markets & the us election - deutsche asset management · pdf filepercentage of times that...
TRANSCRIPT
Deutsche Bank
Markets & the US Election
September 2016
Tom Joyce CIB Capital Markets Strategist
Hailey Orr CIB Capital Markets Strategist
Francis Kelly Head of Government Affairs - Americas
Mariya Getsova CIB Capital Markets Strategist
Deutsche Bank
9/23/2016
1
Source: New York Times. *Includes Independent voters not permitted to vote in states with “closed” primaries.
Only 9% of Americans Voted for Trump & Clinton
76 mm Children
21 mm
Non-citizens
6 mm Felons
324 Million US Residents
103 million are ineligible children,
felons or non-citizens
88 million eligible voters
who chose not to vote,
even in general elections
73 million did not vote in 2016 primaries*
60 million voted in the primaries.
About ½ voted for candidates
other than the nominees
~17 million
voted for Clinton
~13 million
voted for Trump
Deutsche Bank
2
Percentage of Hispanic voters in the 2016 Florida electorate (arguably the
most important battleground state in the election)
Percentage of white voters that voted for Romney in 2012, highest ever
for a GOP nominee challenging an incumbent President (he won 17% of
the non-white vote and lost the election by 5 million votes)
Percentage of white vote that Trump must win (along with 30% of
Hispanics) based on 2016 turnout projections (source:
RealClearPolitics.com)
Number of alcoholic drinks Donald Trump consumes in a week (he does
not drink alcohol)
Number of women in Hillary Clinton’s Yale Law School graduating class of
235 people in 1973
Trump’s ranking in the Forbes’ 2015 list of global billionaires (estimated
$4.1 billion net worth)
Number of countries Clinton visited as US Secretary of State in 4 years,
traveling 956,753 miles
Donald Trump’s age, which would make him the oldest person ever
elected President of the United States (Reagan was 69 years, 349 days old
when he assumed office)
Hillary Clinton’s age (turns 69 before the election, on October 26)
Average age of the 55 delegates that drafted the US Constitution in
Philadelphia in 1787 (35 of them had served as officers in the Continental
Army, and only 29 had college degrees)
Number of amendments put forth by 6 states during the ratification of the
US Constitution in 1788, most of which addressed fears of unchecked
Federal power
Percentage of times that the shorter candidate won the US Presidential
election during the entire 20th Century. The shorter candidate has won
75% of the 4 elections in the 21st Century (since 2000), a number that
would rise to 80% with a Clinton victory in 2016.
Electoral votes needed to win the US Presidential Election
Electoral votes in the “Blue Wall” (18 states & Washington DC which
have voted Democratic in each of the past 6 US Presidential elections)
Electoral votes in current 2016 election that are at least “leaning”
toward Clinton in recent aggregate polls (does not include 14 toss-up
states, and those “leaning” Republican)
Electoral votes in 14 “Toss-Up” states
Electoral votes in the “Red Wall” (13 states which have voted
Republican in each of the past 6 US Presidential elections)
Electoral votes in current 2016 election that are at least “leaning”
toward Trump in recent aggregate polls (does not include 14 toss-up
states, and those “leaning” Democrat)
Number of electoral votes in the 5 most electorally rich battleground
states: Florida (29), Pennsylvania (20), Ohio (18), North Carolina (15)
and Virginia (13)
The number of US states that split their electoral votes by district
between candidates (Maine and Nebraska)
Number of net seats that Democrats must win to regain control of the
US Senate (4 if Clinton wins the White House, since the VP votes to
break 50-50 tie in the Senate)
Number of net seats that Democrats must win to regain control of the
US House of Representatives (218 is a majority in the 435 member
chamber)
Percentage of voter turnout in 2012 US election (vs. 57% in 2008 and
56% in 2004)
Percentage of whites among eligible voters in the 2016 US election,
down from 84% in 1992 (and vs. 12% Blacks, 9% Hispanic and 2%
Asian in 2016)
270
242
200
102
164
2
5
70
18
59
64
0
27
405
112
70
68
Notable Numbers
30
95
55
44
124
25
The Election in Numbers
Source: CIB Capital Markets Strategy, Real Clear Politics, Wikipedia, DB 140 Weekender. Pew Research. Data as of
September 22, 2016.
174
Deutsche Bank
I. Introduction
II. The Election
III. The Polls
IV. The Implications
Appendix:
A. Summary of Republican and Democratic Party Platforms
B. The Senate and House Races
C. 50 Years of US Electoral College Maps
3
Markets & the US Election
Deutsche Bank
4
1. The Evolving Map
2. The Map Favors Democrats
3. Electoral College Math
4. The Path to 1600 Pennsylvania Ave
5. Large Battleground States
6. The New Vulnerables
7. The Third Rail
8. Shifting Demographics
9. The Importance of Turnout
10. A More Polarized Electorate
11. The Funding Advantage
12. The Ground Game
Markets & the US Election
II. The Election III. The Polls
13. This Election’s Big 3
14. Popular Vote Likely Close
15. Fading the Post Convention Bump
16. Temperament & Trust
17. Polling the Issues
18. Debates Can Matter
19. Higher Voter Engagement
20. The Gender Divide
21. Age Differences
22. Ethnicity & Race
23. Education & Income
24. The VP Impact
IV. The Implications
25. Transformational Change: Unlikely
26. Fiscal Stimulus: Yes, but Small
27. Growth: Numerous Channels
28. Volatility: The Uncertainty Principle
29. US Dollar: Modest Strengthening
30. At Risk Currencies: MXN & RMB
31. Fed Policy: Marginally More Hawkish
32. US Rates: Low Yields, Steeper Curve
33. US Credit: Extending the Cycle
34. US Equities: Sector Differentiation
35. Tax Reform: Still Difficult
36. Trade: Tide Shifting
Deutsche Bank
“I sought for the greatness and genius of America in her
commodious harbors and her ample rivers, and it was not
there…in her fertile fields and boundless forests, and it was not
there…in her rich mines and her vast world commerce, and it
was not there…in her democratic Congress and her matchless
Constitution, and it was not there. Not until I went into the
churches of America and heard her pulpits aflame with
righteousness did I understand the secret of her genius and
power. America is great because she is good, and if America
ever ceases to be good, she will cease to be great.”
-Alexis de Tocqueville, French political philosopher,
and author of “Democracy in America”
(1805 – 1859)
6
Deutsche Bank
US Election Scenarios
9/23/2016
7
Source: Peck, Madigan, Jones. CIB Capital Markets Strategy.
Clinton Should Win, Trump Could Win
Scenario
White House US Senate US House
Strength of
Policy
Mandate?
Power Sharing
“Too Close To Call”
#1: Clinton Victory
Democrats Democrats Republicans
• Divided government
• Narrow Senate control
#2: Clinton Victory
Democrats Republicans Republicans
• Divided government
• No Senate control
#3: Trump Victory
Republicans Republicans Republicans
• Unified government
• Narrow Senate
control
#4: Trump Victory
Republicans Democrats Republicans
• Divided government
• No Senate control
More
likely
Less
likely
Deutsche Bank
9/23/2016
8
Source: Committee on Arrangements for the 2016 Republican National Convention. Democratic Platform Committee.
Policy Positions: The Economy
Clinton / Democrats Trump / Republicans
Trade & The Economy:
Fiscal stimulus
Renegotiate NAFTA
Reject TPP in current form
Tough on China (45% tariffs, “FX manipulator”, WTO on subsidies)
National minimum wage
The Fed:
Annual Fed audits
Likely replace Yellen in 2018
Industry Specific:
Repeal Affordable Care Act (Obamacare)
Repeal parts of Dodd-Frank
Modernize Glass-Steagall
“Risk fee” for large financials
Deregulate energy production & exports
Climate change initiatives
Deutsche Bank
9/23/2016
9
Source: Committee on Arrangements for the 2016 Republican National Convention. Democratic Platform Committee.
Policy Positions: The Tax Code
Clinton / Democrats Trump / Republicans
Corporate:
Reduce corporate tax rate (35% to 15%)
Repatriation holiday (at 10%)
Discourage corporate inversions
Carbon tax
“Risk fee” for large financials
Move to Territorial Tax System
Individual:
Reduce top tax rate (to 33%)
Raise tax rate 4% on >$5mm
Limit personal income loopholes
Middle class tax relief
Sharply higher estate taxes
Deutsche Bank
9/23/2016
10 Source: S&P Capital IQ, McGraw Hill Financial
Policy Positions: Industry Specific
Industry
US Election Sector Disruptor
Clinton Trump
Consumer Discretionary
(restaurants / retail) Minimum Wage legislation
Consumer Staples
(agriculture) Crack-down on 11.3mm illegal immigrants
Energy Renewable subsidies, carbon taxes,
drilling restrictions
Financials Dismantle Dodd-Frank
Healthcare Repeal the ACA (Obamacare)
Information Technology Lower corporate taxes & repatriation
Materials WTO on China steel subsidies; 45% China
tariffs
Telecom Increased enforcement of “net neutrality”
Utilities Higher carbon emission and efficiency
standards (coal)
Deutsche Bank
9/23/2016
11
Source: DB Global Markets Research (Hsueh, Melentyev, Bianco, Konstam, Ruskin, Saravelos, Winkler).
Policy Implications: Rates & FX
Clinton /
Democrats
Trump /
Republicans
Higher US rates
Larger fiscal stimulus & faster Fed tightening
Trump vocal against low rates
Steeper yield curve
Larger fiscal stimulus & faster Fed tightening
Lower technical flows on higher hedge costs
More Fed independence
Trump supports Fed audits
Trump would replace Yellen
Stronger US Dollar
Larger fiscal stimulus, protectionism, repatriation
EMFX risk (MXN, RMB)
Trade agreements & other
Deutsche Bank
9/23/2016
12
Source: DB Global Markets Research (Hsueh, Melentyev, Bianco, Konstam, Ruskin, Saravelos, Winkler).
Policy Implications: Oil, Credit & Equities
Clinton /
Democrats
Trump /
Republicans
Higher oil prices
Less oil market deregulation (i.e., less drilling)
Tighter credit spreads
Larger fiscal stimulus
Extends credit cycle length
Stronger corp balance sheets on repatriation
Higher credit issuance
Lower rates
Less funding needed if repatriation passed
Higher equity volatility
Unified Government more likely under Trump
Larger policy change & more uncertainty
Higher US equities
Global large caps
Smaller domestic
Deutsche Bank
9/23/2016
13
Source: Committee on Arrangements for the 2016 Republican National Convention. Democratic Platform Committee.
Policy Positions: Foreign Policy & Socio-Political
Clinton / Democrats Trump / Republicans
Build wall along southern border
Deport aliens committing crimes
Increase flexibility for green cards
Debt-free college
College debt relief
Reduce global nuclear stockpiles
Modernize nuclear arsenal
Root out and destroy ISIS
Tighten gun restrictions
Deutsche Bank
“It has been frequently remarked, that it seems to have been
reserved to the people of this country to decide, by their conduct
and example, the important question, whether societies of men
are really capable or not, of establishing good government from
reflection and choice, or whether they are forever destined to
depend, for their political constitutions, on accident and force.”
