Goldman's Guide To The Election In 3 Simple Charts

Tyler Durden's picture

Ahead of today's presidential and congressional elections, Goldman provides some brief thoughts on various election-night (and beyond) events. From a viewer's guide to the poll-closing times to a discussion of the apparent 'closeness' of the race and post-election market performance, they note that equity performance post 'tight' races has been better than in elections where the winner is more clear-cut. This election has a twist though in that it will be immediately followed by debate on the fiscal cliff,
and thus resolution of the election will reduce, but not eliminate
policy uncertainty


Via Goldman Sachs: Q&A On Election Night

  • Given that pre-election polling indicates that, at least at a national level, this election is closer than most others over the last 50 years, there is a clear risk that the results may not be known by the end of November 6.
  • Equity markets in presidential election years do not follow a consistent pattern like markets in midterm election years. However, median equity performance in the weeks following very competitive elections slightly outpaces performance following less competitive contests. That said, this election is unusual in that it will be immediately followed by debate on the fiscal cliff, and thus resolution of the election will reduce, but not eliminate policy uncertainty.

Q: How does this election compare to other close elections?


A: At the presidential level, it is closer than most contests over the last 60 years. Exhibit 1 lists several previous elections in which public opinion polling on the eve of the election suggested a very close race. Even compared to those, polling at the national level suggests a closer race than most in recent history.


Exhibit 1: Pre-Election Polling in Competitive Presidential Elections

Source: Gallup. GS Global ECS Research.


Q: Is there a risk that the election result will be delayed past November 6?


A: There are two foreseeable risks: a recount in a key state, or a delayed result due to absentee ballots or other voting issues. Colorado, Florida, and Pennsylvania conduct automatic recounts if the results are within 0.5 percentage points; Ohio's threshold is 0.25%. The average of recent polls in Colorado shows the President with a 0.6pp lead, just outside this threshold. In Virginia, President Obama has traded leads with Gov. Romney over the last couple of weeks; the President currently leads the average of recent polls in the state by 0.3pp (in Virginia, like other states that do not have automatic recount rules, candidates can still request a recount in a close election). While it is not inconceivable that at least one state's results could be subject to recount, it should be noted that even in the event that this occurs, it would take an incredibly close election to trigger a recount process similar to what happened in Florida in the 2000 election; President Bush's final margin was only 0.009% of the combined vote of the top two candidates.


Some states may also have difficulty dealing quickly with absentee and provisional ballots. Election laws in Ohio require that provisional ballots--votes cast by those whose eligibility to vote is in question, or who requested but did not return an absentee ballot--should not be counted until 10 days after election day, when absentee ballots must have been received, to avoid potential duplicate votes. As of November 2, there were around 200,000 outstanding absentee ballots, or roughly 3.5% of the number of votes cast for the two major party candidates in 2008.


Q: Do markets behave differently following close elections?


A: Equities react slightly more positively after competitive elections. Market trends are much less clear-cut around presidential elections than they are around midterm elections, when equities have fairly consistently gained following the election and into the early part of the third year in the presidential cycle.


By the end of the week following the election (i.e., November 16 this year) the median gain in the S&P 500 has been 1.9%, compared with 0.3% following less competitive races. The reaction in Treasuries is inconsistent; the yield on the 10-year Treasury has risen following competitive elections and declined slightly following less competitive contests, but is characterized by large moves in either direction in a few election years, and very small moves in most others.


While there are undoubtedly parallels with some of these prior periods, as we have pointed out recently, there are also major differences: the fiscal cliff looming just after the election at year end, the greater fiscal imbalance that lawmakers are likely to address next year, and the increased political focus on monetary policy ahead of the end of Chairman Bernanke's current term in January 2014.


Exhibit 2: Equity and Interest Rate Reaction Following Competitive Presidential Elections

Source: Federal Reserve. Standard and Poors.


Q: What will the early indicators be on election night?


A: Indiana for the Senate, Ohio for the White House, and Virginia for both. Exhibit 3 lists each state by poll closing time, along with the number of electoral votes at stake and the party leading (and margin of lead) in the average of recent polling in the presidential and Senate races. Taking the poll averages at face value, current poll results imply that the President would win 303 electoral votes and Gov. Romney would win 235. In the Senate, taking the current polls at face value implies that some seats will change hands but that the net result will be 23 Democrats elected and 10 Republicans, leaving the partisan composition of the Senate unchanged (there are 23 Democrats and Democratic-caucusing Independent seats and 10 Republican seats up for election this year).


