A Comprehensive Guide to the 2024 U.S. Presidential Election

Political

Summary:

The United States is set to hold its presidential election on November 5, 2024. Marking the 60th quadrennial presidential election in U.S. history, this will be the first election following the post-2020 redistricting cycle and the reallocation of electoral votes. The winner will be inaugurated on January 20, 2025. As the election draws nearer, the political landscape in the United States is becoming increasingly vibrant.

The U.S. presidential election process primarily consists of five stages. The first step is candidate registration for the presidential election, where individuals announce their intention to run. The second step involves the party primaries to determine the presidential nominees. The third step is the general election campaign, where the nominees vie for votes. The fourth step is the voter casting of ballots. The final step encompasses the electoral college voting and the presidential inauguration.

Candidate Registration

From a procedural standpoint, any United States citizen who is at least 35 years old, has been a resident in the U.S. for at least 14 years, and was born in the country is eligible to register as a presidential candidate. However, due to the high financial costs associated with running for the presidency, in practice, only the Democratic and Republican parties are able to effectively enter the campaign phase. Therefore, attention is primarily focused on the nomination processes of these two major parties.

Following registration is the primary election phase.

Primaries and Party Presidential Race

As political parties ultimately field a single candidate to represent them in the presidential race, some aspirants register early to garner support within their party. During the registration phase, candidates actively engage in public appearances to express their views, and media organizations arrange televised debates for candidates to showcase their personalities and build popularity. A convention for both parties is that the primary elections typically commence in Iowa.

The most critical part of the primary process is Super Tuesday. "Super Tuesday" is a Tuesday in February or March of an election year when multiple states hold their presidential primary elections simultaneously. This practice emerged as a way for states to increase their influence by jointly holding primaries on the same day. The victors on Super Tuesday are often the presumptive nominees for their respective parties.

Primaries generally span from January to June. Entering July and August, both parties convene their National Conventions to confirm their presidential and vice-presidential nominees. The campaign then moves into its third and most crucial phase: the general election campaign between the nominees of the two parties.

During this stage, the candidates from both parties conduct nationwide campaigns, articulating their policy positions on domestic and international issues to secure votes.

Campaigns require funding. These funds are typically raised through two channels: crowdfunding websites created by the candidates and Political Action Committees (PACs). While the sources of these funds can remain undisclosed, foreign citizens, governments, or corporations are prohibited from contributing. The funds are commonly used for online and offline advertising, social media promotion, televised debates, nationwide rallies, opinion polls, and other activities to bolster the candidates' momentum.

Preparations for the campaign continue until the day after the first Monday in November, when the presidential election reaches its climax with the official commencement of voting.

Voting

In the United States, the voting process is conducted through the Electoral College system. To put it simply, when U.S. voters cast their ballots in a presidential election, they are not directly voting for the president but rather for electors who have pledged to support these candidates.

There are a total of 538 electoral votes across the nation, comprising 100 votes for Senators, 435 for Representatives, and 3 for the District of Columbia. Senators are allocated two per state, with 50 states in total, while Representatives are determined based on each state's population, with approximately one Representative for every 500,000 residents, and at least one Representative for states with smaller populations. This means that while each state has an equal number of Senate seats regardless of size, the number of House seats is distributed proportionally based on population.

Voters in each state will vote at polling stations to elect "electors," who are responsible for casting votes for the president. A candidate must secure 270 electoral votes to win the election.

There is a rule in the Electoral College voting known as the "winner-takes-all" system. This means that all of a state's electoral votes are cast for the individual who wins the popular vote in that state. Only two states, Maine and Nebraska, allocate their electoral votes proportionally based on the percentage of votes each candidate receives within the state. This is why presidential candidates primarily target specific "swing states."

Electoral College Voting Process

The voting process is divided into two stages: The first is the general election held in November, which is commonly referred to as Election Day. The second stage occurs on the first Monday after the second Wednesday in December with the meeting of the Electoral College.

This bifurcated process is a requirement of the Electoral College system: nominally, the presidential election in November is actually about electing "electors" who represent the voters. The actual election of the president takes place on the first Monday after the second Wednesday in December, when the electors cast their votes to determine the president.

Discrepancies between the electors' votes and the popular vote are highly unlikely. The use of the word "highly" rather than "never" stems from the fact that 17 states do not bind their electors. These states impose no penalties for faithless electors, which means that electors in these states are free to vote according to their own conscience. Historically, since 1948, there have indeed been 16 instances of faithless electors in the United States, where the electors' choices deviated from the popular vote results in their states.

Excluding such unexpected factors, the outcome of the general election can be calculated on Election Day in November based on the results from each state's voting.

Congressional Elections

While presidential elections occur every four years, congressional elections are held biennially, ensuring that there is always an overlap in timing between the two.