-Alexander Hamilton, a Founding Father of the United States,
in Federalist Paper No. 1
(1755 - 1804)
15
Deutsche Bank
2000: Bush Defeats Gore
Source: New York Times. Peck, Madigan, and Jones.
16
1. The Evolving Map
Summary: While national polls may be tight, it is the electoral map that will determine the 2016 US Presidential election. The
Bush elections in 2000 and 2004 provide a roadmap for breaking through the “Blue Wall” established by Clinton in 1992. To win,
Trump will need to hold the Romney footprint in 2012, and add a significant number of other critical states, including: FL (29), PA
(20), OH (18), NC (15) and a few other small states.
2004: Bush Defeats Kerry
2008: Obama Defeats McCain 2012: Obama Defeats Romney
RI
Recommendations
and detected
threats OH
WV VA
PA
NY
NC
SC GA
TN
KY IN
MI WI
MN
IL
LA
OK
ID
NV
OR
WA
CA
NM
CO
WY
MT ND
SD
IA
UT
FL
AR
MO
MS AL
NE
KS
NJ DE
MD
AK
HI
TX
ME VT
NH
C
T
AZ
MA
Independent Republican Democrat
Bush wins 271 electoral votes
RI
Recommendations
and detected
threats OH
WV VA
PA
NY
NC
SC GA
TN
KY IN
MI WI
MN
IL
LA
OK
ID
NV
OR
WA
CA
NM
CO
WY
MT ND
SD
IA
UT
FL
AR
MO
MS AL
NE
KS
NJ
DE MD
AK
HI
TX
ME VT
NH C
T
AZ
MA
Bush wins 286 electoral votes
RI
Recommendations
and detected
threats OH
WV VA
PA
NY
NC
SC GA
TN
KY IN
MI WI
MN
IL
LA
OK
ID
NV
OR
WA
CA
NM
CO
WY
MT ND
SD
IA
UT
FL
AR
MO
MS AL
NE
KS
NJ DE
MD
AK
HI
TX
ME VT
NH
C
T
AZ
MA
Obama wins 365 electoral votes
RI
Recommendations
and detected
threats OH
WV VA
PA
NY
NC
SC GA
TN
KY IN
MI WI
MN
IL
LA
OK
ID
NV
OR
WA
CA
NM
CO
WY
MT ND
SD
IA
UT
FL
AR
MO
MS AL
NE
KS
NJ DE MD
AK
HI
TX
ME VT
NH
C
T
AZ
MA
Obama wins 332 electoral votes
Independent Republican Democrat
Independent Republican Democrat Independent Republican Democrat
Deutsche Bank 17
Recommendations and detected
threats
OH
WV
VA
PA
NY
ME
NC
SC
GA
TN
KY
IN
MI
WI
MN
IL
LA TX
OK
ID
NV
OR
WA
CA
AZ
NM
CO
WY
MT ND
SD
IA
UT
FL
AR
MO
MS AL
NE
KS
VT
NH
MA
RI CT
NJ
DE
MD
AK
HI
DC
Source: Peck, Madigan & Jones.
*Maine and Nebraska split electoral votes and may be double-counted in the total number of states for each category.
• Blue Wall: 242 electoral votes
(18 states & DC have voted
Democratic in the past 6
elections)
• Leaning Dem in 2016*: 200
electoral votes (16 states & DC)
• Toss-Up*: 174 electoral votes
(14 competitive states)
• Red Wall: 102 electoral votes
(13 states voted GOP in past 6
elections)
• Leaning GOP in 2016*: 164
electoral votes (22 states)
2. The Map Favors Democrats
Red and Blue Walls
Summary: The US electoral and demographic map favors Democrats. While Trump can absolutely win the election if voter
turnout and several key states go his way, he has fewer “paths to 270” given the historical strength of Democrats in a large block of
critical states.
Deutsche Bank Source: Real Clear Politics. Data as of Sept 22 2016.
* Toss-ups include any states where latest aggregate poll is within 4% polling differential.
**Nebraska and Maine award electoral votes by congressional district and statewide winner.
18
Safe Democratic Likely/Leans Democrat Toss-ups* Likely/Leans GOP Safe GOP
California 55 New York 29 Florida 29 Texas 38 Tennessee 11
Massachusetts 11 Illinois 20 Pennsylvania 20 Indiana 11 Alabama 9
Maryland 10 New Jersey 14 Ohio 18 Missouri 10 Kentucky 8
Hawaii 4 Washington 12 Michigan 16 South Carolina 9 Oklahoma 7
D.C. 3 Minnesota 10 Georgia 16 Louisiana 8 Arkansas 6
Vermont 3 Oregon 7 North Carolina 15 Utah 6 West Virginia 5
Connecticut 7 Virginia 13 Mississippi 6 Idaho 4
New Mexico 5 Arizona 11 Kansas 6 Nebraska 4
Rhode Island 4 Wisconsin 10 Montana 3 Alaska 3
Delaware 3 Colorado 9 South Dakota 3 North Dakota 3
Maine 2 Iowa 6 Nebraska-2nd 1 Wyoming 3
Maine-1st 1 Nevada 6
New Hampshire 4
Maine-2nd 1
Total EVs: 86 Total Evs:114 Total EVs: 174 Total EVs: 101 Total EVs: 63
3. Electoral College Math
Electoral College Math: 270 Needed to Win
Leaning Clinton: 200 Leaning Trump: 164
86 63 114 174 101
Summary: The US Constitution assigns electoral votes to each state and Washington DC equal to the number of its members in
Congress. Since every state has 2 Senators, and at least one representative in the House, the minimum number of electoral votes
for any state (and DC) is 3. Maine and Nebraska are the only two states that split their electoral votes for each candidate by
district.
Toss-Ups: 174
Red Font = Red Wall State Blue Font = Blue Wall State
Deutsche Bank
9/23/2016
19 Source: Peck, Madigan, Jones. Real Clear Politics. CIB Capital Markets Strategy.
4. The Path to 1600 Pennsylvania Avenue…
Summary: Nearly all roads to the white house in 2016 will lead through Pennsylvania (PA). PA is a critical piece of the “Blue Wall”
and has voted Democrat in every election back to 1988. If Clinton wins PA, the election is almost certainly over. If Trump wins FL
(29), OH (18), NC (15) and a number of other key swing states, but loses PA (20), he will likely lose the election. However, if he
wins PA, it will likely signal that other key states (FL, OH, NC, the rust belt) and the Presidency will go his way.
Starting Point “Must Win” “Also Needs”
… Goes Through Pennsylvania
Blue Wall
(Less PA): 222 EVs
OR
Leaning Dem: 200 EVs
Red Wall: 102 EVs
OR
Leaning GOP: 164 EVs
PA (20)
FL (29), PA (20), and OH (18)
Just FL (29)
OR
Some combo of
2 - 5 swing states
(~30 – 50 EVs)
Some combo of
5 - 10 swing states
(~40 – 100 EVs)
Likely Path: “Rust Belt”
PA (20), OH (18), MI (16), WI (10)
Note: 270 EVs Needed to Win
Deutsche Bank
Feb-2016 Aug-2016
30%
40%
50%
Mar-2016 Jul-2016
30%
40%
50%
Feb-2016 Jun-2016 Mar-2016 Jun-2016
Clinton +6.6pts
Pennsylvania (20 EVs)
Source: Real Clear Politics. Data based on Real Clear Politics averages from most recent polls available. Wall Street Journal. Data as of Sept 22, 2016.
*Number of electoral votes. Start date in each box above based on varying data availability by state. 20
Clinton +6.0pts
Ohio (18 EVs) North Carolina (15 EVs) Virginia (13 EVs)
Florida (29 EVs*)
5. Large Battleground States
The Big 5 Battleground States
Summary: The 5 most important battleground states – Florida (FL), Pennsylvania (PA), Ohio (OH), North Carolina (NC) and
Virginia (VA) – have 95 total electoral votes. Given the degree to which the electoral map favors Democrats, Clinton can afford to
lose either FL or PA. The corollary, however, is not also true. If Trump loses FL or PA, he will almost certainly lose the election.
Trump +1.8pts
Feb-2016 Jun-2016
Trump +1.2pts
Most
important
“toss-up”
state in 2016
Election
Trump +0.1pts
Deutsche Bank
30%
40%
50%
May-2016 Aug-2016
Jul-2016 Aug-2016 Sep-2016
Trump +2.0pts
Feb-2016 Jun-2016
30%
40%
50%
Jun-2016 Aug-2016
9/23/2016
21
Source: Real Clear Politics. EV denotes # of electoral votes for each state. 270 electoral votes required to win. Data as of Sept 22, 2016.
6. The New Vulnerables
New Democratic Party Vulnerables
Iowa (6 EVs) Nevada (6 EVs)
Trump +6.3pts Clinton +5.0pts
New Hampshire (4 EVs)
Georgia (16 EVs) Arizona (11 EVs) North Carolina (15 EVs)
Trump +4.4pts
New Republican Party Vulnerables
Summary: President Obama easily won both Iowa and Nevada, though recent polls show Trump ahead in both states. Iowa has
voted Dem in 5 of the last 6 Presidential elections, while Nevada has in 4 of the last 6. A similar vulnerability has emerged, in
reverse, for three other closely contested states: Georgia, NC and Arizona. All three have voted Republican in 5 of the last 6
elections but remain too close to call.
Apr-2016 Jul-2016
Trump +1.6pts
Feb-2016 Jun-2016
Trump +1.2pts
Deutsche Bank
Clinton Trump Johnson /
Stein
Florida (29) 43.4 43.5 7.0
Pennsylvania (20) 44.7 38.5 10.5
Ohio (18) 39.8 42.3 10.5
Georgia (16) 41.0 45.4 8.6
North Carolina (15) 41.7 43.5 6.3
Virginia (13) 43.6 39.0 9.8
Arizona (11) 38.2 40.4 11.4
Iowa (6) 37.7 44.3 10.4
Nevada (6) 40.5 42.8 8.8
New Hampshire (4) 42.7 37.3 15.7
9/23/2016
22
Source: Real Clear Politics. Seattle Times. Financial Times. Johnson/Stein shows compiled polling info for the two candidates.
Data as of Sept 22, 2016.
7. The Third Rail
2016 3rd Party Candidates Polls in Key Swing States
Gary Johnson (Age: 63)
Libertarian Party (Governor of New Mexico)
Platform:
Small government and limited regulation
Single consumption tax
More protection of civil liberties
Fully privatized healthcare
Qualified for Debates: No
Ballot Eligibility: 50 States & Wash D.C.
Jill Stein (Age: 66)
Green Party (Harvard Medical School)
Platform:
Climate change action
Eradication of student debt
Federal $15 minimum wage, union rights
Single-payer healthcare system
Qualified for Debates: No
Ballot Eligibility: 44 States & Wash D.C.
Summary: Two third party candidates, Johnson and Stein, represent a material percentage (when combined) of “Independent”
and “undecided” voters in many key battleground states. Johnson and Stein also draw their strongest support from young voters
so critical to Clinton’s election (over 25% of 18-29 year olds support Johnson, and ~ 10% for Stein).