In the race for the White House, Virginia will be the first closely contested state to close its polls, at 7:00 pm ET. The state is essentially tied in recent polling, implying that if the President wins here, Gov. Romney would need to win in either Ohio or in a combination of other states (e.g., Colorado, Iowa, Nevada, New Hampshire and/or Wisconsin) where the President's polling advantage has recently been stronger than in Virginia. Ohio closes its polls half an hour later, at 7:30 pm, and while other electoral combinations are possible, there is a good chance that the winner in Ohio will also win the election.


Regarding the Senate, the earliest indicators will be in Indiana and Virginia. Democrats, and independents who caucus with them, currently hold 53 seats, while Republicans hold 47. If the Indiana seat, currently held by a Republican, is won by the Democratic candidate Rep. Joe Donnelly over Republican candidate Richard Mourdock, it will be an early indication that Republicans will have a difficult time gaining the majority in the Senate. Likewise, if Republican former Senator and Governor George Allen is able to win against Democratic former Governor Tim Kaine, it would indicate that Republican gains might be larger than generally expected.


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Shizzmoney's picture
Goldman's Guide To The Election In 3 Simple Charts

1) Write a check to the Democratic Party

2) Write a check to the Republican Party

3) Take some SEC regulators out to Morton's tonight and RAKE IN THE DOUGH!

economics9698's picture

Everyone seems to be overlooking the biggest benefit of the election, we won’t have to look at the stupid NWA advertisement on ZH.  That fucking moocher bitch has been looking at me for weeks.  


TeamDepends's picture

It's a Don King fight and Don wins.

icanhasbailout's picture

LOL @ Morton's. When the chips are down, they go to Peter Luger's.

James-Morrison's picture

2012: No Hope and No Change
Much Ado About Nothing

mick68's picture

We shouldn't be worried about who's going to be president, we should be figuring out how to hang Goldman Sachs from a lampost.

Sudden Debt's picture




orangedrinkandchips's picture

"same as it ever was.....same as it ever was....." Talking Heads

Orly's picture







ebworthen's picture

...Burnin' down the house!

disabledvet's picture

Yeah, no shit. "The only thing you need to know is we win. Now move along puny human." I will be wactching the popular vote. Unlike everyone here I love both these candidates...just as obviously I love the Romney campaign more. I know he doesn't want to hear me say "I never thought Mormon..." but hey, was how I was educated..."indirectly"...and it has taken a lot of work for me to get beyond that. No I will not expect any of you to follow me in that regard either I might add. Having said that if Mitt wins the popular vote...he's the President. And should President Obama win the "electoral College" and remain President I would advise him to take note of that. The rest of his Party clearly will...and given the Democratic Party's full fledged support of extremis I might will be interesting to see how well the "you know who" execute on their Love Of State.

Rainman's picture

When you wake up Wednesday, things will be just as fukked up as Tuesday. FORWARD !

Zero Govt's picture

Yes Rainman, the world works in mysterious ways the case of US 'democracy' though we can all see the sponsors owning the puppets clear as daylight

not much of a mystery how this 'works'

Inthemix96's picture


Do us all a favour and fuck off and die.  And take that pleb dwarf bernank with you as well.

Poisened little shit what he is, and while your on, tell that slimy, greasy shit geithner, I hope he contracts AIDS.

Incubus's picture

They're doing god's work you dirty ass goy motherfucker.

Inthemix96's picture

Sorry mate......

If I had of knew that, I wouldnt have said nowt.........


Incubus's picture

Well, atleast you get it.


I don't really have hope for the rest of these people if they can't spot such an obvious tongue-in-cheek comment.

No wonder they're manipulated so.  No future.

Zero Govt's picture

if "Gods Work" is over-leveraging your kamakazi bank, pumping and dumping with heavy doses of fraud and mis-selling, leaving a road of carnage and steaming shit in your rear-view mirror and running bankrupt requiring non-stop bailouts then Blankfein is a modern day Saint

so Blankfein told the truth infront of the Senate right?