The rules and procedures for congressional elections vary across states and at the federal level, with a two-year electoral cycle. Due to term lengths, the House of Representatives (with a two-year term and 435 seats) undergoes a complete turnover every two years, while the Senate (with a six-year term and 100 seats) rotates approximately one-third of its seats every two years.

Members of the House are apportioned based on the population of each state. Every state is guaranteed at least one Representative, with more populous states having a greater number of Representatives. Redistricting, which is typically managed by state legislatures, can often involve disputes and litigation.

In the Senate, each state, regardless of population, has two Senators who are directly elected by the voters. Prior to 1913, Senators were elected by state legislatures.

Congressional elections primarily use the first-past-the-post system. A candidate who receives the most votes in their respective district is elected. This means that in both House and Senate elections, candidates do not need to secure more than 50% of the vote; they only need to win among their competitors.

Voters have multiple avenues to cast their ballots, including:

In-person voting: Voting at designated polling places on Election Day.

Early voting: Many states allow voters to cast their ballots during a specific period before Election Day.

Absentee voting: Voters can apply for absentee ballots to participate in the election if they are unable to be present on Election Day.

Congressional elections are typically held on the first Tuesday of November each year. Results are usually announced shortly after the election. However, due to mail-in and early voting, final results may take days or even weeks to confirm.

When these two types of elections coincide, voters often compare the image and stance of presidential and congressional candidates when making their voting decisions. If voters have a strong identification with the presidential candidate, they may be inclined to support congressional candidates from the same party or with similar positions.

As a result, a "double win" scenario for a political party is possible, where the candidate wins the presidency and the party gains majorities in both chambers of Congress (51 seats in the Senate and 218 seats in the House). Such a situation can effectively reduce friction and resistance in the policy-making process.

Swing States

The concept of swing states is crucial in American elections, referring to states without clear party leanings or unstable electoral landscapes (where candidates' popularity margins are extremely narrow). Given the balanced distribution of Electoral College votes between solidly partisan states, the votes from swing states become pivotal in determining victory.

Under the Electoral College system, even marginal victories in swing states translate to significant advantages due to the "winner-take-all" system, awarding all the state's electors to one candidate.

Parties concentrate resources in swing states to boost competitiveness, while candidates tailor policies to meet voter demands. Stance adjustments based on local feedback are applied accordingly to attract support.

These states mainly cluster within the Rust Belt and Sun Belt regions, with traditional union-supporting Rust Belt leaning Democrat, and the Sun Belt leaning Republican.

Questioning Vote Counts

U.S. elections are managed independently by states, and variations in voting methods and equipment can lead to discrepancies or disputes. Electronic fraud or human errors occur, especially in electronic voting or mail-in ballots. In the past, this happened usually in key states.

Once this happens, candidates or parties may legally challenge results, requesting recounts at cost. In many states, automatic recounts occur if results fall within certain margins (often fractions of a percent). Automatic recounts could be manual or calculated by computers, determined by local regulations.

If there are serious doubts about the validity of the votes, legal recourse is available. This often entails filing lawsuits in state or federal courts, demanding scrutiny of ballot management procedures, voter eligibility, and any instances of electoral misconduct.

Should questions arise concerning the administration or tallying of votes, political parties or individual candidates might petition for independent observers to supervise the recount process. Moreover, some jurisdictions permit independent audits of the entire electoral process to guarantee both vote accuracy and the integrity of election protocols.

In cases of significant contention, the government or independent bodies may initiate investigations to examine whether there were any violations or irregularities during the electoral process. Such probes are typically exhaustive, encompassing reviews of voter registration, voting records, and vote tabulations.

Tie

A tie occurs if neither candidate secures a majority of the 538 electoral votes (270 required), leaving no immediate victor via the Electoral College. At this juncture, the House of Representatives determines the President. Each state delegation gets a single vote, and a candidate winning the backing of more than half of the states (26) becomes the President. Should the deadlock persist, a special session of the House in early January will provide a resolution.

Meanwhile, the Vice President is elected by the Senate, where each Senator casts a vote. The candidate securing a majority wins the vice presidency.

In the context of the 2024 U.S. election, Trump and Harris embody policy divergences between the Republican and Democratic parties. Beyond reflecting personal leadership styles, their platforms unveil starkly different visions for America's path forward.

Candidate's Policy Proposals

Amidst the 2024 U.S. election landscape, Trump and Harris encapsulate the policy contrasts between the Republican and Democratic parties. Their respective policies reflect not just governing personas but also distinct views on America's future trajectory.

Broadly speaking, Trump's 2024 campaign emphasizes bolstering border security, large-scale deportation measures, and reviving his "America First" economic doctrine. This includes imposing tariffs on imported goods, restricting Sino-American trade relations, and additional tax cuts. He advocates electoral reform, demanding stringent voter identification and limiting mail-in ballots. His socially conservative stance endorses restrictions on transgender rights and curtails support for green energy, aiming to reinforce fossil fuel supremacy.