Deutsche Bank
5 9
10
12
2
1
7
84%
70%
'92 '16
23
33
26
33
50%
33%
'92 '16
9/23/2016
23 Source: Peck, Madigan, Jones. Pew Research Center. Cook Political Report. Associated Press.
8. Shifting Demographics
Race & Ethnicity
Summary: Since 1992, the US electorate has become more educated, more ethnically diverse, and older. However, these
changes have impacted the two major parties differently. According to Pew Research, the Democratic Party is becoming less
white, less religious and better educated at a faster rate than the country. In contrast, Republican voter trends have been slower
than the national rate on these metrics, while aging at a comparatively more rapid pace.
Changing Demographic Profile of American Voters (1992 – 2016)
Education Age
White
Other Asian
Black
Hispanic
High
school
or less
Some
college
College
degree+
18-29
30-49
50-64
65+ 19 21
21
30
40
31
19% 16%
'92 '16
Deutsche Bank
Black
White
Hispanic
Asian
Female
Male
Silent/Greatest (>71)
Boomers (52-70)
Gen X (36-51)
Millennial (18-35)
9/23/2016
24
Source: Upshot estimates. Real Clear Politics, Peck, Madigan, and Jones. *Romney’s share of white working class vote, share Trump would need (estimate), share
Trump would need with 5 pts less support from Hispanic voters and college-educated whites.
9. The Importance of Turnout
2012 US Election Turnout
Estimated White Vote Needed for
Trump in Key Swing States
Summary: In 2012, Romney won 59% of the white vote (highest ever by a GOP candidate against an incumbent), and 17% of the
non-white vote in the 2012 election. To win, Trump will need the largest white male turnout in history, while Clinton will need strong
numbers from women, youth, Hispanics and African Americans.
55%
67%
64%
48%
47%
64%
60%
72%
69%
61%
46%
Total Eligible Voters:
By Ethnicity:
By Gender:
By Age:
State (EVs)
Romney’s
Share
Share Trump
Needs
Share with
5 pts less*
Florida (29) 64% 67% 72%
Pennsylvania (20) 56% 61% 64%
Ohio (18) 55% 58% 61%
Michigan (16) 53% 62% 65%
North Carolina (15) 70% 68% 71%
Virginia (13) 66% 72% 77%
Wisconsin (10) 50% 57% 60%
Minnesota (10) 49% 57% 61%
Colorado (9) 55% 63% 69%
Oregon (7) 47% 58% 62%
Iowa (6) 50% 56% 58%
Nevada (6) 58% 67% 72%
New Hampshire (4) 51% 56% 59%
Deutsche Bank
9/23/2016
25
10. A More Polarized Electorate
Summary: American voters are more ideologically polarized than ever before. Today, 92% of Republicans are to the right of the
median Democrat, versus 64% in 1994. And 94% of Democrats are to the left of the median Republican, up from 70% in 1994.
Those furthest to the Left and Right are also much more likely to vote.
Source: Pew Research Center. New York Times. Ideological Gap 2014 Political Polarization in American Public (consistency based on a scale of 10 political values
questions). Activism based on survey on 10,000 participants from Pew Research (2014).
* Political contributions made in last 2 years.
Widening Ideological Gap Larger Activism Gap
% Who Always Vote
% Making Political Contributions*
58%
43% 39%
58%
78%
0%
20%
40%
60%
80%
100%
Consistently liberal
Mostly liberal
Mixed Mostly conservative
Consistently conservative
31%
12% 8%
15%
26%
0%
10%
20%
30%
40%
Consistently liberal
Mostly liberal
Mixed Mostly conservative
Consistently conservative
Republican / Leans Republican
1994 2014
Democrat / Leans Democrat
1994 2014
Median
Democrat
Consistently
liberal
Consistently
conservative
Median
Republican
Median
Democrat
Consistently
liberal
Consistently
conservative
Median
Republican
Deutsche Bank Source: Peck, Madigan, Jones. Open Secrets. Presidential fundraising as of Sept 1, 2016. Senate fundraising as of Sept 13, 2016. Center for Responsive
Politics. Senate totals above based on candidate filings and could result in some double counting. Cruz, Rubio and Bush outraised Clinton in the following 15
states: AZ, AK, DE, FL, GA, ID, MO, MT, ND, OK, TX, UT, WV, WI and WY. *Campaign donations include self funding.
9/23/2016
26
11. The Funding Advantage
Summary: Clinton (and her Super PACs) have outraised Trump (and his Super PACs) in all 50 states and Washington DC.
However, it would be wrong to say that a Clinton victory necessarily brings control of the US Senate, because Republicans have
outspent their Democratic rivals in a large number of key Senate races.
Presidential Campaign:
Democrat Advantage
Senate Races:
Republican Advantage
$0
$50
$100
$150
$200
$250
$300
$350
$400
$450
$500
Clinton Trump
(USD, Mn)
$435 Mn
$161 Mn
Individual
donations*
Super PACs
&
Organizations
28%
72% 22%
78%
$0
$20
$40
$60
$80
$100
$120
$140
Democrats Republicans
(USD, Mn)
Against
other
party
For party $95 Mn
28%
72%
$133 Mn
22%
78%
Deutsche Bank Source: Peck, Madigan, Jones. Political Communication White Paper (Kreiss & Jasinski). Washington Post. Bloomberg. Fortune. Field office data based
on PBS data as of Aug 30. *Note RNC will open 27 joint offices FL and 2 in NC in September.
9/23/2016
27
12. The Ground Game
Summary: This year, we are poised to see the greatest imbalance ever in advertising and ground game spending in a US election.
Between the 2004 and 2012 campaigns, the Democratic Party made massive investments in data and technology that
Republicans have been slow to emulate. By comparison, the Republican Party commenced comparable efforts in 2016.
Data & Technology Field Offices # of Discreet Technology & Data Staffers
(2004 to 2012 Elections)
# of Technology & Data Companies Started by Staffers
(2004 to 2012 Elections)
507
123
0 100 200 300 400 500 600
Democrats
Republicans
67
13
0 20 40 60 80
Democrats
Republicans
# of Field Offices in Key States (as of Sept 1)
State* Clinton Trump Difference
Florida 34 1 Clinton +33
Pennsylvania 36 2 Clinton +34
Ohio 36 16 Clinton +20
Virginia 29 18 Clinton +11
North Carolina 30 0 Clinton +30
New Hampshire 17 1 Clinton +16
Georgia 1 3 Trump +2
Wisconsin 33 22 Clinton +11
Iowa 24 9 Clinton +15
Colorado 18 8 Clinton +10
Arizona 2 1 Clinton +1
Nevada 6 6 Even
Deutsche Bank
“Madison’s experience at both the state and the federal level had convinced him
that ‘the people’ was not some benevolent, harmonious collective but rather a
smoldering and ever-shifting gathering of factions or interest groups committed to
provincial perspectives and vulnerable to demagogues with partisan agendas. The
question, then, was how to reconcile the creedal conviction about popular
sovereignty with the highly combustible, inherently swoonish character of
democracy. Perhaps the most succinct way to put the question was this: How
could a republic bottomed on the principle of popular sovereignty be structured in
such a way to manage the inevitable excesses of democracy and best serve the
long-term public interest?”
-Joseph Ellis, Pulitzer Prize Winning Author of
“The Quartet: Orchestrating the 2nd American Revolution, 1783-1789”
29
Deutsche Bank
9/23/2016
30
Source: Real Clear Politics Data as of Sept 22, 2016 (overall). Johnson and Stein shown on a combined basis. JMC analytics, based on survey of 781
registered voters. Survey conducted between September 7-8, 2016. YouGov, based on survey of 1091 likely voters. Survey conducted between August
30-September 2, 2016. CNN based on 1,006 Ohioans from Sept 7 - 12, 2016. Pew Research. David Rothschild, PredictWise.
13. This Election’s Big 3
Summary: Four years ago, the prevailing view was that Romney had to take Florida, Ohio and Virginia to win the election. This
year, swap out Virginia for Pennsylvania. If Clinton wins Pennsylvania, she will almost certainly win the election. However, if
Trump wins Pennsylvania, it will likely be the type of evening where he also wins Ohio and North Carolina.
Florida (29) Pennsylvania (20) Ohio (18)
Overa
ll
Key D
em
og
rap
hic
s
43%
44%
7%
0% 20% 40% 60%
Clinton
Trump
Johnson / Stein
45%
39%
11%
0% 20% 40% 60%
40%
42%
11%
0% 20% 40% 60%
34%
55%
0% 20% 40% 60%
Clinton
Trump
White
Hispanic
44%
42%
35% 40% 45%
Clinton
Trump
37%
44%
30% 35% 40% 45%
86%
3%
0% 50% 100%
White
Black
30%
53%
0% 20% 40% 60%
80%
9%
0% 50% 100%
White
Non-White
Deutsche Bank
35%
37%
39%
41%
43%
45%
47%
49%
Jul-2016 Aug-2016 Sep-2016
9/23/2016
31
Source: Real Clear Politics. Data as of Sept 22, 2016. David Rothschild, PredictWise.
14. Popular Vote Likely Close
National Polls Popular Vote Likely to be Close
Year Electoral College Winner
Opponent % Margin of
Victory
1948 Truman (D) Dewey (R) 4.5%
1952 Eisenhower (D) Stevenson (R) 10.9%
1956 Eisenhower (D) Stevenson (R) 15.4%
1960 Kennedy (D) Nixon (R) 0.2%
1964 Johnson (D) Goldwater (R) 22.6%
1968 Nixon (R) Humphrey (R) 0.7%
1972 Nixon (R) McGovern (D) 23.2%
1976 Carter (D) Ford (R) 2.1%
1980 Reagan (R) Carter (D) 9.7%
1984 Reagan (R) Mondale (D) 18.2%
1988 Bush (R) Dukakis (D) 7.7%
1992 Clinton (D) Bush (R) 5.6%
1996 Clinton (D) Dole (R) 8.5%
2000 Bush (R) Gore (D) (-0.5%)
2004 Bush (R) Kerry (D) 2.5%
2008 Obama (D) McCain (R) 7.3%
2012 Obama (D) Romney (R) 3.9%
Clinton
Trump
Clinton: +2.1 pts
Summary: In any election, polls are typically off by 2-3 points on average. The challenge is knowing which direction they are off.
As the last 30 years have shown, the popular vote will likely be reasonably close (even if the electoral college is not). The outsized
popular victories of prior decades are unlikely to return soon.
Closer
Last
30
Years
45.5
43.4
Deutsche Bank Source: Lunchtime Politics. Wall Street Journal. Gallup Polls. Based on the last poll before the start of the convention and the first poll available 7+ days after the
start of the convention. Clinton poll jump in 1992 aided by Ross Perot withdrawing from the race during the Democratic National Convention, making it a two-person
contest, before Perot re-entered in October. Real Clear Politics . Data as of Sept 22, 2016. 32
Post Convention Polling (2016) Post-Convention Bump (Historical)
Democrats Republicans
Year Candidate Poll Bump Candidate Poll Bump
2016 Clinton +2 Trump +4
2012 Obama +1 Romney (-3)
2008 Obama +4 McCain +4
2004 Kerry (-2) Bush +7
2000 Gore +8 Bush +4
1996 Clinton +4 Dole +8
1992 Clinton +28* Bush +2
1988 Dukakis +7 Bush +7
1984 Mondale +2 Reagan +4
1980 Carter +10 Reagan +8
Median: +4 +4
30%
35%
40%
45%
50%
55%
Jun-2016 Jul-2016 Aug-2016 Sep-2016
Clinton Trump
RNC
15. Fading the Post Convention Bump
DNC
Summary: The post convention bumps of early July for both Clinton and Trump were largely in line with historical averages. Both
have long since faded as the race has tightened.
