At this time of year, baseball normally would be ending its marathon 162-game regular season and be about to begin postseason play, culminating in the World Series at the end of October. This being 2020, nothing is normal. After a Covid-abbreviated 60-game regular campaign, an expanded roster of 16 teams will vie in the playoffs, with the World Series winding up in Arlington, Texas, home of the Rangers, a team that won’t even be in the playoffs.
The U.S. presidential race also enters its final and most crucial stage this week, with Republican President Donald Trump facing his Democratic challenger, former Vice President Joe Biden, in their first debate on Tuesday evening. That will be the culmination of a seemingly endless process, even longer than a normal baseball campaign, that got under way with the first debate among the Dems’ contenders (and not a few pretenders) back in mid-2019. In comparison, an elephant’s gestation period is 18 to 22 months, and it takes 11 to 14 months for a donkey’s foal to emerge.
The presidential and congressional elections have been rumbling in the financial markets’ background for weeks, but are moving to the forefront now. Friday also will bring the September employment report, the final jobs data to be released before Election Day, Nov. 3. The economic numbers this time might affect the political world even more than the markets, given the importance of voters’ pocketbooks on their election decisions.
Election Day this year is a misnomer, however, because counting the ballots could extend for days and weeks as a result of expanded mail ballots and early voting. The uncertainty from what could be a delayed and contentious tally is expressed in the pricing of options well beyond Nov. 3.
The graph of implied volatility of at-the-money options on the S&P 500 shows a “kink” in contracts expiring in two-to-three months, says Peter Cecchini, founder of AlphaOmega Advisors and former global chief market strategist at Cantor Fitzgerald. After that, the curve slopes downward, indicating a perception of receding risk. A year ago, in contrast, the volatility curve sloped gently upward to represent slightly greater risk on options expiring on a more distant date.
“Of course, it’s not just the election,” he writes in an email. “Since then, there’s been a pandemic and recession.” Federal Reserve Chairman Jerome Powell has been especially explicit in calling for additional fiscal policy assists for the economy, which Cecchini suggests reflects a lack of “monetary policy space,” with the central bank already pinning its federal-funds target rate near 0% and buying $120 billion of Treasury and agency mortgage securities each month. Further adding to the options market’s disquiet is Trump’s refusal to pledge a peaceful transfer of power should he lose the election, Cecchini adds.
The chances of a pre-election fiscal package are far from certain, especially with the coming contentious confirmation fight over the Supreme Court vacancy left by Justice Ruth Bader Ginsburg’s death. However, Treasury Secretary Steven Mnuchin said on Thursday that he and Democratic House Speaker Nancy Pelosi are continuing negotiations over a new stimulus bill. Democrats are drafting a $2.4 trillion measure, smaller than the $3 trillion-plus Heroes Act passed by the House in May, but still far larger than what Republicans have been willing to support.
The GOP has resisted another multitrillion-dollar deal since recent economic data portray an apparent sharp, V-shaped recovery. Early estimates of the September jobs numbers to be reported on Friday call for an increase in nonfarm payrolls of 850,000 to 900,000, a robust gain but shy of the previous month’s 1,371,000 jump. (Hiring of temporary census workers boosted August’s payrolls by 240,000, while 40,000 of them were let go in September, according to Capital Economics’ estimates.)
The effects of the federal fiscal relief thus far, notably the $2.3 trillion Cares Act, are waning, with the end of $600 weekly supplemental unemployment benefits in August. With prospects of further income support fading, Wall Street economists are sharply lowering their growth forecasts for the year’s final quarter. Goldman Sachs cut its fourth-quarter real gross domestic product growth number in half, to 3% from 6%. JPMorgan trimmed its estimate to 2.5% from 3.5%.
To be sure, that would follow what could be a huge 30% annualized rate of expansion in the current quarter, which would still fall short of the 31.7% annualized contraction in the second quarter, when much of the U.S. economy was shut down.
While the markets will be watching the world of politics, financial and economic variables might have more impact on the presidential outcome. According to a new model constructed by Strategas’ Washington policy strategy team led by Dan Clifton, the incumbent party candidate’s popular vote results have been accurately predicted by four variables. These are the S&P 500’s performance three months ahead of Election Day; the value of the dollar (weaker being better); the incumbent’s approval rating; and the state of the economy.
Strategas’ model has predicted the popular vote of the incumbent party’s candidate within 0.75 of a percentage point since 1988. (Excluding the 2008 election during the Great Financial Crisis, the margin was 0.18 of a point.) Of course, Al Gore and Hillary Clinton won the popular vote in 2000 and 2008, respectively, but lost in the Electoral College.
This model shows the current race tighter than the polls, which have Biden leading Trump by 6.5 points, down by about a point in the past month, according to the RealClear Politics Poll Average. But “Trump’s trend has been falling in September, with equities selling off and the dollar rising,” according to a Strategas client note.
That’s just a snapshot of the current conditions, they emphasize. The race’s tightening coincides with fewer new Covid-19 cases, shifting voters’ attention to the economy, the Supreme Court, and law and order, they add. But a renewed flare-up in Covid could move the emphasis back to Trump’s handling of the pandemic.
If 2020 has shown anything, a lot can change in a month.
Write to Randall W. Forsyth at firstname.lastname@example.org
Popular political Twitter accounts frequently use the refrain "Twitter is not real life," and data from a recent CBS News poll backs that up with just 29% of respondents saying they use Twitter to follow the campaign.
But as one communications professor put it, Twitter plays an "outsized role" in politics today as many politicians and news organizations engage on the platform regularly.