Conversely, Harris expands upon and advances Biden's progressive agenda, spotlighting social equity and climate action. Her platform supports expanding healthcare access, lowering prescription drug prices, and aligning environmental policies with The Paris Agreement and clean energy initiatives. Harris champions a higher minimum wage, paid family leave, and eradication of LGBTQ+ discrimination, pushing for more inclusive social policies. On foreign affairs, she advocates for multilateral cooperation, reinforcing international coalitions, particularly in counterbalancing China's influence in the Indo-Pacific region.

Concerns of Voters

During election periods, several core issues command significant attention from voters. Key concerns include the economy, immigration, reproductive rights, the future of democracy, and climate change.

Economy and Inflation: The economy stands as a primary concern for voters, especially amid inflationary pressures, rising housing costs, and tepid economic growth, driving many to seek solutions for job creation and wage hikes. Economic matters remain pivotal across party lines, notably regarding wage gains and cost-of-living adjustments.

Trump garners greater favor here. Many believe his policies on tax cuts, employment boosts, and restrained government spending will help alleviate inflationary strain. Republicans, in particular, laud his "America First" approach. By contrast, Harris focuses on expanded welfare programs and minimum wage hikes, advocating taxes on high-income earners and corporations to bridge income disparities—positions less appealing to voters wary of economic stagnation.

Immigration: The immigration issue is more controversial in the 2024 election than ever before, particularly regarding border security and illegal immigration. Republican voters are highly concerned about immigration enforcement, while some Democratic voters support comprehensive immigration reform that strengthens border security and provides a pathway to legal residency for certain immigrants.

Trump has taken a hardline stance on immigration policy, advocating for the mass deportation of illegal immigrants and increased border security measures, a position that has garnered widespread support among Republican voters who are highly focused on immigration issues. Harris, on the other hand, advocates for comprehensive immigration reform that enhances border control while also providing legal immigration pathways, and she opposes family separation policies. Her immigration stance has support among Democrats and some median voters, but it is not as popular among voters seeking tougher policies as Trump's is.

Abortion Rights: Abortion rights have become a major social issue in the 2024 election, especially after the Supreme Court overturned Roe v. Wade in 2022. Democratic candidates advocate for the restoration of nationwide abortion rights, while Republican candidates tend to favor leaving the decision on abortion to the states.

On the issue of abortion, Harris enjoys more support than Trump, particularly among Democrats and female voters. Since the Supreme Court's decision to overturn Roe v. Wade, Harris has called for the restoration of nationwide abortion protections and has urged that this right be enshrined in federal law. Trump's position on this issue is somewhat ambiguous, as he supports delegating the abortion issue to the states, which has created some divisions among conservative voters.

Democracy and Electoral Integrity: Many voters are concerned about the stability of democratic institutions, particularly regarding election integrity, political polarization, and electoral reform. This reflects a decline in public trust in political systems and a call for electoral reform.

Trump's hardline stance on election integrity, including the implementation of strict voter ID laws, has garnered support from many conservative voters; however, some voters worry that his rhetoric may exacerbate political polarization. Harris, on the other hand, advocates for the protection of voting rights, opposes legislation that restricts voter participation, and seeks to enhance electoral transparency, which is more popular among Democratic voters, but does not resonate as well with those emphasizing election security compared to Trump.

Climate Change: Climate policy is particularly important among young voters and Democratic supporters, with many calling for further promotion of clean energy and policies to reduce carbon emissions in response to the climate crisis. Although the significance of climate issues varies among different groups, it continues to receive attention on the electoral agenda.

Harris has earned considerable support on climate change, especially among young voters and Democratic constituents. Her climate policy includes supporting clean energy and continuing participation in the Paris Agreement, aiming to guide the transition to renewable energy through policy. In contrast, Trump leans towards traditional energy, opposes electric vehicle subsidies, and has rolled back environmental regulations. This stance is appealing to voters who emphasize economic development, but his support on climate issues is lower than that of Harris.

Overall, Trump has an advantage on economic and immigration issues, while Harris is favored on abortion rights, climate, and social justice issues. These differences reflect their divergent policy priorities, but it is important to clarify that there is a distinction between commitment and action. For instance, Trump did not successfully repeal the Obama's Affordable Care Act, and Biden continued Trump's tariffs on China while also failing to stop the construction of the southern border wall.

Part of the candidates' policy proposals aims to secure as many votes as possible, while fulfilling commitments faces strict institutional constraints and the necessity of honoring those commitments. This leads to another group - the median voters.

Median Voters

The median voters refer to those individuals who do not have a clear preference for any one party. Their voting intentions are more influenced by specific real-world issues rather than party ideology. They tend to focus on policies that can genuinely improve their lives, particularly in areas such as the economy, healthcare, education, and social justice. They play a crucial role in elections, especially in tightly contested races, where the voting tendencies of swing voters can directly impact the final outcome.