Deutsche Bank
9/23/2016
33
16. Temperament & Trust
Unfavorability Ratings Trust
Temperament
Summary: Polls suggest Hillary Clinton is the 2nd least favorable major Party candidate in modern US election history. Trump is
the first. Low likeability for both candidates makes voter turnout, and therefore the election outcome itself, more challenging to
forecast.
Source: Gallup, Five Thirty Eight. Clinton / Trump data from Gallup as of September 6-13, 2016. Others as of April & May of respective election year.
ABC/Wash Post, September 8, 2016. CNN/ORC, September 1-4, 2016. WSJ/NBC News telephone poll of 1,000 registered voters and 922 likely voters
conducted Sept. 16-19; margins of error: +/-3.10 and 3.23 pct. pts., respectively.
0%
10%
20%
30%
40%
50%
60%
70%
1980 1984 1988 1992 1996 2000 2004 2008 2012 2016
Clinton
56%
Trump
60%
35% 31%
Clinton Trump
35%
50%
15%
Clinton Trump Neither
Do you think the candidate is
honest and trustworthy? %
answering yes.
Do you think “honest and
trustworthy” applies more to
Trump or Clinton?
61%
30%
Clinton Trump
56%
36%
7%
Clinton Trump Neither
Who do you think has a better
temperament to serve as
president?
Do you think “has the
temperament to serve effectively
as president” applies more to
Trump or Clinton?
Unfavorable Ratings for Each Candidate
Top Voter Concerns
With Clinton With Trump
33%
27%
13%
6%
Temperament
Race/Gender Views
Putin Praise
Tax records
36%
29%
9%
8%
Middle East Policy
Emails
"Deplorable" Comment
Health
Deutsche Bank
9/23/2016
34
Source: Pew Research Center. Based on survey of 2,245 registered voters. Survey conducted between June 15-16, 2016.
17. Polling the Issues
Summary: The issues most important in the 2016 election vary significantly by demographic group across age, ethnicity and
gender. However, the economy, immigration, national security and healthcare consistently rank high in importance.
Which Candidate Would Do a Better Job of…
Improving Economic
Conditions
Reducing Special
Interest Influence
Making Wise
Trade Policy
Dealing with
Healthcare
Handling
Immigration
Making Wise Foreign
Policy Decisions
Defending Against
Terrorist Attacks
Dealing with
Gun Policy
Selecting Supreme
Court Justices
Handling Race
Relations
43% 48%
0%
10%
20%
30%
40%
50%
60%
70%
Clinton Trump
30%
50%
Clinton Trump
48% 46%
Clinton Trump
54%
37%
Clinton Trump
51%
42%
Clinton Trump
54%
36%
0%
10%
20%
30%
40%
50%
60%
70%
Clinton Trump
43% 48%
Clinton Trump
46% 45%
Clinton Trump
52%
40%
Clinton Trump
66%
26%
Clinton Trump
Deutsche Bank
Year Poll Differential (Pre & Post Debate)
2008
McCain vs. Obama
2004
Bush vs. Kerry
2000
Gore vs. Bush
1996
Clinton vs. Dole
1992
Bush vs. Clinton
1988
Bush vs. Dukakis
1984
Reagan vs. Mondale
1980
Carter vs. Reagan
1976
Ford vs. Carter
9/23/2016
35
Source: Washington Post. Washington Monthly. Nate Silver.
18. Debates Can Matter
Notable Debate Gaffes Impact of First Presidential Debate
Year Notable Gaffe & Impact
1960
Gaffe: Nixon appears nervous in first televised
presidential debate
Impact: Kennedy moves from 1 point behind to
3 points ahead of Nixon
1976
Gaffe: Ford says there is no Soviet domination
of Eastern Europe
Impact: Carter's lead widens from +2 points to
+6 points
1988
Gaffe: Dukakis gives unemotional response to
rape and death penalty question
Impact: George H.W. Bush's lead in the polls
widens from +5 points to +10 points
1992
Gaffe: Bush glances at his watch during the
second debate, appearing impatient
Impact: Bush drops in the polls by 2 points
2000
Gaffe: Al Gore sighs audibly at the presidential
debate
Impact: Polls swing to Bush by 2-3 points
Before
After
Obama +3.3
Obama +6.0
Bush +4.3
Bush +5.2
Bush +5.4
Bush +2.4
Gore +1.8
Bush +1.5
Clinton +16.5
Clinton +15.1
Clinton +12.9
Clinton +13.5
Reagan +20.6
Reagan +17.0
Carter +1.4
Reagan +1.4
Carter +6.0
Carter +3.4
Summary: Over the last 40 years (since 1976), there have only been two elections – 1980 and 2000 – where leadership in the
national polls traded places following the debate. Further, in every case, the poll leader after the first debate in every election won
the Presidency.
Deutsche Bank
0%
20%
40%
60%
80%
100%
1992 1996 2000 2004 2008 2012 2016
0%
20%
40%
60%
80%
100%
1992 1996 2000 2004 2008 2012 2016
0%
20%
40%
60%
80%
100%
1992 1996 2000 2004 2008 2012 2016
00%
20%
40%
60%
80%
100%
2000 2004 2008 2012 2016
9/23/2016
36
19. Higher Voter Engagement
Summary: Contrary to popular opinion, the US voter has actually been very engaged in recent US elections, in particular 2016.
Numerous polls and studies suggest that US voters are spending significant time watching, reading and thinking about the 2016
election.
Source: Pew Research Center. Based on registered voters, other / don’t know responses not shown. Results from June
surveys.
Engagement of Registered Voters
When it comes to making progress on
important issues facing the country… Thought about election…
Follow news about Presidential candidates… Interest in politics compared to last
presidential election year…
It really matters who wins
Pretty much the same regardless
74%
22%
Quite a lot
Only a little
80%
15%
Very / fairly closely
Not too / at all closely
85%
14%
More interested
Less interested
60%
16%
Deutsche Bank
9/23/2016
37
Source: NPR, Center for American Women in Politics. NBC / WSJ Polling. The USC Dornsife / LA Times Presidential Election
"Daybreak" Poll. Data based on a survey of over 2000 people. Data as of Sept 22, 2016.
20. The Gender Divide
2016 Preferences by Gender Female Voter Turnout
52%
54%
56%
58%
60%
62%
64%
66%
68%
1980 1984 1988 1992 1996 2000 2004 2008 2012
Female
64%
Male
60%
% of Eligible Adult Population Who Reported Voting
Summary: Women comprised 53% of the voting US electorate in 2012, and have had higher voter turnout than men in every US
Presidential election since 1980. The gender gap between political parties in 2016 has the potential to be the widest of any US
election. Importantly, recent polls suggest that Trump’s disapproval ratings among women are 70-75%. In 2012, Romney lost the
overall women’s vote by 11 points, though he won the white women’s vote 56 to 42.
Female
Male
Clinton
47%
Trump
41%
Clinton
39%
Trump
50%
30%
35%
40%
45%
50%
55%
60%
Jul-2016 Aug-2016 Sep-2016
30%
35%
40%
45%
50%
55%
60%
Jul-2016 Aug-2016 Sep-2016
Deutsche Bank
Age 18 - 34
Age 35 – 64
Age 65+
69% 70% 72%
70% 72%
60%
64%
69% 69% 69%
41%
47%
57%
61% 61%
46%
50%
46%
20%
40%
60%
80%
1996 2000 2004 2008 2012
Voter Turnout by Generation
38
2016 Preferences by Age
21. Age Differences
Summary: President Obama won 60% of the youth vote in 2012. Importantly, Clinton’s once commanding lead among young
voters has collapsed over the last month as millennials have moved toward the 3rd party candidates, Johnson and Stein. Voters in
the age 35-64 demographic have so far shown the least volatility. Trump’s clearest advantage is with voters age 65 and older.
% of Eligible Voters Who Say They Voted
Source: WSJ. LA Times. Pew Research Center. Current Population Survey November Supplement (IPUMS). The USC
Dornsife / LA Times Presidential Election "Daybreak" Poll. Data based on a survey of over 2000 people. Eligible voters are
U.S. citizens ages 18 and older. Millennial refers to the population ages 18 to 35 as of 2016. Data as of Sept 22, 2016.
Clinton
44%
Trump
39%
Clinton
44%
Trump
46%
Clinton
41%
Trump
52%
Silent/
Greatest
(Age >71)
Boomers
(Age 52 – 70)
Gen X
(Age 36 – 51)
Millennials
(Age 18 - 35)
15%
25%
35%
45%
55%
65%
Jul-2016 Aug-2016 Sep-2016
15%
25%
35%
45%
55%
65%
Jul-2016 Aug-2016 Sep-2016
15%
25%
35%
45%
55%
65%
Jul-2016 Aug-2016 Sep-2016
Deutsche Bank
46%
40%
White Black
Latino Other
White College Graduates
White Non-College Graduates
Jul-2016 Sep-2016 0%
25%
50%
75%
100%
Jul-2016 Sep-2016
Jul-2016 Sep-2016
0%
25%
50%
75%
100%
Jul-2016 Sep-2016
29%
57%
9/23/2016
39
Source: ABC/Wash Post, September 8, 2016. Preferences among likely voters (%). The USC Dornsife / LA Times Presidential Election "Daybreak"
Poll. Data based on a survey of over 2000 people. Race and Ethnicity data as of Sept 22, 2016.
22. Ethnicity & Race
2016 Preferences by Race The White Education Divide
Summary: Polls suggest that Clinton is having difficulty replicating the strength of the coalition that delivered Obama to the White
House in 2008 and 2012: the youth, educated whites, Hispanics and African Americans. Turnout among these critical
demographics will ultimately determine the 2016 election outcome.
Trump
Trump
Clinton
Clinton
Trump
Clinton
56%
32%
Clinton 86%
Trump 5%
Trump
Clinton 54%
34%
Trump
44%
Clinton 43%
Deutsche Bank
High School or Less
Some College
College Grad or Up
20%
30%
40%
50%
60%
70%
Jul-2016 Aug-2016 Sep-2016
20%
30%
40%
50%
60%
70%
Jul-2016 Aug-2016 Sep-2016
40
2016 Preferences by Education 2016 Preferences by Income
23. Education & Income
Summary: White voters without college degrees have been a core source of Trump support. By contrast, Clinton has done better
with college educated voters than previous Democrats. While Clinton holds a distinct edge with lower income voters, Trump has
led among middle and higher income segments of the population.
Source: The USC Dornsife / LA Times Presidential Election "Daybreak" Poll. Data based on a survey of over 2000 people.
Data as of Sept 22, 2016.
