The stock market has been betting on a blue wave with the Democrats controlling the House, the Senate, and the Presidency, leading to potentially trillions of dollars in stimulus after the election. But the odds of a blue wave sweep may actually be diminishing, not increasing. The national polls still show that Joe Biden has a wide lead over President Trump. But the lead has started to show some cracks, and digging a little bit deeper; a Biden Presidency may be harder to achieve than many realize. 

It is worth noting that Pennsylvania is likely to be one of the most crucial states in this election, with its 20 electoral votes. It is a state that President Trump barely won in 2016, beating Hillary Clinton by a mere 68,000 votes. In 2012, Obama easily won, with roughly 287,000 votes more than Romney.

What may be more important is the voter base has changed rather dramatically since 2016. Through October 13, 2020, there were a total of 4,186,050 Democrats, 31,406 fewer than the 4,217,456 registered Democrats in November 2016. Meanwhile, the number of Republicans has increased by 174,154 to 3,475,336 on October 13, 2020, from 3,301,182 in November 2016. Independent voters have climbed to 1,288,845 from 1,204,339, an increase of 84,506 over the same time.

It means Biden is at a minor disadvantage with his base falling in the state and will need a greater percentage of his party to come out to vote for him this year. For example, in 2016, Clinton had 69.1% of all Pennsylvania Democrats support her, or 2,912,941. Meanwhile, Obama had 2,907,448 or 68.2% of the 4,266,317 total Democrats in November 2012.  For Biden to get the same 2,912,941, he will need 69.6%, the most of the past 2 elections. 

Meanwhile, the polls in Pennsylvania, based on the Real Clear Politics Average, show that Biden’s lead over Trump has slipped from 5% on October 13 to 4.5% on October 16. Meanwhile, Florida’s polls have narrowed from 3.8% on October 9 to just 1.4% on October 16.  

The bottom line, the national polls may be wide and showing Joe Biden with a large lead, but hardly matter. It is a mistake to focus on the national polls. I don’t doubt that Trump could lose the popular vote as he did in 2016. But the winner is not decided by the popular vote; it runs off the electoral college. This means the states need to be won, and I continue to think that the market may be very disappointed after November 3 because it will be a much closer race than anyone thinks.