This has led to the development of the "Median Voter Theorem", namely, if voters rank candidates based on their proximity to their own political positions, the candidate closest to the median voters will be elected.

Whether from the Republican or Democratic Party, the core base primarily consists of median voters. Therefore, candidates often adjust their campaign strategies to attract median voters by promoting more inclusive policies or those that focus on real-world issues to broaden their appeal. This also explains why both candidates may appear ambiguous on certain issues. As an independent voting bloc, median voters wield significant influence in elections, and their voting intentions and concerns often determine the candidates' chances of winning.

After the Elections

On November 5, ET, known as Election Day, the majority of ballots will be counted. The media typically predicts the winner on the evening of that day or the following day, but the official results have not yet been confirmed.

From November 6 to 19, due to mail-in ballots, votes will continue to be counted after Election Day. In states that allow late ballots, mail-in ballots will arrive gradually. Except for Washington State, which has not specified a specific date, the latest permissible time in other states is November 19.

On December 16, members of the Electoral College from each state will gather in their state capitals to cast their votes, officially selecting the President and Vice President. The results of these electoral votes will directly determine the winner of the election.

On January 6, 2025, Congress will convene in a joint session to tally and certify the results of the Electoral College votes. Members of the House of Representatives and the Senate will formally count the electoral votes, and any objections must be accepted or rejected by Congress. The candidate who receives the majority of electoral votes will be officially declared the President.

On January 20, 2025, the new President will be inaugurated.

Risk Warnings and Disclaimers

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Economic

First, Spain, France and Germany revealed better-than-expected growth numbers in Q3. Germany even eked out an unexpectedly positive figure, which certainly helped – I wouldn’t say ‘to improve’ the mood but – to prevent sentiment from getting worse in the midst of a jungle of bad economic news, there. VW posted its least profitable quarter since the pandemic but said that they could avoid factory closures IF the workers accepted a 10% decrease to their salaries and the German unemployment change came in almost double the expectations, but seeing the German economy eke out that 0.2% advance in Q3 was a good surprise.

Now, the encouraging GDP figures came in with a cost: inflation in Spain and Germany came in higher than expected. Inflation in Germany crossed past the European Central Bank’s (ECB) 2% target and reached 2.4% in October.

The aggregate CPI update for Eurozone, due this morning, is expected to brush up against the 2% target. The combination of better-than-expected growth and higher-than-expected inflation weighs on accelerated rate cut expectations from the ECB. And the latter is positive for the euro. This is why the EURUSD tested the 1.0870 resistance, which matches the minor 23.6% Fibonacci retracement on the September to October selloff and the 200-DMA, but couldn’t clear it.

And the reason why it couldn’t clear it is because mixed data came in from the US. There, the GDP update came in slightly softer than expected, at 2.8% versus 3% printed previously, but consumer spending jumped from 2.8% to 3.7% defying the rising credit card debt and delinquencies, and more importantly, PCE prices fell to 1.5%, and core PCE prices fell less than expected but printed 2.20% – which now is very close to the Federal Reserve’s (Fed) 2% policy target. The September core PCE index is due today and is expected to show a further slowdown as well.

Soft landing: Achieved?

With the current data that we have in hand, some investors now argue that the Fed already achieved the soft landing that it was dreaming of. As such, the US dollar was weaker yesterday because the softening price pressures could allow the Fed to continue its rate cuts, but the downside remained limited because the data suggests that the cuts could be moderated. The ADP report showed yesterday that the US economy added 233K new private jobs last month, more than the double of 110K expected by analysts and was stronger than the number printed a month earlier. Of course, Friday’s official data will say the last word but Friday’s figures could also bring some positive surprises if the Boeing strike and hurricanes had a lighter than expected impact on the numbers. We will see.

For now, the US dollar remains bid despite yesterday’s weakness, the 2-year yield spiked higher – as the Fed doves scaled back their Fed cut bets. A 25bp cut at next week’s FOMC meeting remains on cards. The probability assessed to that is around 96%. But the Fed is not seen repeating the 50bp cut anytime soon.

Budget was …ok

In the UK, the budget day couldn’t give the pound the energy it needed to clear the 1.30 offers. The announcement went as smoothly as it possibly could – given the amplitude of the bad news. Reeves said that the country will raise taxes by £40bn pounds to boost spending on public services. The UK also announced earlier that they would boost gilt sales by almost £20bn this fiscal year. But the spending would be less than expected by the market. That brilliant management of expectations helped traders keep their nerves together. The UK’s 10-year yield spiked to 4.40% but the selloff in sterling remained contained as the Bank of England’s (BoE) hopes of seeing further inflation easing in the UK went up in smoke as increased spending pressures are now knocking on the door.