Less than $35k
$35 – 75k
More than $75k
Clinton
39%
Trump
51%
Clinton
49%
Trump
38%
Clinton
41%
Trump
47%
Clinton
43%
Trump
45%
Clinton
37%
Trump
53%
Clinton
51%
Trump
36%
20%
30%
40%
50%
60%
70%
Jul-2016 Aug-2016 Sep-2016
25%
35%
45%
55%
65%
Jul-2016 Aug-2016 Sep-2016
25%
35%
45%
55%
65%
Jul-2016 Aug-2016 Sep-2016
25%
35%
45%
55%
65%
Jul-2016 Aug-2016 Sep-2016
Deutsche Bank
9/23/2016
41
Source: Washington Post, FiveThirtyEight, Real Clear Politics. State boost based on candidate performance in VP’s home state using relative voting
index (RVI) comparisons to prior and following elections (where available). Indiana polls are the average of 3 most recently available polls between
August 19 and September 9, 2016. Virginia data as of Sept 22, 2016.
24. The VP Impact
Home State Boost
Indiana (11): Mike Pence
Virginia (13): Tim Kaine
Year Candidate Home State State Boost
2012 Biden DE +5.9
2012 Ryan WI +3.6
2008 Biden DE +7.7
2008 Palin AK +8.8
2004 Edwards NC +0.2
2004 Cheney WY +6.8
2000 Lieberman CT +5.9
2000 Cheney WY +10.1
1996 Gore TN +4.1
1996 Kemp NY -2.9
Median Since 1920: +2.2
Clinton / Kaine: +6.0pts
Summary: Over the past 100 years (back to the 1920 election), the Vice-Presidential candidate has boosted their ticket by only
2.2 percentage points in their home state. While Kaine has helped solidify the important swing state of Virginia, Republicans hope
that Pence will be able to extend Republican strength in Indiana into the nearby “rust belt” (OH, PA, MI and WI).
36%
45%
0%
10%
20%
30%
40%
50%
Clinton / Kaine Trump / Pence
30%
35%
40%
45%
50%
Feb-2016 Aug-2016
Deutsche Bank
“If men were angels, no government would be necessary. If
angels were to govern men, neither external nor internal
controls would be necessary. In framing a government which is
to be administered by men over men, the greatest difficulty lies
in this: You must first enable the government to control the
governed; and in the next place oblige it to control itself. A
dependence on the people is no doubt the primary control on
government, but experience has taught mankind the necessity
of auxiliary precautions.”
-James Madison, 4th US President,
in Federalist Paper No. 51
(1751 - 1836)
43
Deutsche Bank
0
100
200
300
400
500
600
700
800
900
114th 113th 112th 111th 110th 109th 108th 107th 106th 105th 104th 103rd 102nd 101st 100th 99th 98th 97th 96th 95th 94th 93rd
Source: GovTrack. Congress.gov. Bills and Joint Resolutions Passed by Congress. DB Government Affairs (Frank Kelly). S&P. Peck, Madigan & Jones.
44
Legislation Passed by Each Congress
Congress
1973
Congress
2016
1970s Avg: 760
1980s Avg: 664
1990s Avg: 486
2000s Avg: 443
2010s Avg: 260
25. Transformational Change: Unlikely
Summary: Large, complex legislation is very difficult to do in today’s Washington. That is especially true with either divided
Government or a narrow Senate majority. While a Trump victory with a unified Congress has the greatest potential for
transformational change, the size and “unfunded” nature of many of his proposals (stimulus, tax cuts) will make them difficult to
push through a Republican Congress. For both candidates, the filibuster-proof budget path known as “reconciliation” could
become the preferred legislative path.
Legislation by “Reconciliation”
Reagan’s ’86 tax cuts
Clinton’s ’93 stimulus
Bush’s ’03 tax cuts
Deutsche Bank
9/23/2016
45
26. Fiscal Stimulus: Yes, but Small
Potential Post-Election
Fiscal Stimulus
Post-Election
Fiscal Stimulus Drivers
President Year Stimulus Package
Obama 2009 Tax Cuts / Spending
Bush 2001 Tax Cuts / Spending
Clinton 1993 Spending
Reagan 1981 Tax Cuts
Carter 1977 Spending
Ford 1975 Tax Cuts
Johnson 1964 Tax Cuts
Kennedy 1961 Spending
Eisenhower 1954 Tax Cuts / Spending
Fiscal Stimulus Packages in Presidential First Terms Hillary Clinton
Size: $275bn in 1st 100 days
(<1% of GDP per annum)
Form: Infrastructure spending and student loan
relief
Funding: Raise income and estate tax for wealthy
Donald Trump
Size: “At least double” Clinton
(2 - 3% of GDP per annum)
Form: Infrastructure spending and tax cuts
Funding: Largely unfunded (and so much larger
deficit impact)
Summary: First term US Presidents, on both sides of the aisle, have a long history of pursuing fiscal stimulus. Both Trump and
Clinton have proposed large fiscal stimulus, and bi-partisan consensus has developed around the need for infrastructure spend.
Look for programs to be much smaller than advertised (due to narrow Senate majorities, and Trump’s largely “unfunded” plan).
Source: GovTrack. Congress.gov. Bills and Joint Resolutions Passed by Congress. DB Government Affairs (Frank Kelly). S&P. Peck, Madigan & Jones.
Deutsche Bank
9/23/2016
46
Source: DB Asset Management (Larry Adam, CIO. Stefan Kreuzkamp). Recession time periods reflect 1929 – 20015. DB
Global Research (Hooper. Slok, Bianco. Spencer. Winkler). DB House View. GDP impact based on a summary of different
models.
27. Growth: Numerous Channels
Recessions & Election Cycles Post-Election Growth Drivers
Summary: Post-election policy pivots could impact US growth, positively or negatively, through numerous channels. Generally
speaking, infrastructure spending will have higher multiplier effects than tax cuts. Also, as DB CIO Larry Adam reminds us, 9 of
the 14 US recessions since the Great Depression have been in the first year of a Presidential term (including the last 3 Presidents:
Obama, Bush, and Clinton).
Fiscal stimulus
– Infrastructure has higher fiscal multiplier
than tax cuts
– US has higher multiplier than many peers
Low Ricardian equivalence
Low sensitivity to current account
Low impact to US credit risk
Tax reform
– Needs to be funded to reduce fiscal drag
– Positive for growth and business spend if
structured properly
Trade policy
– Disruption depends on speed, scope and
tone of change
– Contagion most rapid through currency
markets
Consumer and business confidence
– Negative if policy becomes unpredictable
or uncertain
– Little change if policy change is modest
– Positive if fiscal, tax and trade policy
structured properly
GDP Impact of Fiscal Easing
0.00%
0.05%
0.10%
0.15%
0.20%
0.25%
US EZ Japan UK Canada EM Total
Impact on global growth from fiscal packages being
discussed (%)
0.08%
0.07% 0.02% 0.01%
0.01% 0.00% 0.21%
3.5%
2.5%
4.0% 3.7%
0 1 2 3 4 5 6 7 8 9 10
0%
1%
2%
3%
4%
5%
Year 1 Year 2 Year 3 Year 4
Average GDP in Presidential Cycle # of Times Recession Started
9 of the 14 recessions since
1929 have started in
the first year of a
Presidential term.
Deutsche Bank
-4%
-2%
0%
2%
4%
6%
8%
Jan
Fe
b
Mar
Apr
May
Jun
Jul
Aug
Sep
Oct
Nov
Dec
9/23/2016
47
Source: DB Asset Management (Larry Adams, CIO). DB Global Markets Research (Bianco). Bloomberg. Close Elections based on
average S&P performance in close election years (1952, 1960, 1968, 1976, 2004), one week rolling average with performance indexed
such that election day is 100. Open election data based on data from 1933 – 2015.
28. Volatility: The Uncertainty Principle
Summary: Going back to WWII, Presidential election years have been the weakest for US equity markets. According to DB’s
David Bianco, when elections are close (1952, 1960, 1968, 1976, 2004), pre-election under-performance often gives way to a post
election rally. Lastly, the S&P 500 has significantly under-performed in years of “open” elections (i.e., no incumbent running).
Election Years
Markets Don’t Like Uncertainty
Close Elections Open Elections
(No Incumbent)
5.7%
7.3%
14.8%
5.6%
0%
5%
10%
15%
20%
Year 1 Year 2 Year 3 Year 4
Average S&P 500 Return in
Presidential Term
97
98
99
100
101
102
103
104
105
28-Aug 12-Oct 26-Nov
Election
Day
S&P 500
The S&P in a year of an open
election (8 occurrences) has
underperformed all election years
by 507 bps.
All Election
Years
Open Election
Years
S&P 500
Deutsche Bank
9/23/2016
48
Source: DB Global Markets Research (Winkler, Ruskin).
29. US Dollar: Modest Strengthening
Fickle Relationship
Between USD & Fiscal Policy
2016E 2017E
EUR / USD 1.05 0.95
GBP / USD 1.25 1.15
USD / JPY 94 94
40
60
80
100
120
140
160
-11%
-6%
-1%
4%
9%
14%
19%
24%
1972 1978 1984 1990 1996 2002 2008 2014
Dollar
Index
Budget Surplus / Deficit
(% of GDP)
Effective Fed Funds Rate
Summary: As DB’s Robert Winkler notes, the relationship between FX and fiscal policy is frequently fickle. Under Reagan, a large
fiscal stimulus (~5% of GDP) precipitated an early 80’s USD strengthening cycle in large part because it was also preceded by
monetary tightening. Subsequent first term fiscal expansions (Bush early 2000’s, Obama in 2009) coincided with a weakening
USD as the Fed was not aggressively tightening at the same time.
Post-Election
USD Strengthening Drivers
Hillary Clinton
USD Strengthening: Continues, but less than with
Trump
– Fiscal stimulus more modest
– Tax repatriation less likely
Donald Trump
USD Strengthening: Stronger than under Clinton
– Larger fiscal stimulus
– Marginally more hawkish Fed
– Higher rates, steeper curve
– Tax repatriation flows
– Trade disruption likely USD positive
Deutsche Bank
12
13
14
15
16
17
18
19
20
2013 2014 2015 2016
9/23/2016
49
Source: Bloomberg. DB Global Markets Research (Ruskin). USD/MXN and USD/CNY axis in reverse order. Data as of Sept
22, 2016.
Near-Term: USD / MXN
2016 2017
USD / MXN 18.80 19.50
USD / CNY 7.00 7.00
Taper tantrum
Fed tightening
19.62
6.0
6.1
6.2
6.3
6.4
6.5
6.6
6.7
6.8
2015 2016
Aug 2015
devaluation
6.66
Medium-Term: USD / CNY
30. At Risk Currencies: MXN & RMB
Summary: The Mexican Peso has declined 13% YTD, making it one of the worst performing EM currencies globally in 2016.
While other factors have been important (Fed, oil prices, low growth, leverage), DB’s Alan Ruskin has highlighted the asymmetry
between Trump’s poll numbers and the Peso. In the case of both China and Mexico, domestic factors and global risk will matter
more, but sharp post-election policy pivots on trade will have an impact.
Deutsche Bank
Hillary Clinton
Fiscal Stimulus:
– Likely modest given divided Gov't
– Stimulus facilitates more rapid tightening
Strengthen Dodd-Frank
– "Risk fee" and Glass-Steagall update for large
banks supervised by Fed
Donald Trump
Fiscal Stimulus:
– Larger than Clinton plan
– Slightly more rapid tightening
Fed Audit
– Favors a less independent Fed
Replace Yellen
– More hawkish choice likely
Dodd-Frank Repeal
– Desire to dismantle Dodd-Frank would impact Fed's
current supervisory role
9/23/2016
50
Source: Federal Reserve. Bloomberg. Data as of Sept 22, 2016.
