Trump’s in the box seat, ahead of the first debate

We’re five months out from the US presidential election and the campaign is set to heat up next week.

Joe Biden and Donald Trump will face off in the first presidential debate of 2024 on the evening of June 27.

The 90-minute event will take place at CNN’s studios in Atlanta, Georgia, a key battleground state.

It’ll be televised at 1:00pm on Friday here in New Zealand so if you’ve got no Matariki plans, there you go.

I know what you’re thinking. It’s way too early in the year, isn’t it?

I’m sure the US Commission on Presidential Debates would agree.

Having scheduled all the election debates since 1988, it’s had dates and locations locked in (for September and October) since late last year.

While it breaks with tradition to go three months earlier, there’s hardly anything normal about this election.

Joe Biden and Donald Trump were both nominated much earlier than usual, and they’re already the oldest candidates ever (from the major parties).

At 81, Biden is the oldest president in history and if Trump (who turned 78 last week) wins, he’ll surpass Biden as the oldest person ever elected.

This is the first rematch since 1956, and the first between two who’ve both been president since the 1890s.

Oh yeah, one of the candidates is a convicted felon now too. That’s definitely a first.

Biden will be hoping an early debate will revive his campaign.

Trump is ahead in the polls, and Sportsbet is paying $1.62 for a Trump victory compared with $2.88 for a Biden win.

That’s a little unusual.

In 200-plus years of US elections, the incumbent party has won 58 per cent of the time. When the sitting President is running, that increases to 69 per cent.

Biden should be in pole position, at least according to history, but he’s not and the clock is ticking.

His approval rating, which has slumped to a low of 38 per cent, is a major problem.

That’s well below the levels that typically point to re-election.

In the past 75 years, the only presidents who’ve fallen that low at the same point in their tenure are Jimmy Carter and George H.W. Bush, just before they were voted out in 1980 and 1992.

It’s surprising to see Biden languishing at a time when the US economy has been so strong.

The unemployment rate is just four per cent, well below the long-term average of 5.7 per cent.

It’s been at that level or less for 30 consecutive months now, a winning streak we haven’t seen since 1969.

However, for many Americans this is overshadowed by the highest cost of living pressures in decades.

The annual inflation rate hit 9.1 per cent in 2022, the highest since 1981.

Inflation has averaged 5.1 per cent since the last election, compared with just 1.9 per cent during Trump’s four years in office.

That isn’t necessarily Biden’s fault, but it happened on his watch and there’s a good chance it could lose him the election.

For investors, this could mean some portfolio fine-tuning is in order.

If Trump wins, he’ll want to reduce taxes, in part by extending provisions from the 2017 Tax Cuts and Jobs Act, which are scheduled to sunset in 2025.

We might also see changes at the Federal Reserve, with Trump likely to want someone more dovish than current chair Jerome Powell (whose term ends in May 2026).

That could mean lower interest rates (and potentially a weaker US dollar), while at the same time it risks another wave of inflation.

Trump would take a more hardline stance on immigration, and he’d be expected to ramp up pressure on China too (even though Biden has left many of the Trump-era tariffs in place).

Less regulatory oversight and lower capital requirements could also come with a Trump second term, which would benefit the banks and financials.

The renewable energy industry could be a key loser, with Trump suggesting he would repeal all the Biden administration’s green energy mandates immediately if elected.

We’ll need to monitor the potential consequences as policy plans firm in the months ahead.

However, the impact of a victory for either candidate will be diluted if the winning party doesn’t win a majority in Congress.

If I had to guess the outcome today, I’d say Trump wins by a slim margin, but with gridlock in a divided Congress, limiting how much he can do.

There’s still a long way to go, but for now sit back and enjoy the first debate in what is sure to be an intriguing election campaign.

Market Insights enewsletter

Keep up to date with our fortnightly Market Insights enewsletter. Our research team provide timely and regular commentary and analysis on market developments, understanding investment jargon, and the impact of current events.

Subscribe Now