China and Japan

China posted a small but unexpected expansion in its manufacturing sector in October, a piece of news that may have help crude oil extend yesterday’s recovery, and the Bank of Japan (BoJ) maintained its policy unchanged at today’s meeting, as expected, and Governor Ueda pointed out concerns regarding the increasingly uncertain global economic outlook. But the board ‘remains committed to further rate increases if economic and price data align with its forecasts’ and that line capped the upside in the USDJPY limited, and gave some strength to the yen.

Earnings update

Microsoft and Meta released their Q3 earnings yesterday, after the bell, and the results were good. Microsoft posted a better-than-expected quarterly revenue growth, fueled by its cloud computing business and Office – which integrates AI capabilities. But the company projected slower quarterly growth in cloud revenue, highlighting its challenge in bringing data centers online quickly enough to meet the rising demand for AI services. Shares dropped 3.7% in the afterhours trading.

Similar with Meta. The company posted strong quarterly results, improved ad revenue thanks to AI, but the weaker than expected user number in Q3, and the plans to spend more on AI didn’t please investors. The shares fell 3% in the afterhours trading.

Today, it’s Apple and Amazon’s turn to go to the earnings confessional. And they should not only meet and beat expectations but came in with a solid forecast to keep enthusiasm going.

To stay updated on all economic events of today, please check out our Economic calendar

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Economic

Forex

USD: Dollar takes a back seat to overseas events

The DXY dollar index has softened a little this week – largely in response to overseas events. Here the third-quarter eurozone growth data and October German price data were stronger than expected and have prompted the market to scale back expectations of a 50bp ECB rate cut this December.

And this morning we have just seen USD/JPY drop nearly 1% on Bank of Japan Governor Kazuo Ueda's press conference outlining a plan to continue with rate hikes should the BoJ's forecasts be realised. Most recently the market had felt the BoJ would be less likely to hike on the back of uncertain political developments and potentially a more dovish make-up of the Japanese government.

That brings us to the dollar. Dollar strength this month has all been about a market positioning for a Donald Trump win and US rate spreads widening in favour of the dollar as the Rest of the World turns more dovish. Well, it seems that the ECB and BoJ may not be quite as dovish as some had feared – news that could potentially cap the dollar's rally for the time being. Given that background, a sticky core PCE deflator today – the Fed's preferred price gauge – at 0.3% month-on-month may not need to send the dollar that much higher.

DXY is currently on support at 104.00 and after one-way bullish traffic for over a month, may be due a modest correction to the 103.65 area.

EUR: 50bp from the ECB in December is not a done deal after all

Yesterday was a day for the ECB hawks. German and eurozone data surprised on the upside as did German October CPI. And the influential Isabel Schnabel said the ECB should not rush further rate cuts. This prompted around a 12bp repricing higher in the terminal rate for the ECB's easing cycle and finally saw the two-year EUR:USD swap rate differential narrow, supporting EUR/USD. The same dynamic could be present in the European morning should the eurozone October flash CPI surprise on the upside and again pare back expectations for the ECB rate cut in December. These still stand at 34bp.

EUR/USD could retest yesterday's 1.0870 high on today's European data – but a move up to 1.09030 might be a bridge too far given the pivotal US elections next Tuesday.

GBP: Sterling a little weaker as the dust settles on the budget

Labour's large tax-and-spend budget – described by some as an "old Labour" policy – is still reverberating across UK asset markets. Sterling briefly got a lift yesterday on the view that the budget was stimulative and that the Bank of England easing cycle would need to be repriced higher. However, as our UK economist James Smith concluded in his budget review piece, we suspect the BoE is unlikely to be swayed by the government's budget plans and we see the risk that yesterday's spike in short-dated sterling interest rates gets reversed.

At the same time, it looks as though Labour is sailing very close to the wind with its borrowing plans – with new Gilt supply coming dangerously close to £300bn for FY24/25 and FY25/26. EUR/GBP should be trading a little lower based on short-dated rate spreads and the reason it is not is probably because a modest fiscal risk premium is going back into sterling. Should eurozone CPI surprise on the upside today, EUR/GBP could move closer to 0.8400.

Over the medium term, we are slightly bullish on EUR/GBP because of the market under-pricing the forthcoming easing BoE cycle. And it now seems the UK budget may add to that trend if indeed a modest fiscal risk premium gets priced into the pound.

CEE: Region remains under pressure

Yesterday's GDP data for the third quarter disappointed, especially in Hungary, confirming a return to technical recession, but the data in the Czech Republic was also slightly weaker, below central bank expectations. Inflation numbers in Poland for October will be published today, the first in the CEE region. Our economists expect a slight pick-up from 4.9% to 5.1% YoY, one-tenth above market expectations. However, core inflation in particular surprised to the upside in September and may get more attention this time.