31. Fed Policy: Marginally More Hawkish
Pre-Election
Dovish “Relent” / Hawkish Hold
Summary: Historically, the Fed has been more dovish pre-election, and more hawkish post-election, than the Taylor Rule would
prescribe. More importantly, the Fed has been dovishly relenting to market expectations on rates, while communicating a “hawkish
hold” on tightening expectations. Fiscal stimulus, if passed, could put the Fed on a more rapid ‘normalization’ path.
Post-Election
Implications for the Fed
3.50%
0.63%
1.13%
1.88%
2.90%
0.50%
0.72% 0.85%
0%
1%
2%
3%
4%
2016 2017 2018 Long Run
Market View
(Sep 2016)
(Dec 2015)
(Sep 2016)
Fed View
1.50 – 1.75%
Difference:
2 hikes
4
hikes
Deutsche Bank
9/23/2016
51
Source: DB Global Markets Research (Konstam. Winkler). Data as of September 15, 2016.
32. US Rates: Low Yields, Steeper Curve
Fiscal Stimulus & the Yield Curve
2016E 2017E
10Yr UST 1.75% 2.00%
Summary: Historically, the Fed matters more for US rates than elections. Having said that, if either Clinton or Trump managed to
push through a sizable fiscal stimulus (will be difficult), this would likely precipitate a hawkish re-pricing of Fed tightening
expectations, higher US rates, and a steeper yield curve. This, in turn, would be bullish for the Dollar.
Post-Election
US Rates Drivers
Fed Policy
– Matters more for US rates than elections
– Historically, more hawkish post election
– Trump would replace Yellen with more hawkish Chair
– Continued “financial repression” (excess monetary
easing) more likely under Clinton
Fiscal Stimulus
– Historically, curve steepening
– Form and size of stimulus matters (i.e., private sector
may “save” tax cuts)
– Productivity-enhancing if large and structured
properly
– Higher growth and terminal funds
– Accelerates Fed tightening
Tax Repatriation
– Could positively impact business spend and
productivity
Divided Government
– Historically, curve steepening
– Fiscal stimulus likely smaller -11%
-9%
-7%
-5%
-3%
-1%
1%
3%
1990 1994 1998 2002 2006 2010 2014
5s – 30s
Budget Surplus / Deficit
(% of GDP)
Deutsche Bank
9/23/2016
52
33. US Credit: Extending the Cycle
Technicals Over-Powering
Fundamentals & Political Risk
Post-Election
US Credit Drivers
Summary: Though fiscal stimulus may be modest under Clinton or Trump, and tax repatriation more likely with Trump, both
policies are positive for US credit. However, if they cause Fed tightening to accelerate, that could reduce technical flows into US
credit as FX hedging costs rise for overseas buyers. While tax repatriation will impact large cap IG more than domestic oriented
HY, oil sector policy will have comparatively more impact on HY.
Source: Cash is S&P 500, ex-fin. DB Global Markets Research (Winkler. Bianco, Melentyev. Ruskin). IFR. Lipper Fund Flows.
Modest fiscal stimulus (Trump & Clinton)
– Economic growth and spread tightening
– Modestly extends credit cycle
Tax repatriation flows (Trump)
– More impact on IG than HY
– Stronger balance sheets and tighter
spreads
– Reduces large cap IG issuance needs
Oil sector deregulation (Trump)
– Sector specific benefits
– Higher production lowers oil prices
– Lower oil puts pressure on HY
Overseas US Corp Cash
~$480 Bn
~$672 Bn
$448 Bn
0
200
400
600
800
Cash in US, USD
Cash Abroad, USD
Cash Abroad, non-USD
Estimated Cash Holdings (USD, Bn)
Weekly US IG Bond Flows (USD, Mn)
-2,000
-1,000
0
1,000
2,000
3,000
4,000
Jan-2016 Mar-2016 Jun-2016 Aug-2016
Deutsche Bank
9/23/2016
53
Source: DB Wealth Management (Larry Adam, CIO). DB Global Markets Research (Bianco). Price return only. Data from 1930 - 2015. Bloomberg.
34. US Equities: Sector Differentiation
Sector Differentiation
in Sweep Scenarios
Summary: While only 6 US Presidential election years since 1896 have experienced US stock market declines greater than 5%, 2
of them occurred recently (2000 and 2008). DB’s David Bianco reminds us that markets will likely be more volatile in the event that
either side, Clinton or Trump, achieves unified Government with the Senate. Regarding relative industry performance, critical
policy and regulatory differences will be key drivers.
Advantaged Sectors
Under Clinton
Health Care Services & Facilities (Managed Care)
Engineering & Construction
Small Banks & Insurance
Energy Majors
Clean Energy & Social Media
Metals & Mining
Advantaged Sectors
Under Trump
Drugs & Medical Devices
Defense Stocks
Big Banks & Capital Markets
Oil E&P and Services
Cheap Energy & Telco/Cable
Chemicals & Construction
Average Annual S&P 500
Return by President
17.7%
14.8%
12.9%
11.6%
9.5%
7.4%
7.0%
5.3%
1.1%
0.9%
0% 5% 10% 15% 20%
Clinton
Bush Sr.
Eisenhower
Reagan
Truman
Obama
Kennedy/Johnson
Carter
Bush Jr.
Nixon/Ford
Average Annual S&P 500 Return by President
Deutsche Bank
9/23/2016
54
Source: DB Global Markets Research (Winkler. Nip. Bianco. Ruskin). Deloitte.
Note: G20 includes European Union, which does not have a uniform corporate tax rate. Spain is not a G20 member but is a permanent guest. Tax rates
shown are national corporate tax rates and do not include additional sub-national tax rates.
35. Tax Reform: Still Difficult
G20 Corporate Tax Rates
Summary: Clinton and Trump have a broad range of significantly different corporate tax proposals related to top line rates,
overseas cash, inversions, tax systems and industry-specific levies (energy and financial).
Post-Election
Corporate Tax Implications
Hillary Clinton
Corporate Tax Rates:
− No proposed change to rate or system
Inversions & Overseas Earnings:
− Increase foreign ownership threshold from 20% to
50%
− “Exit tax” on un-repatriated earnings for companies
leaving the US
Industry Specific Increases:
− “Risk fee” for large financials
− Tax on high frequency trading
Donald Trump
Corporate Tax Rates:
− Reduce corp. tax rate from 35% to 15%
− Move from Worldwide to Territorial Tax System
Inversions & Overseas Earnings:
− Discourage inversions via lower tax rate
− One-time repatriation holiday at 10%
35%
0% 10% 20% 30% 40%
Canada
Germany
Russia
Saudi Arabia
Turkey
United Kingdom
South Korea
Japan
China
Indonesia
Spain
Italy
South Africa
Australia
India
Mexico
France
Brazil
Argentina
Unites States
Deutsche Bank
Post-Election
Trade Implications
9/23/2016
55
Source: OECD. Pew Research. Financial Times. The World Trade Organization. The World Bank. Exports as % of GDP as of
2014. DB Global Markets Research (Hooper, Spencer, Slok).
36. Trade: Tide Shifting
Discriminatory Trade
Practices Rising Globally
US Trade Growth Since NAFTA
0%
10%
20%
30%
1960 1970 1980 1990 2000 2010
NAFTA
US Exports and Imports as % of GDP
Summary: At $380 bn in 2015, the US is the #1 FDI destination globally. Companies from proposed TPP and TTIP countries
account for 90% of inward US FDI. In the US, Congress has the ability to restrict the Trump or Clinton’s ambitions on a range of
social and economic issues (immigration, tax, spend). Notably, however, their protectionist trade pivots are an area where a new
President has more flexibility to unilaterally exercise power.
Hillary Clinton
Renegotiate NAFTA
Reject TPP
Unlikely to support TTIP
Strengthen enforcement of trade deals
Donald Trump
Renegotiate NAFTA
Reject TPP / Unlikely to support TTIP
Create the “Reagan Economic Zone”
“Tough on China”
− 45% tariffs
− WTO on steel subsidies
− Label as “currency manipulator”
28%
0
200
400
600
800
1000
1200
2008 2009 2010 2011 2012 2013 2014 2015 H1 2016
Number of discriminatory trade-related measures
Deutsche Bank
“Some men look at constitutions with sanctimonious reverence, and
deem them like the ark of the covenant, too sacred to be touched. They
ascribe to the preceding age a wisdom more than human, and suppose
what they did to be beyond amendment. I knew that age well; I belonged
to it and labored with it. It deserved well of its country… But I know also,
that laws and institutions must go hand in hand with the progress of the
human mind. As that becomes more developed, more enlightened, as
new discoveries are made, new truths discovered… institutions must
advance also, and keep pace with the times. We might as well require a
man to wear still the coat which fitted him as a boy as civilized society to
remain ever under the regime of their barbarous ancestors.”
- Thomas Jefferson, 3rd US President, toward the end of his life, in July 1816
Epilogue
Source: Joseph Ellis.
(1743 - 1826)
56
Deutsche Bank
Corporate Tax
Policy
• Business Income Tax:
− No change to corporate tax rate
− No current proposal to change from
Worldwide to Territorial Tax System
• Inversions & Overseas Earnings:
− Increase threshold for foreign ownership in
an inversion from 20% to 50%
− “Exit tax” on un-repatriated earnings for
companies leaving the US
− Limit interest deductions for US affiliates of
MNCs to deter “earnings stripping”
− Claw back tax breaks for companies moving
jobs overseas
• Industry Specific Deductions / Credits:
− Credit for investing in community
development and infrastructure
− Credit for hiring apprentices & employee
profit sharing
• Industry Specific Increases:
− “Risk Fee” for largest financial institutions
− Tax on high-frequency trading
− Cut deduction for excess non-taxed
reinsurance premiums paid to affiliates
− Eliminate tax incentives for fossil fuels
− Excess tax for oil produced from tar sands
• Business Income Tax:
− Reduce corporate tax rate from 35% to 15%
− Move from Worldwide to Territorial Tax System
• Inversions & Overseas Earnings:
− Discourage inversions through lower tax rate
− One-time repatriation holiday at 10% (paid on all
foreign held cash, regardless of moving it back
to the US or holding overseas)
− End tax deferral on income earned abroad (but
keep foreign tax credit in place)
• Simplify Tax Code:
− Reduce / eliminate special interest loopholes
• Oppose Retroactive Taxation
Source: Committee on Arrangements for the 2016 Republican National Convention. Democratic Platform Committee.