I'd put your money on Blankfein screaming on a Harley down the Highway to Hell, tank fueled on others blood, bubble Ben clinging on behind for dear life with neither wearing a crash helmet

you can bet Blankfein was selling another epic over-leveraged lie

business as usual

firstdivision's picture

Simple answer, buy oil ETF's as it is currently undervaluved due to artificial supression for the election.

CPL's picture

No, buy physical oil if you want to actually hedge the cost.  Buy paper oil if you wish to be choked to death on leveraged decay and other misc stuff.

TeamDepends's picture

Agreed.  If you are buying paper anything you are merely purchasing promises.

firstdivision's picture

paper profit for future physical fire sales.

orangedrinkandchips's picture

A recount in a state? THE POPLUAR VOTE MEANS JACK SHIT!!!!







Orly's picture

You cannot be serious!

If it weren't for the Electoral College, the east coast megalopolitan mob and the libs in Cali would run everything all the time.  It's like making a law that all the production from Iowa, Kansas and Nebraska would go to New York City...because they said so.

The Electoral College has voting members equal to the number of Representatives from each state and they (usually...depending on state law...) cast all their Representative votes for the person who has the highest popular vote in their state.  Therefore, Iowa, Kansas, know, all the red fly-over states have a voice in governing the country instead of having the untold millions in the inner cities getting their gimme bag on every four years.

Think about it.

Ignatius J Reilly's picture

Please go read some history. You are making a fool of yourself.  Start with this.  We are a Republic.  Go find out why, at least in theory, that is a good thing.

mess nonster's picture

I attended Electoral College. I got bookoo student loans, and majored in pot smoking and orgies. i dropped out 3 credits shy of a degree in political economics and defaulted on said student loans. Now I can't get a legit job 'cause the IRS garnishes all my wages. It's a good thing pot is still illegal, 'cause now i make bank with my grow-houses and it's all tax free, mutha-fukkahs!

LongSoupLine's picture

Eat shit and die Goldman fucking pukes.


other than that, have a nice day.

Shizzmoney's picture

BREAKING NEWS: The banks won the election.  You don't have to watch the news tonight.

I feel like I'm in my house duirng Sandy all over again.  "Don't worry, in a few hours, it will be over........".

But it kind of won't.

“Rebellion to tyranny is obedience to God.”-ThomasJefferson's picture

Lloyd Blankfein composed this story while he was rolling naked on his office floor trying to suck his own dick.  Schumer and Reid told him it was a good mental exercise; as they are both accomplished cocksuckers!

mess nonster's picture

I thought Mitt and Barack took turns sucking Lloyd's dick. Why does he have to do it himself?

HurricaneSeason's picture

The fiscal cliff wont be as bad as increasing the debt ceiling.

Dr. Engali's picture

Soooooo.... guys..what's going on? What's all the hoopla about? Did I miss something?  I'll bet you weren't aware of this but I heard we have had a hurricane recently and there are cold hungry citizens trying to pull their communities back together. Maybe we will get some news about it after this election thingy.

crusty curmudgeon's picture

Please doc, you're distracting me with this hurrican thingy.  There isn't much time left and I'm trying to figure out which candidate supports jobs.

HurricaneSeason's picture

Li Keqiang supports "private sector jobs", Romney supports military jobs and Obama supports teachers, police, firemen, road repavers and solar power workers.

fonzannoon's picture

I am absolutely convinced they are using my area as some expirement to see how communities react when the fuel supplies get cut off. There is literally no gas available. When a gas station gets a delivery it is instant mad max. Lines for miles and people are now starting to morph into angry mean versions of themselves. I am not even talking about the people right on the coastlines. I mean inland where roads are open, gas stations have power and everything should be business as usual. But instead people are literally trapped. Business is basically shut down and people are not wasting another drop of gas to get to work. What's worse is the feeling that you are just a lab rat with a bunch of retarded doctors staring down at you.


Dr. Engali's picture

That sucks Fonz,I wouldn't want to be in your shoes. I hope that you and your family are doing well and staying warm. Hang in there.

fonzannoon's picture

Thanks Doc. I am hanging. In a lot better shape then most. I still have my options open and am astonished that I may have to use them a week after a tropical storm. It just blows my mind how weak the system truly is.

hedgeless_horseman's picture



I am 100 miles inland and was without grid power (as were the fuel stations) for 13 days after the last hurricane.  Plan accordingly.