CEE currencies remain under pressure and we maintain a bearish view going forward. EUR/HUF moved to new highs and traded above 408 for a while yesterday. Weak GDP data did not help the situation and the rates market remains mixed. On the one hand, valuations show significant cheapness of HUF assets, on the other hand, the market is risk-off ahead of the US elections and not much willingness to take too much risk ahead of the risk event. Thus, we do not see much reason for improvement and approaching 410 EUR/HUF seems to be the next test, which could be an uncomfortable level for the central bank.

In Poland, it was only at the end of yesterday's trading that the POLGBs market reflected the surprisingly high deficit increase announced a day earlier and today we could see further reverberations of market fears of higher bond supply, exposing PLN as well. In the Czech Republic, the CNB blackout period starts later today and so far we haven't heard much. That means today is the last chance to see any headlines, but the 25bp November cut seems like a done deal.

To stay updated on all economic events of today, please check out our Economic calendar

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Economic

In focus today

In the euro area, HICP inflation data for October is released. With inflation data out from Spain, Germany, and Belgium, we track euro area HICP at 2.0% y/y today, above consensus expectations (cons: 1.9%) driven by broadly higher inflation also in core inflation, which we see unchanged at 2.7% y/y (cons: 2.6%). Most importantly, we will see the monthly increase in seasonally adjusted services prices (prior: 0.14% m/m s.a.). For ECB this will help determine if weak momentum continued into October. We also receive the September unemployment rate, which will be interesting following easing labour market dynamics, while unemployment rate has remained record-low at 6.4%

In the US, the Employment Cost Index for Q3 is due for release this afternoon. This is a key measure of labour cost pressures for the Fed. September monthly PCE data will also be released.

The US Presidential election is coming closer, and we will host a conference call on 6 November to give our quick take on the potential market implications of the election: Conference call on the implications of the US election for Global and Scandi markets.

Economic and market news

What happened overnight

In Japan, the BoJ kept rates unchanged as expected this morning but stressed its intention to keep hiking borrowing costs if the economy sustains a moderate recovery. The BoJ will prefer a wait-and-see approach ahead of the US presidential election next week and until the political situation after the ruling coalition lost its majority is more certain. We expect another hike in December, particularly because the BoJ might see it as necessary to support the yen. With inflation on target and consumers’ purchasing power heading slowly in the right direction, there is also an economically sound case for it, irrespective of the yen.

In China, October PMIs showed upbeat signs, with the composite PMI increasing to 50.8 driven by both manufacturing and non-manufacturing activities, which printed 50.1 (prior: 49.8) and 50.2 (prior: 50.0), respectively. This indicates that latest stimulus measures are helping pick up the economy.

What happened yesterday

In euro area, Q3 GDP rose 0.4% q/q beating expectations of a 0.2% q/q increase. The ECB estimated growth at 0.2% q/q in their latest projections, so the data comes as a pleasant surprise. Growth was driven by Spain which recorded a record 0.8% q/q expansion (cons: 0.6%, prior: 0.8%), France that got a boost from the Olympics with 0.4% q/q, and Germany that recorded rising activity of 0.2% q/q due to a downward revision of growth in Q2. However, growth outlook remains fragile as the manufacturing sector continues to struggle with declining activity and the service sector is moderating. The outlook for 2025 is dependent on consumption picking up as real income rises and an improvement in the industry. Currently, we are not seeing this, leaving downside risks to the outlook.

The higher-than-expected data on inflation and growth supports the case and our call for a 25bp cut by the ECB in December against a “jumbo” cut.”

In the US, Q3 GDP figure is mostly in line with expectations at 2.8% q/q SAAR (cons: 2.9%). The increase particularly reflected solid growth in private spending, showing that consumers remain resilient ahead of the US presidential election. ADP employment for October exceeded expectations with +233k (cons: +111k). September is revised slightly higher from +143k to +159k. ADP has usually been a mixed predictor for NFP, so a modest reaction might be reasonable.

In Sweden, we changed our call for the Riksbank meeting next week and we now expect a 50bp cut down to 2.75% (previously 25bp cut). This change follows the release of disappointing growth data earlier this week. The GDP indicator for Q3 reported a decrease of -0.1% q/q. Additionally, both the Riksbank’s company survey and the NIER survey have shown diminished expectations in the business sector. For a full preview ahead of next week’s Riksbank decision.

In the UK, the Labour government released their first budget. In line with our expectation, the budget provided some expansionary measures with funding sourced from large tax increases worth GBP 40bn and the change in debt measure estimated to provide around GBP 50bn. However, and importantly, borrowing is set to rise substantially averaging GBP 36bn each year over the next five years. We have long argued that a more expansionary budget could trim markets expectation for a December cut, which today’s events have provided support for. We continue to expect a 25bp cut in November and an unchanged decision in December.