58
Corporate Tax Policy
Policy Issue Clinton & Democratic Platform Trump & Republican Platform
Deutsche Bank
Personal Tax
Policy
• Income Tax Increases:
− 4% surcharge on adjusted gross income for
those earning above $5mm
− 30% effective tax rate to those earning >
$1mm (Buffett Rule)
− No tax increases for middle class earners
• Limiting Exemptions:
− Exemptions and deductions limited to 28%
• Capital Gains:
− New tax schedule with declining rates based
on holding period
− Derivative contracts marked-to-market
annually, with gain or loss treated as
ordinary income
• Tax Relief / Credits for:
− Care-giving expenses
− Excessive out of pocket healthcare
− Education expenses
• Sharply higher estate taxes
− Below $3.5mm: Exempt
− $3.5 - $10mm: 45% tax
− $10 - $50mm: 50% tax
− $50 - $500mm: 55% tax
− Above $500mm: 65% tax
• Income Tax Cuts:
− Top rate reduced to 39.6% 33%
− Reduce number of tax brackets from 7 to 3:
12%, 25%, 33%
− Retain exiting capital gains rate structure
− Carried interest taxed as ordinary income
• Reduced Deductions / Exemptions:
− Increase standard deduction for joint filers
− Eliminate personal exemptions and head-of-
household filing status
− Cap itemized deductions at $200,000 for
married-joint filers and $100,000 for single filers
• Tax Relief / Credits for:
− Childcare
− Eldercare
− Only available for those below the highest tax
bracket
• Eliminate Estate Tax
• Repeal 3.8% Obamacare tax on investment
income
• National sales tax tied to simultaneous repeal of
the 16th amendment (federal income tax)
Source: Committee on Arrangements for the 2016 Republican National Convention. Democratic Platform Committee.
59
Personal Income Tax Policy
Policy Issue Clinton & Democratic Platform Trump & Republican Platform
Deutsche Bank Source: Committee on Arrangements for the 2016 Republican National Convention. Democratic Platform Committee.
60
Economic & Market Issues
Policy Issue Clinton & Democratic Platform Trump & Republican Platform
Trade
• Renegotiate NAFTA
• Reject TPP
• Unlikely to support T-TIP
• Oppose trade agreements that do not support
American jobs, raise wages, and improve
national security
• Agreements must include strong and enforceable
labor and environmental standards
• Crack down on unfair subsidies from trading
partners
• Free and open internet
• Strengthen enforcement of trade deals
• Renegotiate NAFTA
• Reject TPP
• Unlikely to support T-TIP
• Create the “Reagan Economic Zone”
− A worldwide multilateral agreement with
nations committed to the principles of open
markets to promote free & fair trade
• Tough on China
– 45% tariffs
– “Currency manipulator”
– WTO on steel subsidies
• Appoint trade negotiators whose goal will be to
“win for America”
• Apply tariffs and duties to countries that “cheat”
• Direct the Commerce Department to use all legal
tools to respond to trade violations
Minimum Wage
& Employment
• National minimum wage of $15 an hour
• End sub-minimum wage rules for tipped workers
and people with disabilities
• Incentivize corporate profit sharing with
employees
• Allow states to enact Right-to-Work laws
• Support portability of pension plans and health
insurance
• State / local minimum wage rather than national
• Support employee stock ownership
The Fed
• Unlikely to replace Yellen in 2018 • Likely to replace Yellen in 2018
• Implement annual audits of the Fed
Deutsche Bank Source: Committee on Arrangements for the 2016 Republican National Convention. Democratic Platform Committee.
61
Industry Specific Issues
Policy Issue Clinton & Democratic Platform Trump & Republican Platform
Financial
Market Reform
&The Fed
• Expand Dodd-Frank
• Update / modernized Glass-Steagall (1933
banking regulation prohibiting commercial banks
from engaging in investment business)
• Extend statute of limitations for prosecuting
financial fraud & break up too-big-to-fail financial
institutions
• Repeal portions of Dodd-Frank to reduce post-
GFC regulations
• Support legislation to allow financial institutions to
utilize the Bankruptcy Code
• Protect taxpayers against financial bailouts
Energy
• Develop clean fuels
• 50% of electricity from clean energy sources
within a decade
• Half a billion solar panels installed within four
years
• Modernize electric grid
• Price carbon dioxide, methane, and other
greenhouse gases to reflect their negative
externalities
• Develop all forms of energy that are marketable in
a free economy without subsidies, including coal,
oil, natural gas, nuclear power, and hydropower
• Expedite permitting process for mineral
production on public lands
• Oppose any carbon tax
• Eliminate energy export restrictions
Healthcare
• ACA Medicaid expansion
− Public coverage through a public option in
every state
− Ability to opt in to Medicare for those over 55
− State innovation waivers under the ACA for
locally tailored plans
• Protect Medicare, Medicaid and SNAP in current
form
• Repeal of Affordable Care Act of 2010
(Obamacare)
• Repeal the 1945 McCarran-Ferguson Act
(protecting insurance companies from anti-trust
litigation)
• Grow Health Savings Accounts & Health
Reimbursement Accounts
Deutsche Bank Source: Committee on Arrangements for the 2016 Republican National Convention. Democratic Platform Committee.
62
Immigration & Education
Policy Issue Clinton & Democratic Platform Trump & Republican Platform
Immigration
• Comprehensive immigration reform with pathway
to full and equal citizenship
• Eliminate three and 10 year bars for green card
seekers
• Implement President Obama’s Deferred Action for
Childhood Arrivals and Deferred Action for
Parents of Americans
• End family detention and close private
immigration detention centers
• Expand access to affordable healthcare to all
families, regardless of immigration status
• Promote naturalization
• Support immigrant integration
• Build a wall along the southern border and protect
all ports of entry
− Make Mexico pay for the wall by impounding
all remittance payments derived from illegal
wages, increasing fees on temporary visas
issued to Mexican CEOs and diplomats,
increasing fees on all border crossing cards,
increasing fees on all NAFTA worker visas
from Mexico, and increasing fees at ports of
entry to the US from Mexico
• Refuse entry to refugees who cannot be carefully
vetted, especially those whose homelands have
been the breeding grounds for terrorism
• Mandatory return of all criminal aliens
• Defund sanctuary cities
• Enhance penalties for overstaying visas
• End birthright citizenship
• Increasing H-1B wages to encourage domestic
hiring
Education
• Free tuition at public universities for families
earning under $125k (in 2021)
• Federal government to push for increased
percentages of racial and ethnic minority, low-
income, and first-generation students enrolled at
colleges and universities
• Federal government should not originate student
loans
• Support innovative financing mechanisms:
education savings accounts (ESAs), vouchers,
and tuition tax credits
Deutsche Bank Source: Committee on Arrangements for the 2016 Republican National Convention. Democratic Platform Committee.
63
Defense & Foreign Policy
Policy Issue Clinton & Democratic Platform Trump & Republican Platform
Defense /
Terrorism
• Reduce the number of nuclear, chemical, and
biological weapons around the world
− Strengthen the Non-Proliferation Treaty
− Ratify the Comprehensive Nuclear-Test-Ban
Treaty
• Expand military spending by $450 bn over 10
years
• Modernize nuclear weapons and their delivery
platforms
• End the policy of Mutually Assured Destruction
Foreign Policy
• “Root out ISIS and other terrorist groups and bring
together the moderate Syrian opposition,
international community, and our regional allies to
reach a negotiated political transition that ends
Assad’s rule”
• In Afghanistan, work with the NATO-led coalition
of partners to bolster the democratically-elected
government
• Isolate Hezbollah to restore Lebanon’s
independence
• Continue partnership with the Iraqi people to
destroy ISIS and similar organizations
• US Government and UN support for Christian
communities in cities like Erbil to help with
displaced person and urban refugees
• Refuse to accept any territorial change in Eastern
Europe imposed by force (Ukraine, Georgia)
Deutsche Bank Source: Committee on Arrangements for the 2016 Republican National Convention. Democratic Platform Committee.
64
Socio-Political & Other Issues
Policy Issue Clinton & Democratic Platform Trump & Republican Platform
Judicial
Appointments
• Appoint judges who defend the “constitutional
principles of liberty and equality for all, and will protect
a woman’s right to safe and legal abortion”
• Support a constitutional amendment to overturn the
Supreme Court’s decisions in Citizens United and
Buckley v. Valeo
• Appoint judges who:
− Support “the inalienable right to life and the laws of
nature and nature’s God”
− Will reverse “activist decisions” such as Roe,
Obergefell & Obamacare
− Will overturn laws usurping Congress’s and states’
lawmaking authority
• Support Congress impeaching judges who usurp
Article I powers
Gun Control
• Expand and strengthen background checks
• Repeal the Protection of Lawful Commerce in Arms
Act (PLCAA)
• Uphold the right to bear arms
• Support firearm reciprocity legislation
• Oppose federal licensing or registration of law-abiding
gun owners, registration of ammunition and restoration
of the Clinton gun ban
Other Social
Issues
• Applaud Supreme Court recognition of LGBT people’s
right to marry
• Family and medical leave act providing all workers at
least 12 weeks of paid leave to care for a new child or
address a personal or family member’s serious health
issue
• Cap child care costs at 10% of income
• “Condemn the Supreme Court’s ruling in United States
v. Windsor, which wrongly removed the ability of
Congress to define marriage policy in federal law”
• Support “natural marriage, the union of one man and
one woman”
• Repeal the Johnson Amendment which in 1954
prohibited tax-exempt organizations from endorsing or
opposing political candidates
• Support the First Amendment Defense Act to protect
the non-profit tax status of faith-based adoption
agencies and accreditation of religious educational
institutions
• Support a human life amendment to the Constitution
and legislation to make clear that the 14th
amendment’s protections apply to children before birth
• Restrict public funding to organizations that perform or
promote abortions
Deutsche Bank
66
Source: Wall Street Journal. New York Times. Financial Times. Real Clear Politics.
*Includes 2 independents who caucus with the democrats.
Republicans Have More Senate Seats to Lose
Democratic Seats to Watch
Democratic seats not up for election* Democratic seats up for election
Summary: While Democrats must win 5 net seats to regain control of the US Senate in 2016, Republicans must defend a much
larger number of seats (24) than their Democratic counterparts (10). However, if Democrats keep the White House, they will only
need to pick up 4 net seats to gain control, since the Vice President breaks a 50-50 tie in Senate voting.
10
seats
Seats today: 46
Republican Seats to Watch
Republican seats not up for election Republican seats up for election
24
seats
Seats today: 54
Deutsche Bank Source: Real Clear Politics. Data as of Sept 22, 2016.
* Toss-ups include any states where latest aggregate poll is within 4% polling differential. 67
2016 US Senate Election
Safe Democratic Likely/Leans Democrat Toss-ups* Likely/Leans GOP Safe GOP
HI: Schatz (D) CO: Bennet (D) IN: Open (R) GA: Isakson (R) AL: Shelby (R)
CT: Blumenthal (D) WI: Johnson (R) PA: Toomey (R) AZ: McCain (R) AR: Boozman (R)
NY: Schumer (D) NV: Open (D) KY: Paul (R) ID: Crapo (R)
VT: Leahy (D) NC: Burr (R) LA: Open (R) AK: Murkowski (R)
OR: Wyden (D) NH: Ayotte (R) OH: Portman (R) KS: Moran (R)
WA: Murray (D) MO: Blunt (R) IA: Grassley (R) ND: Hoeven (R)
CA: Open (D) IL: Kirk (R) FL: Rubio (R) OK: Lankford (R)
MD: Open (D) SC: Scott (R)
SD: Thune (R)
UT: Lee (R)
Total: 7 Total: 2 Total: 7 Total: 7 Total: 10
Republicans Have Spending Advantage in Key Senate Races
Senate Seats Up for Election
Democrats: 46 Republicans: 47
44 Seats Not Up for Election or Safe 40 Seats Not Up for Election or Safe 2 7 7
Summary: While Republicans have more Senate seats to lose in 2016 (24 vs. just 10 for the Democrats), they have also
channeled a significant amount of party money toward outspending their Democratic rivals in a number of the key Senate races.
