Busch: What's Key to the US Election Results

With the U.S. election less than 24 hours away, here are my keys to the outcome:

  1. The latest 10 swing state polls indicate an extremely close race, but with President Obama ahead by 1-3pts in OH, NH, WI and VA.
  2. Nationally, the candidates are tied.
  3. Stating the obvious, this election is extremely close and will be determined by voter turnout. On October 26th, Gallup released a poll of early voting that showed Romney up 52-45%. This is a 22pt swing from 2008 when then nominee Obama lead McCain by 15pts.

Clearly, you can spin many potential outcomes for who will win and by how much.

My view remains that the Gallup information shows a strong Republican turnout and therefore will translate into a victory for Romney.

Here's a list of key states and when their polls close for the US presidential race.

All times are ET and PM:

  • 7:00 - Virginia
  • 7:30 - Ohio
  • 8:00 - New Hampshire, Pennsylvania and Florida
  • 9:00 - Colorado and Wisconsin
  • 10:00 - Nevada and Iowa

If VA, OH, or FL is called for one of the candidates before 9PM ET, it would signal a strong turnout for that candidate and that candidate is likely to be the winner. Obama has the most possible scenarios for retaining the office, but Romney must win VA and FL or the race will be over.

Nightmare scenarios:

  1. No official winner by Wednesday at 8AM with a recount called.
  2. Tie of 270 electoral votes.

Fiscal cliff scenarios:

  1. Under Obama, a protracted battle with House Republicans over moving all the of Bush tax cuts into 2013 with the outcome as only a partial extension.
  2. Under Romney, a similar battle over extensions, but with more cooperation from House Republicans.
  3. Under both nightmare scenarios, the fiscal cliff is delayed and markets react negatively.

In case anyone was listening this weekend, the G20 stated that the US fiscal cliff is the number one risk to the global economy. Therefore, how the cliff is addressed is critical. Therefore, this election is critical. To me, there are too many potential negative scenarios for the market to digest and therefore they will be cutting back on risk until we ascertain a clear outcome.

For currencies, I want to continue to sell EUR/USD.

Sell EUR/Buy USD

  • Entry 1.2830 (200DMA)
  • S/L 1.2880
  • T/P 1.2680

Andrew B. Busch Director, Global Currency and Public Policy Strategist at BMO Capital Markets, a recognized expert on the world financial markets and how these markets are impacted by political events, and a frequent CNBC contributor. You can comment on his piece and reach him here and you can follow him on Twitter at http://twitter.com/abusch .