Equities: Global equities were lower yesterday, driven by disappointing earnings and likely some de-risking ahead of the US election. In our opinion, macro data should not be blamed for the weak development yesterday, as most macro figures were strong, even in Europe where equities underperformed the most. Please also consider bond yields, which were marginally higher, as well as sector and style rotations; cyclicals performed well, quality underperformed, and minimum volatility was flat. This does not suggest a classic negative environment based on growth fears. Apologies for repeating ourselves here; this is expected given the massive number of factors currently at play, plus US election being less than one week away. In the US yesterday, Dow -0.2%, S&P 500 -0.3%, Nasdaq -0.6%, and Russell 2000 -0.2%. Asian markets are lower this morning, with Chinese stocks standing out on the positive side. European and US futures are also lower, led by the tech and growth segments of the indices.

FI: In a choppy session, driven by a heavy string of data releases, we saw yields selling off from the front end in a bearish flattening of the curves. The upside surprise to German inflation data took out 4bp of the jumbo rate cut discussion for December and thus now ‘only’ points to 31bp of ECB rate cuts in December. This combined with higher European growth (and above ECB projected Q3 development), means that a slower and more gradual approach was assessed as the most likely scenario by markets.

FX: EUR/USD trended toward the upper end of the 1.08-1.09 range on the back of euro area data that was better than feared. USD/JPY declined slightly, still hovering around 153 after the Bank of Japan’s anticipated decision to hold the policy rate at 0.25% this morning. EUR/GBP experienced a rollercoaster day in an eventful session for UK markets with the release of the Labour government’s first budget. NOK/SEK continues to move higher, driven largely by relative rate spreads as NOK-SEK spreads reach new wides. EUR/NOK drifted up to 11.90, while EUR/SEK neared 11.60.

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Warren Takunda

Economic

Speaking at an event in Pennsylvania, Trump set out his thoughts on how the US will work with the EU when it comes to trade - and it his comments supports current economic sentiment in Brussels - that it could cost Europe billions.

"I'll tell you what, the European Union sounds so nice, so lovely, right? All the nice European little countries that get together.

"They don't take our cars. They don't take our farm products. They sell millions and millions of cars in the United States. No, no, no, they are going to have to pay a big price," he said.

It comes as Trump previously proposed a potential 10% tariff on all European Union goods exported to the United States, which could profoundly impact Europe’s export-driven industries and disrupt its largest overseas trade relationship.

As EU exporters brace for possible obstacles, data from the European Commission underscores the economic vulnerabilities at stake, with Germany, Italy, and Ireland leading the list of countries most affected.

How crucial are European Union exports to the US?

As Euronews' Piero Cingari highlighted in his report for Euronews Business, although China surpassed the United States (US) as the European Union’s top goods partner in 2020, the US remains Europe’s largest overall trading partner when services and investment are included.

According to European Commission data, the European Union exported €502.3 billion in goods to the US in 2023, making up a fifth of all non-European Union exports.

Moreover, the European Union is a net exporter of goods to the US, with a positive goods balance of about €158 billion in 2023.

The American market is especially vital for major European economies like Germany, Italy, and Ireland,

Germany alone accounted for €157.7 billion in exports to the U.S. in 2023. Italy and Ireland followed with €67.3 billion and €51.6 billion in exports, respectively.

Which European sectors are most at risk?

European exports to the US are led by machinery and vehicles (€207.6 billion), chemicals (€137.4 billion), and other manufactured goods (€103.7 billion), which together comprise nearly 90% of the bloc's transatlantic exports.

According to the European Commission, these sectors were responsible for a significant trade surplus in 2023, with €102 billion in machinery and vehicles and €58 billion in chemicals.

Breaking down the export categories, medicinal and pharmaceutical products led in 2023 with €55.6 billion, followed by motor vehicles at €40.7 billion and medicaments at €36.1 billion.

Germany and Italy, as Europe’s leading producers of machinery and vehicles, face particular risk.

Automotive exports, a critical segment of Germany’s economy, could experience a drop in US demand due to price increases, further weakening an already stagnant the sector and jeopardising jobs.

Should a 10% tariff be imposed, these industries face potential loss of competitiveness due to an increase in final costs, risking production slowdowns and job cuts if US consumers turn to other markets for these goods.

For European industries, the threat of US tariffs comes at a time of existing economic strain, as the bloc’s manufacturing output has been consistently shrinking over the last two years.

Source: Euronews

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Cohen

Political

Economic

Shares of Trump Media rose more than 8% Tuesday after whipsawing in the company’s heaviest and most volatile trading day since going public.

The company majority owned by Donald Trump, which trades as DJT on the Nasdaq, experienced five separate halts within the first two hours of frenzied, high-volume trading.

The first five-minute halt occurred at 9:36 a.m. ET, when shares were trading up around 14%.

Trading was halted a second time at 9:42 a.m., with shares up nearly 9%. The company was halted again at 9:50 a.m.

When it was halted for a fourth time at 10:21 a.m., the stock was down more than 2%. Trading was halted again 10 minutes later.