Two months ago, it appeared the Dems had the advantage to gain control. Today, Republican progress and spending in key races
has made control of the 2016 Senate “too close to call”.
Toss-Ups: 7
Deutsche Bank
9/23/2016
68
Summary: As occurs every two years, all 435 seats in the US House of Representatives are up for re-election. With 218 seats
needed to secure a majority, the Democrats will need to pick up a total of 30 net seats in order to take control of the House. While
possible, current polls on RealClearPolitics.com suggest the Democrats are very likely to have less than 200 seats after the
election, well short of a majority.
Source: Peck, Madigan, Jones. Wikipedia. Note 3 seats are vacant.
Status Quo for the House
435 US House of Representatives Seats
186
Current Democrats
246
Current Republicans
Majority: 218 Seats
Deutsche Bank
50 Years of Electoral College Maps
70
The 1964 Election: Johnson Defeats Goldwater
Recommendations and detected threats
OH
WV VA
PA
NY
ME
NC
SC
GA
TN
KY
IN
MI
WI
MN
IL
LA TX
OK
ID
NV
OR
WA
CA
AZ NM
CO
WY
MT ND
SD
IA
UT
FL
AR
MO
MS AL
NE
KS
VT
NH
MA
RI
NJ
AK
HI
Independent Republican Democrat
DE MD
CT
Johnson wins 486 electoral votes
Source: New York Times.
Deutsche Bank
50 Years of Electoral College Maps
71
The 1968 Election: Nixon Defeats Humphrey and Wallace
Recommendations and detected threats
OH
WV VA
PA
NY
NC
SC
GA
TN
KY
IN
MI
WI
MN
IL
LA TX
OK
ID
NV
OR
WA
CA
NM
CO
WY
MT ND
SD
IA
UT
FL
AR
MO
MS AL
NE
KS
NJ
AK
DE MD
ME
TX
VT
NH
MA
RI
AZ
HI
CT
Independent Republican Democrat
Nixon wins 301 electoral votes
Source: New York Times.
Deutsche Bank
50 Years of Electoral College Maps
72
The 1972 Election: Nixon Defeats McGovern
Recommendations and detected threats
OH
WV VA
PA
NY
NC
SC
GA
TN
KY
IN
MI
WI
MN
IL
LA
OK
ID
NV
OR
WA
CA
NM
CO
WY
MT ND
SD
IA
UT
FL
AR
MO
MS AL
NE
KS
NJ
AK
HI
TX
DE MD
ME
VT
NH
MA
RI
AZ
CT
Independent Republican Democrat
Nixon wins 520 electoral votes
Source: New York Times.
Deutsche Bank
50 Years of Electoral College Maps
73
The 1976 Election: Carter Defeats Ford
Recommendations and detected threats
OH
WV VA
PA
NY
NC
SC
GA
TN
KY
IN
MI
WI
MN
IL
LA
OK
ID
NV
OR
WA
CA
NM
CO
WY
MT ND
SD
IA
UT
FL
AR
MO
MS AL
NE
KS
NJ
DE MD
AK
HI
TX
ME
VT
NH
RI
AZ
MA
CT
Independent Republican Democrat
Carter wins 297 electoral votes
Source: New York Times.
Deutsche Bank
50 Years of Electoral College Maps
74
The 1980 Election: Reagan Defeats Carter
Recommendations and detected threats
OH
WV VA
PA
NY
NC
SC
GA
TN
KY
IN
MI
WI
MN
IL
LA
OK
ID
NV
OR
WA
CA
NM
CO
WY
MT ND
SD
IA
UT
FL
AR
MO
MS AL
NE
KS
NJ
DE MD
AK
HI
TX
ME
VT
NH
CT RI
AZ
MA
Independent Republican Democrat
Reagan wins 489 electoral votes
Source: New York Times.
Deutsche Bank
50 Years of Electoral College Maps
75
The 1984 Election: Reagan Defeats Mondale
RI
Recommendations and detected threats
OH
WV VA
PA
NY
NC
SC
GA
TN
KY
IN
MI
WI
MN
IL
LA
OK
ID
NV
OR
WA
CA
NM
CO
WY
MT ND
SD
IA
UT
FL
AR
MO
MS AL
NE
KS
NJ
DE MD
AK
HI
TX
ME
VT
NH
CT
AZ
MA
Independent Republican Democrat
Reagan wins 525 electoral votes
Source: New York Times.
Deutsche Bank
50 Years of Electoral College Maps
76
The 1988 Election: Bush Defeats Dukakis
RI
Recommendations and detected threats
OH
WV VA
PA
NY
NC
SC
GA
TN
KY
IN
MI
WI
MN
IL
LA
OK
ID
NV
OR
WA
CA
NM
CO
WY
MT ND
SD
IA
UT
FL
AR
MO
MS AL
NE
KS
NJ
DE MD
AK
HI
TX
ME
VT
NH
CT
AZ
MA
Independent Republican Democrat
Bush wins 426 electoral votes
Source: New York Times.
Deutsche Bank
50 Years of Electoral College Maps
77
The 1992 Election: Clinton Defeats Bush and Perot
RI
Recommendations and detected threats
OH
WV VA
PA
NY
NC
SC
GA
TN
KY
IN
MI
WI
MN
IL
LA
OK
ID
NV
OR
WA
CA
NM
CO
WY
MT ND
SD
IA
UT
FL
AR
MO
MS AL
NE
KS
NJ
DE MD
AK
HI
TX
ME
VT
NH
CT
AZ
MA
Independent Republican Democrat
Clinton wins 370 electoral votes
Source: New York Times.
Deutsche Bank
50 Years of Electoral College Maps
78
The 1996 Election: Clinton Defeats Dole
RI
Recommendations and detected threats
OH
WV VA
PA
NY
NC
SC
GA
TN
KY
IN
MI
WI
MN
IL
LA
OK
ID
NV
OR
WA
CA
NM
CO
WY
MT ND
SD
IA
UT
FL
AR
MO
MS AL
NE
KS
NJ
DE MD
AK
HI
TX
ME
VT
NH
CT
AZ
MA
Independent Republican Democrat
Clinton wins 379 electoral votes
Source: New York Times.
Deutsche Bank
50 Years of Electoral College Maps
79
The 2000 Election: Bush Defeats Gore
RI
Recommendations and detected threats
OH
WV VA
PA
NY
NC
SC
GA
TN
KY
IN
MI
WI
MN
IL
LA
OK
ID
NV
OR
WA
CA
NM
CO
WY
MT ND
SD
IA
UT
FL
AR
MO
MS AL
NE
KS
NJ
DE MD
AK
HI
TX
ME
VT
NH
CT
AZ
MA
Independent Republican Democrat
Bush wins 271 electoral votes
Source: New York Times.
Deutsche Bank
50 Years of Electoral College Maps
80
The 2004 Election: Bush Defeats Kerry
RI
Recommendations and detected threats
OH
WV VA
PA
NY
NC
SC
GA
TN
KY
IN
MI
WI
MN
IL
LA
OK
ID
NV
OR
WA
CA
NM
CO
WY
MT ND
SD
IA
UT
FL
AR
MO
MS AL
NE
KS
NJ
DE MD
AK
HI
TX
ME
VT
NH
CT
AZ
MA
Independent Republican Democrat
Bush wins 286 electoral votes
Source: New York Times.
Deutsche Bank
50 Years of Electoral College Maps
81
The 2008 Election: Obama Defeats McCain
RI
Recommendations and detected threats
OH
WV VA
PA
NY
NC
SC
GA
TN
KY
IN
MI
WI
MN
IL
LA
OK
ID
NV
OR
WA
CA
NM
CO
WY
MT ND
SD
IA
UT
FL
AR
MO
MS AL
NE
KS
NJ
DE MD
AK
HI
TX
ME
VT
NH
CT
AZ
MA
Independent Republican Democrat
Obama wins 365 electoral votes
Source: New York Times.
Deutsche Bank
50 Years of Electoral College Maps
82
The 2012 Election: Obama Defeats Romney
RI
Recommendations and detected threats
OH
WV VA
PA
NY
NC
SC
GA
TN
KY
IN
MI
WI
MN
IL
LA
OK
ID
NV
OR
WA
CA
NM
CO
WY
MT ND
SD
IA
UT
FL
AR
MO
MS AL
NE
KS
NJ
DE MD
AK
HI
TX
ME
VT
NH
CT
AZ
MA
Independent Republican Democrat
Obama wins 332 electoral votes
Source: New York Times.
The information herein is believed to be reliable and has been obtained from sources believed to be reliable, but we make no representation or warranty,
express or implied, with respect to the fairness, correctness, accuracy, reasonableness or completeness of such information. In addition we have no
obligation to update, modify or amend this communication or to otherwise notify a recipient in the event that any matter stated herein, or any opinion,
projection, forecast or estimate set forth herein, changes or subsequently becomes inaccurate.
We are not acting and do not purport to act in any way as an advisor or in a fiduciary capacity. We therefore strongly suggest that recipients seek their
own independent advice in relation to any investment, financial, legal, tax, accounting, or regulatory issues discussed herein. Analyses and opinions
contained herein may be based on assumptions that if altered can change the analyses or opinions expressed. Nothing contained herein shall constitute
any representation or warranty as to future performance of any financial instrument, credit, currency rate or other market or economic measure.
Furthermore, past performance is not necessarily indicative of future results.
This communication is provided for information purposes only. It is not an offer to sell, or a solicitation of an offer to buy any security, nor to enter into any
agreement or contract with Deutsche Bank AG or any affiliates. Any offering or potential transaction that may be related to the subject matter of this
communication will be made pursuant to separate and distinct documentation and in such case the information contained herein will be superseded in its
entirety by such documentation in final form. This presentation has been prepared by members of our investment banking department and does not
necessarily represent the views of our Research department or Deutsche Bank's "house view." This presentation speaks only as of the date it is given,
and the views expressed are subject to change based upon a number of factors, including market conditions.
Because this communication is a summary only it may not contain all material terms, and therefore this communication in and of itself should not form the
basis for any investment decision. Financial instruments that may be discussed herein may not be suitable for all investors, and potential investors must
make an independent assessment of the appropriateness of any transaction in light of their own objectives and circumstances, including the possible
risks and benefits of entering into such a transaction. By accepting receipt of this communication the recipient will be deemed to represent that they
possess, either individually or through their advisers, sufficient investment expertise to understand the risks involved in any purchase or sale of any
financial instrument discussed herein. If a financial instrument is denominated in a currency other than an investor’s currency, a change in exchange
rates may adversely affect the price or value of, or the income derived from, the financial, and any investor in that financial instrument effectively
assumes currency risk. Prices and availability of any financial instruments described in this communication are subject to change without notice.
Securities and investment banking activities in the United States are performed by Deutsche Bank Securities Inc., member NYSE, FINRA and SIPC, and
its broker-dealer affiliates. Lending and other commercial banking activities in the United States are performed by Deutsche Bank AG, and its banking
affiliates. This communication and the information contained herein is confidential and may not be reproduced or distributed in whole or in part without
our prior written consent.
For more information contact Tom Joyce (212-250-8754)
Disclaimer