Our Fearless Predictions

Donald L. Luskin
Monday, November 7, 2016
Clinton wins by plurality, but the GOP keeps the Senate and House, and adds governors.
Strategic view: 

We expect Clinton to win, but we have very little conviction in that call, and are open to our election model having been right all along about a Trump win. If she wins, it will be by a plurality, as #NeverTrump voters go to third parties. With higher conviction we think the GOP will keep the Senate – even polls, which have appeared all year to be biased globally against conservatives, show that. We are highly confident the GOP will keep the House, but with a reduced and radicalized majority. With reasonable conviction we expect the GOP to pick up some governors.
Markets may be relieved by this outcome of divided government, and indeed it will block the worst policy mistakes. But it will lead to toxicity, brinksmanship, crises and volatility (the government is funded through December 9, and the debt ceiling is suspended until next March). If Trump does win – which we don’t even remotely rule out – we expect a Brexit-like risk-off spasm.