With less than two weeks until Election Day, polls show Democrat Joe Biden is leading President Donald Trump, but the surveys may not be the best predictor, according to Amanda Agati, chief investment strategist at PNC.
"I have to say there's no perfect predictor when it comes to election outcomes, but we do look at a number of different indicators to try and get some idea and gauge what the outcome might actually look like," Agati told CNBC's "Trading Nation" on Wednesday.
"We know the polling is notoriously unreliable so I'm just going to throw that one right out of the equation for now, but we are obviously watching that to see how that evolves over the next couple of weeks."
Instead, Agati is looking to a different metric — the betting markets. Biden's chances of winning are at about 64%, according to PredictIt, while a Democratic Senate sits at 65%.
"By all of the betting odds metrics, it sure is suggesting a pretty strong vote of confidence in Biden and a change in control," said Agati.
Agati is also watching the economic data as a predictor, specifically second-quarter GDP, real disposable income per capita and monthly payrolls.
"Unfortunately, no matter how you slice and dice it, those indicators are looking just about as bad as it gets. And so if you just look at it on its face, you have to think that the economic data is suggesting also a change in control in favor of Biden," said Agati. "The key question in such an unprecedented year that we find ourselves in is whether voters will actually hold Trump and the current administration accountable or will they blame Covid."
Second-quarter GDP fell by an astonishing 31.4% with the pandemic gripping the U.S. economy. That marked a record decline. A record increase is expected in the third quarter as economic growth rebounds off of a low base. Disposable personal income rose by 42.1% in the second quarter, juiced by stimulus checks.
Finally, September nonfarm payrolls increased by 661,000, coming in below estimates of an 800,000 increase. Permanent job losses totaled 3.8 million.
One of the few metrics that swings in Trump's favor is market performance, according to Agati.
"The market is suggesting that the administration will be reelected, so if you look at the 90 days leading up to an election, usually when the S&P 500 is up, the party in power stays in power. So if you do the math quickly, the S&P 500 is up about 5% at this point and so clearly a strong vote of confidence that the administration will get reelected," she said.
In 2016, for example, the markets were among the only metrics that predicted a Trump win over Democratic candidate Hillary Clinton. The S&P 500 was lower in the 90 days heading into the election, indicating a change in party control.
The markets as an indicator has been wrong just three times in the last 100 years, Agati said. Those years were 1980 when Ronald Reagan defeated incumbent Jimmy Carter; in 1968 when Richard Nixon won against Hubert Humphrey; and in 1956 when Dwight Eisenhower won reelection against Adlai Stevenson.
"Will this be the fourth time? I guess we'll find out in a couple of weeks," she said.