The stock then turned positive, and closed up 8.76% at $51.51 per share.

Nearly 16 million Trump Media shares changed hands in the first 10 minutes of the trading day. By 10:15 a.m., the company had already surpassed its 30-day average trading volume of 35.1 million shares.

By 1:15 p.m., Trump Media’s volume surpassed 134 million shares — the highest level since October 2021, when the then-private media company announced plans to merge with the blank-check firm known as DWAC.

Trump Media Closes up 8% after Rollercoaster Trading Session with Heavy Volume, Several Halts_1

That merger was completed in late March, allowing the newly public Trump Media to trade on the Nasdaq. Trump Media’s current stock price remains below the company’s intraday peak from its trading debut.

Tuesday’s volatile session came after DJT stock had already surged more than 21% on Monday, also on extremely heavy trading volume.

Those gains added to a preelection stock rally that began in late September, after a monthslong sell-off that dragged the company’s share price below $12.

Just a few weeks later, Trump Media shares were trading at more than four times that price.

The stock as of Tuesday morning was up 224% so far this month, and is on pace for its best month since October 2021.

The company’s stock now far exceeds its recent peak in mid-July, when its share price soared after the Republican presidential nominee narrowly survived an assassination attempt.

Trump owns nearly 57% of the company, which operates the Truth Social platform. His stake at Monday’s closing price was worth upward of $5.4 billion, representing more than half of his on-paper net worth, according to Forbes.

At the closing bell Tuesday, the value of Trump’s stake had grown by nearly $500 million.

Despite losing hundreds of millions of dollars on scant revenue in recent fiscal quarters, Trump Media boasts a market capitalization above $10 billion.

Analysts believe the company’s many pro-Trump retail investors are buying its stock to support the former president, or bet on his odds of beating Democratic presidential nominee Kamala Harris.

Monday’s surge followed Trump’s major campaign rally at Madison Square Garden in New York City on Sunday.

The company’s gains have also coincided with political betting markets, such as Polymarket and Kalshi, tilting toward Trump over Harris in recent weeks.

Odds and gambling platforms do not use the same methodologies used by traditional political polling, and therefore are not substitutes for political polls. Critics have raised concerns that the election betting markets are being manipulated.

Source: CNBC

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Warren Takunda

Stocks

London stocks looked set for further losses on Thursday, having ended firmly in the red a day earlier after Labour’s first Budget in 14 years.

The FTSE 100 was called to open around 25 points lower.

Ipek Ozkardeskaya, senior analyst at Swissquote Bank, said: "The announcement went as smoothly as it possibly could - given the amplitude of the bad news. Reeves said that the country will raise taxes by £40bn pounds to boost spending on public services. The UK also announced earlier that they would boost gilt sales by almost £20bn this fiscal year. But the spending would be less than expected by the market.

"That brilliant management of expectations helped traders keep their nerves together. The UK’s 10-year yield spiked to 4.40% but the selloff in sterling remained contained as the Bank of England’s (BoE) hopes of seeing further inflation easing in the UK went up in smoke as increased spending pressures are now knocking on the door."

Investors will be mulling the latest data out of China, which showed that manufacturing activity expanded in October for the first time in six months.

According to figures released earlier by the National Bureau of Statistics, the official purchasing managers’ index rose to 50.1 from 49.8 in September, beating expectations for a reading of 49.9.

A reading below 50.0 indicates contraction, while a reading above signals expansion.

The sub-index for production printed at 52.0 for October, while the new orders index came in at 50.0.

The index for raw materials inventory was 48.2, remaining in contraction territory, while the employment index was 48.4.

Meanwhile, the non-manufacturing PMI rose to 50.2 in October from 50.0 in September.

In corporate news, energy major Shell posted a dip in third-quarter profits, weighed down by lower oil prices, although the decline was less steep than feared.

Adjusted earnings before interest, tax, depreciation and amortisation fell 5% on the second quarter, to $16.01bn, while adjusted earnings - Shell’s definition of net profit - declined 4% to $6.03bn.

That was notably better than the $5.36bn expected by analysts, however.

Haleon reported a 6.1% organic revenue increase in its third quarter, with balanced growth in price and volume/mix, driven by strong sales of power brands like Sensodyne and Advil across all regions.

The FTSE 100 consumer products group said its adjusted operating profit margin rose to 23%, supported by gross margin expansion and cost efficiencies, despite foreign exchange and the impact of acquisitions.

It also completed key divestments, raising around £0.8bn, and had returned over £1bn to shareholders through buybacks and dividends in the year-to-date.

Online grocery retailer Ocado Group confirmed speculation that it is appointing former Microsoft exec Adam Warby to replace chair Rick Haythornthwaite, who announced his resignation six months ago.

Warby, who is currently the chair of Nasdaq-listed executive search and management consultancy Heidrick & Struggles International, will join the company on 1 December.