Randall Forsyth of Barron’s delves into potential implications of the FBI’s decision to revisit its investigation of Democratic presidential candidate Hillary Clinton’s email.
Whether anything will come of the newly discovered emails with Election Day just over a week away is, of course, unknown, as is just about everything else in this unprecedented presidential race. What is known is that this latest development has made the markets’ expectations of the U.S. election results far less certain—just as they were feeling more confident of a Democratic win of the White House and the Senate, with the Republicans retaining a majority in the House of Representatives, albeit a smaller one. In other words, status quo ante, Latin for “meet the new boss, same as the old boss.”
Of course, that sort of certainty is what markets prefer and what they have been increasingly assuming, perhaps a bit complacently. Stocks and the dollar slumped on Friday afternoon when news of the reopened FBI probe hit, while the Mexican peso—which has become the inverse indicator of GOP candidate Donald Trump’s chances—took a hit.
Prior to that, markets seemed to anticipate no big changes in Washington, D.C., amid a continued surge in mergers and acquisitions. October set a monthly record with nearly a quarter-trillion dollars’ worth of deals announced, according to Dealogic data reported in The Wall Street Journal. That’s also indicative of the salubrious financing conditions, with near-record stock prices and still historically low interest rates, as well as reasonable confidence that the political landscape won’t change radically.
At this point, the only absolute certainty seems to be that anything can happen, even though pundits contend a Brexit-style surprise is out of the question. While the reopened FBI probe got in under the wire to qualify as an October surprise, we offer no predictions here about what could happen in the days leading up to Nov. 8 and what the impact might be. The newly discovered emails came to light in devices from former Rep. Anthony Weiner and his wife, Huma Abedin, a top aide to Clinton. They were discovered in the course of the FBI’s investigation into Weiner’s alleged sexting to a 15-year-old girl, and not from the former secretary of state’s private email server.
That distinction seemed to help the stock market pull out of a midafternoon swoon on Friday, but still had it a bit back on its heels. In any case, regardless of any potential bombshells, the abstruse 18th century math of the Electoral College still makes Clinton a prohibitive favorite.
As Chris Krueger of Cowen’s Washington Research Group wrote after the email news emerged on Friday, “You can spot Trump both Florida AND Ohio and you are still not even close. He then has to hold North Carolina, Arizona, Georgia, Utah, and every other state Mitt Romney won. Then he has to win Pennsylvania OR a bank-shot combination of states to [attain] 17 electoral votes (New Hampshire, Iowa, Nevada, and Maine’s Second Congressional District),” all to get the requisite 270 electoral votes. Moreover, voting doesn’t take place Nov. 8, it ends that day, as nearly 14 million ballots already have been cast, he adds.