HurricaneSeason's picture

By the 3rd florida hurricane, I learned it's best to drive out of the hurricane zone and get a hotel room for a week or two. Beats standing in line for gas, ice and food. You instantly have air conditioning and tv and hot showers and reasonable traffic conditions. Since it's cold, I'd travel hundreds of miles south for a vacation. It doesn't seem like it's the time to buy the unabomber's cabin, yet.

Orly's picture

Goes back to that "machine" that I was talking about with Rosenberg.  It's not freakin' Manhattan.  That island is not the machine.

The machine is the entire megalopolis from North Carolina to Boston and once that machine stops, it's very, very difficult to get it turned back on.

I'm sorry you and your family have been victims of idiotic planning and, frankly, hubris, on the part of your "leaders" for lo these many years.  Hang in there, fonz!  Don't let them get you down.


fonzannoon's picture

Hey thanks, and trust  me I am fine. I guess because I have not been in the middle of a mess like this I find it had to chalk this up to idiotic planning. I think it's more sinister, but you are probably right.

jdelano's picture

I'll be brutally honest here.  I live in Fairfield, CT and I don't care at all about the "hurricane" nor the "suffering" of its "victims" or the communities trying to pull themselves back together.  9/10 people in the region affected by this storm were insured middle class families who lost power for a few days and had to creep facebook on their iphones.  That's it.  For the 1/10 people in Staten and a few towns in Jersey that lost their homes, that sucks, but seriously, who gives a shit? If Sandy was a disaster for you it's either because you were uninsured, you didn't evacuate, you didn't exercise any common sense and had your fucking four year old kids in the car with you when the surge came instead of being somewhere elevated and safe because you are an idiot and a shitty parent, or you are just a whiny douche who thinks that the bad shit that happens to the people in your little corner of the world is somehow far more newsworthy than the really bad shit that happens to everyone else just because you live in the Northeast.  5000 dead soldiers in Afghanistan and none of us give a shit.  Why the hell should anyone else care about gas lines in Garden City Long Island?  I understand I probably sound like a complete asshole to you Obama zealots but here's the truth... one night last week I spent six hours with my neighbors helping a guy down the block I've never met chop up and remove a tree that collapsed onto his porch.  That's what kind of person I am--not great but decent, willing to lend a hand, put a few dollars in your hat, pick you up at the airport at 3am cause your flight got delayed and there's no one else.  Anyhow, the whole time this guy was bitching and tearing out his hair and cursing the universe and I'm sorry, I just no patience for this shit anymore.  The tree was fucking years DEAD.  All he had to do to avoid having his porch crushed was not be a fucking moron and have it taken down pre-Sandy.  Ant and Grasshopper.  And the few people--hardworking and poor that got hit by this storm the worst and are truly, genuinely, cold and hungry, well they'd probably be just fine too if we got off our asses and instead of watching the fucking bullshit melodrama-obsessed media coverage of the "afermath" went out and loaded up a truck with blankets  and soup....          

LiesAreTheOnlyTruth's picture

JDelano 2012!  I'm writing you in on my ballot sir ... well put!!

fonzannoon's picture

I agree with basically every single thing you said. Just don't blame the media on us. Call your TV station, they are the ones who decide what gets put on.

philosophers bone's picture

Gov. Christie starts his run for president in 5...4...3...2....   He might stop to scrape up Romney from the bus that he drove over him - but only if there's something in it for him. 

Inthemix96's picture

Just got off the phone.  I have been talking to a good friend of mine, he is right in the thick of the political situation in the United States.  He has recieved a call himself and asked me to pass on this invaluable information to all I know.  So I will start here on ZH.  He does believe however that the information is so top line, and of such importance that it should be disseminated by as many good folk as possible.

Well he just told me that, if you think this election will make a two fucking pennys worth of difference to your average bloke on the street, you need you're head looked at.  He also said that it might be a good idea to assume the standard position and hold your ankles as tight as you can.

This is gonna hurt you a lot more than it hurts me, he said......

ebworthen's picture

Does your friend have a mustache? 

(this bloke believes your friend is right)