won’t go away. We will have a cognitively disabled president with his finger on the nuclear war-fighting trigger.

Biden will pose a serious case for removal from office under the 25th Amendment. This was mooted for Trump, but it was based on animus, not health. In Biden’s case, the health threat is real.

This is why the vice presidential nomination is so important. When the vice presidential pick for Biden is announced (likely a far-left voice), investors should immediately think of that person as a de facto president now and actual president by 2022.

So there are your choices. Trump brings more social unrest, and Biden brings mental health issues that will lead to his removal. As they say in sports betting, “Pick ’em.”

I said earlier that if the election was held today, Trump would lose. But because so much can happen over the next four months, my forecast for the outcome of the presidential election is still a toss-up.

There are so many wild cards in the deck that will be played between now and Election Day. These wild cards include the strength of the economic recovery, the continuation of social unrest, a possible second wave of COVID-19, international hot spots, Trump’s petulance and Biden’s mental health.

Now, a toss-up is bad news for Trump because he had a 74% probability of winning as recently as January.

But that has gone by the boards as a result of the pandemic, the depression, the more recent riots and Trump’s inability to understand that a different type of leadership is required when the crisis is not strictly political.

The key takeaway is that the Trump-Biden contest is still basically 50-50.

The polls could simply be underestimating Trump’s support — a phenomenon sometimes referred to as the idea of the “hidden Trump voter.”

At the same time, Trump’s difficulties do not mean clear sailing for Biden. The biggest single variable in success or failure in electoral politics is not polling but turnout.

Even a candidate behind in the polls will win if his supporters turn out in force. Likewise, a candidate ahead in the polls will lose if his supporters stay home.

On that front, Biden will have great difficulty getting the “Bernie Bros” and other left-wing elements of the Democratic electorate to turn out on Election Day. There’s a noticeable lack of enthusiasm for Biden even among those who favor him in the polls.

These two trends — Trump’s lagging in the polls and Biden’s lag in enthusiasm — will help define the presidential race over the next four months.

In addition to the pandemic and the economy, which are the dominant factors, other campaign themes will include Trump blaming China for the pandemic and Biden attacking Trump’s handling of the pandemic.

Both candidates have a path to victory. For Biden, it’s keeping a low profile and hoping to coast to victory on the anti-Trump feeling in the country. For Trump, it’s getting past his petty feuds and laying out a vision for a second term.

In politics, something beats nothing every time.

The election will be close no matter what happens. That was always in the cards.

For investors, it’s important to know that the markets have not priced in a Biden victory. Biden has plans for higher taxes, more regulation and the Green New Deal.

It’s one more reason to lighten up on stocks and build cash reserves until we have more clarity on the election.

Regards,

Jim Rickards
for The Daily Reckoning