According to the recent CBS News Battleground Tracker poll, just 14% of that 29% who use Twitter said they use it a lot. Half of voters say they use other social media sites like Facebook, Snapchat and Instagram to follow the race.CBS News
Of those who do use Twitter to follow the election, they tend to be younger and more of them say they are voting for Joe Biden.CBS News
Twitter users only make up a small portion of the population. According to the company's latest earnings report, the platform said it had 36 million daily active users in the U.S. during the second quarter of 2020. That's only about 9% of the entire country.
However, Twitter is a crucial part of the daily routine for most public officials and for journalists.
"Twitter plays an outsized role in U.S. politics and U.S. political media," said Shannon McGregor, an assistant professor of communications at the Hussman School of Media and Communication at the University of North Carolina at Chapel Hill.
"Just the platform itself and the fact that it is such an insular bubble of political users and news media users, it can be sort of a self-reinforcing loop in terms of limiting the range of perspectives, potentially that journalists or political actors are exposed to and reinforcing those, I would say, polarizing ideas," McGregor said.
When it comes to actually posting about candidates, only 35% of registered voters say they share information on any online platform, including Twitter and Facebook. That breakdown is about the same no matter which major party candidate they're voting for.
About half (49%) of people who do post about their candidate say they use Twitter to follow the campaign at least some of the time, while more than three quarters (77%) use Facebook or other social media platforms.CBS News
When broken down by ideology, those who post tend to be more extreme in their views. People who identified as very liberal or very conservative were more likely to post about their candidate.CBS News
All of this tracks with what we're seeing in key states like Florida and Texas, where about a third of voters use Twitter to follow the election and those people tend to be younger.
"It's not as if that huge percentage of people not using Twitter means Twitter isn't important in the election," McGregor said, "It's probably more important than it should be because of who is on it, even if it's not a majority of registered voters."
Over the past few decades, whenever a Republican president puts up an important judicial nominee — especially a Catholic one — we go through the same routine. Some Democrat accuses the nominee of imposing her religious views on the law.
“The dogma lives loudly within you,” Sen. Dianne Feinstein notoriously told Amy Coney Barrett in a 2017 confirmation hearing. Then Republicans accuse Democrats of being religious bigots. Then the nominee testifies that her personal opinions or religious faith will have absolutely no bearing on her legal judgments.
This unconvincing routine gets us no closer to understanding two important questions: How does faith influence a person’s political views? How should we look at religiously devout people in public life?
To the extent that I have answers to these questions it’s through my own unusual experience. I came to faith in middle age after I’d been in public life for a while. I would say that coming to faith changed everything and yet didn’t alter my political opinions all that much. That’s because assenting to a religion is not like choosing to be a Republican or a Democrat. It happens on a different level of consciousness.
When I was a kid, I was raised, like most people in our culture, on certain stories: Moses leading the Israelites out of oppression, little David slaying Goliath, Ruth swearing loyalty to Naomi.
During my decades as an atheist, I thought the stories were false but the values they implied were true. These values — welcome the stranger, humility against pride — became the moral framework I applied to think through my opinions, to support various causes. Like a lot of atheists, I found the theology of Reinhold Niebuhr very helpful.
About seven years ago I realized that my secular understanding was not adequate to the amplitude of life as I experienced it. There were extremes of joy and pain, spiritual fullness and spiritual emptiness that were outside the normal material explanations of things.
I was gripped by the conviction that the people I encountered were not skin bags of DNA, but had souls; had essences with no size or shape, but that gave them infinite value and dignity. The conviction that people have souls led to the possibility that there was some spirit who breathed souls into them.
What finally did the trick was glimpses of infinite goodness. Secular religions are really good at identifying some evils, like oppression, and building a moral system against them. Divine religions are primarily oriented to an image of pure goodness, pure loving kindness, holiness. In periodic glimpses of radical goodness — in other people, in sensations of the transcendent — I felt, as Wendell Berry put it, “knowledge crawl over my skin.” The biblical stories from Genesis all the way through Luke and John became living presences in my life.
These realizations transformed my spiritual life: awareness of God’s love, participation in grace, awareness that each person is made in God’s image. Faith offered an image of a way of being, an ultimate allegiance.
But when it came to forming opinions or writing columns, I was still in the same business. Sure, my style of thinking changed a bit. I spent more time listening, trying to discern how I was being called. I began to think with my heart as much as my head. (That could just be male middle age.) But my basic moral values — derived from the biblical metaphysic — were already in place and didn’t change that much now that the biblical stories had come alive.
My point is there is no neat relationship between the spiritual consciousness and the moral and prudential consciousnesses. When it comes to thinking and acting in the public square, we believers and nonbelievers are all in the same boat — trying to apply our moral frameworks to present realities. Faith itself doesn’t make you wiser or better.
When it comes to judges, I don’t believe any operate without a moral framework, like perfect legal automatons. I don’t believe faith alone points any of them to concrete answers. Look at how judges from the same faith come out all over the map on all issues. Look at how, deep down, the anti-abortion Catholics you know are driven by intellectual and moral conviction, not by mindless submission to Rome.
And to be honest about it, our worldly connections are usually more influential than our faith commitments when it comes to our political and professional decisions. If you want to know how Amy Coney Barrett is going to rule, pay more attention to the Federalist Society than to People of Praise, her Christian community.
In a society that is growing radically more secular every day, I’d say we have more to fear from political dogmatism than religious dogmatism. We have more to fear from those who let their politics determine their faith practices and who turn their religious communities into political armies. We have more to fear from people who look to politics as a substitute for faith.
And we have most to fear from the possibility that the biblical metaphysic, which has been a coherent value system for believers and nonbelievers for centuries, will fade from our culture, the stories will go untold, and young people will grow up in a society without any coherent moral ecology at all.
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