JP Morgan to Investors: Get Prepared for a Trump Win in November


In remarks to investors this week, officials at JPMorgan Chase & Co. advised clients to keep their eyes on the polls and prepare their investments for the possibility of a Trump win in November. Acknowledging that the polls have shown Joe Biden with a healthy lead on the president for months, strategists at the banking conglomerate advised that the betting markets now show Trump quickly gaining on his Democratic challenger.

According to betting odds on Real Clear Politics, Biden’s lead over Trump has shrunk to just 1.9 points as of this weekend. That’s compared with a lead of over 24 points a month ago, showing conclusively that – at least as far as bettors are concerned – this race is tighter than ever.

“Certainly a lot can happen in the next ~60 days to change the odds, but we currently believe that momentum in favor of Trump will continue, while most investors are still positioned for a Biden win,” said JP Morgan quantitative strategist Marko Kolanovic.

Working in collaboration with analyst Brad Kaplan, Kolanovic said that the subsiding coronavirus pandemic could be a major contributor to Trump’s rising numbers.

“COVID-19 cases rate has been declining by about ~20,000 cases/day a month,” wrote the researchers. “Given that there are no very large states that have yet to see widespread outbreaks that can significantly boost new cases, this will likely set the pandemic on course to subside in time for the election.”

We’re not entirely sure about that prediction, but we would agree that the coronavirus is not going to be the hot topic in November that it has been for the last months. And if this administration – or any other health institution – comes out with a vaccine between now and then, that’s another whole ballgame in and of itself.

What we do agree with is that the chaos we’re seeing in Minneapolis, Kenosha, Portland, Seattle, and elsewhere is going to take a huge toll on Biden’s chances. Kolanovic and his team studied the work of Omar Wasow, who found that unrest in the years leading up to Nixon’s election in 1972 had a significant impact on driving conservative voters to the polls. You could argue that this happened to some extent in 2016 as well, the election following in the same year as the Freddie Gray riots in Baltimore and only two short years after the chaos in Ferguson. We wouldn’t be at all surprised to see it play out in November.

At the end of the day, this is just one more observer casting about for a prediction about how this election will play out. But considering the financial implications at play, we’d say that Kolanovic has more reason to be honest about his conclusions than most.