Will Coronavirus Flip the Senate?
One of my favorite things in the world is when you animals send me your takes and challenge me to a joust. Well, one of you smarties, trader Dustin Webb, sent me this take about why he thinks it is some risky business to think that the Democrats can flip the Senate in the upcoming election, even with the coronavirus literally in the air.
If you have been following this blog then you know I have been using the “Dems win Senate” marketplaces as a high-yield saving account for a while and I have just buying a few shares of total Dem dominance whenever I get bored or start to think that Trump might get vaporized in November. I have accumulated a position that I wish was way bigger on the Dems controlling the House and Senate in 2021 at an average price of 30 cents.
Anyway, here is what Dustin said:
Will the Democrats Re-Take the Senate in 2020?
It’s truly breathtaking to behold the amount of change we’ve seen in the political landscape now as opposed to just one month ago. Just a month ago, Bernie Sanders looked like the nominee in waiting with a beaten and nearly dead Biden. A few calls from Obama later and we have what seems to be a presumptive nominee in Biden. That, along with a presumed recession caused by the coronavirus has pushed the betting markets into almost even money on the issue of who will control the senate in 2020. I truly wish I could be as certain as the markets are right now betting either way but I feel the only thing I’m certain of is that we have nowhere near enough information to know what the Senate will look like after the 2020 elections. Here’s why:
- Everyone assumes a recession is nearly guaranteed. I think it’s very likely but far from certain especially with a helpful fed who just pumped $1.5 trillion dollars into the economy and are poised to push interest rates to 0. That at the very least could delay a recession. Not to mention some kind of massive government stimulus that is already looking likely to happen.
- KEENDAWG: it’s been a few days since I got this piece but I am basically 99 percent sure that at this point, every state whose largest industry is not either ice fishing or meth production is closed for business indefinitely.
- Bernie has not conceded this race. I agree with Nate Silver that it would take a miracle to change the trajectory of the race at this point but that’s pretty much the same thing that happened to Biden after South Carolina. Coronavirus could make Sanders policies far more appealing and it creates a stark contrast between the two men. Also, just today we saw the very first primary election postponement. That helps blunt Biden’s momentum if Sanders can create a counter-narrative fast.
- KEENDAWG: Bernie’s done. The only race he is going to win is the race to losing.
- We really haven’t seen Trump’s approval rating dip that much nationally. As of this writing, Trump is still holding steady at around 42% which is where he’s been for most of the last 3 years. If winning the senate suddenly became massively more likely we should see it in Trump’s approval rating first.
- KEENDAWG: also will be interesting to see if voters in important states are still more worried about their churches, schools, and police departments being wiped-out by liberal woke values than coronavirus. Could play either way.
- Since we don’t even know definitively who the nominee is we don’t know how to size them up versus Trump and we don’t know how it affects candidates down ballot. I know what politicians and pundits think but I don’t have any data.
- KEENDAWG: Good point.
These four facts push me to say that either we should wait until after the conventions to see the true makeup of this race or that we should be slightly betting against what I consider very optimistic projections for Democrats to retake the Senate. Let’s not forget that the tipping point senator for control is likely to be Georgia.
I’ll be going into a deeper analysis on this later but understand that Democrats lost the governors mansion there in 2018 while riding an 8.4 percentage point wave nationally on the generic congressional ballot and a well-financed female candidate of color that energized voters. Add on the fact that Trump would have to lose the rust belt and every swing state on the map in addition to Georgia and I think you have a pretty unlikely scenario for Democrats to regain control. It’s trading at about 45 cents for Democrats to win in Georgia…I think I’ll take the other side of that bet.
KEENDAWG: This whole piece was a huge disappointment to me due to the fact that I was hoping to keep buying cheap YES shares on the Democrats flipping the Senate. I have no interest in continuing to buy at anything over 40 right now.
Really this is all a question of how many voters will want to sock Donald Trump and the Republicans in the face for the coronavirus, or if the public’s response will be less partisan. Keep in mind that the mechanics of the election mean that Democrats need to flip five Republican seats to have the majority, due to the fact that Alabama Senator Doug Jones is a bigger goner in 2020 than a non-white character in any horror movie made before 1999. That means beating five of the following: GOP senators:
Martha McSally (AZ), Steve Daines (MT), Kelly Loeffler (GA), Susan Collins (ME), Tom Tillis (NC), Joni Ernst (IA), and The Godfather aka Mitch McConnell (KY).
The more I think about it, the more I am thinking it might be time to sell.
KEENDAWG.
