Changing the party in power is less about a positive vote for the opposition and more about a negative vote for the governing party. And there is basically nothing opposition parties can do about it. Opposition parties must wait their turn.

On this account there is nothing National can do to win the election because New Zealanders are not yet dejected enough with Jacinda Ardern to vote her out. National must hang in there until enough people are unhappy with Labour. It is a waiting game.

On the other hand, there are enough voters in the USA unhappy with their current president to bring the other lot into power.

After one term it is the incumbent’s job to keep. It is very difficult to topple a president off their perch after one term as they hold all the cards unless a majority of voters become sick of them.

That seems to be the case in the USA. Trump is on the way out and financial markets seem to be confirming it.

ABC News reporter, David Taylor, says that US currency markets have been moving in line with the swings in the fortunes of the presidential outcome.

Currency markets in the US have been viewing the election as a ‘contested outcome’ which has been creating enormous uncertainty for the US and by extension, the world.

In times of uncertainty the US dollar rises because it is seen as a safe haven and the best currency to hold in a crisis. By holding US currency risk is taken off the table, often referred to as ‘risk-off’ environment.

The ‘contested election’ scenario, one likely to result in Trump attacking the vote-counting in the courts and refusing to leave office or accept defeat, has been the dominant paradigm for some months leading up the first of the presidential debates. Trump did not come off well in that first debate, then he got Covid-19 while Biden kept right on electioneering, and since then the polls have been firming for Biden. Trump has not got anything new to add. Same old, same old.

The looming uncertainty that a contested election would bring has subsided as Biden has strengthened and Trump has weakened, and money is now flowing out of the US again into more risky currencies. Sometimes referred to as a ‘risk-on’ situation.

Of note in the currency markets, according to David Taylor, is that money is flowing out of the US and into the Mexican peso. Trump losing the election would be a great outcome for Mexico with a Biden win improving relations and economic activity between the two countries.

The US stock market too is pricing in a comfortable win for Biden since the poor first debate for Trump. There have been a couple of hiccups along the way when Trump got Covid-19 (big uncertain moment) and again when Trump called off stimulus discussions (big uncertain moment). Since that first debate there has been an upward trend in share prices indicating increasing certainty around the election outcome.

Remember, share markets are relatively agnostic about whether a republican or a democrat controls the presidency. They just want to see a smooth election and a transition without surprises.

A clean sweep of the House, the Senate, and the presidency by one party would indicate a future full of reasonably predictable outcomes and that, according to share markets, would be worth taking a bet on.

Financial markets just want to know what is around the corner.

Keep asking great questions …