Phil Orlando: I'm Phil Orlando, Chief Equity Strategist, and this is a Washington on Wall Street update from Federated Hermes. The voting is completed, but the counting continues. So we don't have a President or a Senate just yet, but President Trump and Republicans performed much better than expected on Election Day yesterday. This defies the polls and the pundits for the second consecutive election cycle. They had forecast a landslide double-digit victory for Vice President Biden and a blue wave through both houses of Congress. That clearly didn't happen, as many of the big national polls failed catastrophically due to an oversampling bias error.
So, where are we right now? Trump won key swing states in Florida, Ohio, and Texas, but North Carolina, Georgia, Arizona and Pennsylvania, Michigan, and Wisconsin in the Rust Belt are all still close to call. A record 101 million votes, including absentee ballots, were cast before yesterday, so it may take the next several days to tabulate the mail-in ballots in these six key states to decide their results. Biden leads in Arizona and Wisconsin, while Trump is ahead in Georgia, North Carolina, Pennsylvania, and Michigan.
In the Senate, Republicans offset expected losses in Arizona and in Colorado, with flips in Michigan and Alabama, so Republicans are likely to hold onto their 53-47 Senate majority. Maine is still too close to call and one of the two Georgia seats is headed to a runoff election in January. In the House, it appears that the Republicans narrowed the Democrats' lead from 33 seats currently to about 10 seats. What caused the shocking early result?
It appears that the powerful economic rebound over the past six months from the deep pandemic recession mattered most to voters. So for now, we're counseling patience. Please allow the integrity of our election to be upheld as we proceed through the counting process. There's also likely to be recounts and litigation in coming days. Stay calm. We'll know more later this week.
Disclosure: Views are as of November 4, 2020 and are subject to change based on market conditions and other factors. These views should not be construed as a recommendation for any specific security or sector. Federated Advisory Services Company 20-30524 (11/20)