November 4, 2020 – PM Update

As the electoral map continues to narrow, the presidential race remains undecided and votes continue to trickle in with a number of battleground states still too close to call. Our afternoon report also includes the latest on congressional races, state and local results, a number of high-profile ballot initiatives that will have an impact on several industries, and the corporate reaction to the election.

Key Takeaways

• Biden’s path to victory more straightforward than Trump’s. The race will come down five states – Arizona, Georgia, Nevada, North Carolina, and Pennsylvania. Biden will likely win the election by carrying at least two of them, while President Trump would need four of the five.
• President Trump’s campaign manager has asked for a recount in Wisconsin. On Wednesday afternoon, Biden was up by more than 20,000 votes in the state and 95 percent of ballots reported. Biden’s campaign has expressed confidence that Biden would ultimately win Wisconsin, Michigan, and Pennsylvania.
• Five Senate races still have not declared a winner, including Alaska, Georgia (one seat still undecided; one seat is going to a runoff election in January), Michigan, and North Carolina. Democrats did not pick up as many seats as expected, and Senate Republicans are well-positioned to keep their majority, with key holds in Iowa, Maine, Montana, and South Carolina.
• Democrats secured control of the House of Representatives but were unable to expand their majority. Bullish predictions led to disappointments in Texas, Florida, Minnesota, and New Mexico, where Republicans defeated Democratic incumbents.
• Republicans have secured 8 of the 11 open gubernatorial seats, including an open seat in Montana. Democrats secured the remaining three, including the battleground state of North Carolina.
• Key initiatives in expanding privacy rights, the legalization of marijuana and paths to racial justice and criminal reform were passed across the country. However, critical measures in California permitting affirmative action in government policies and cash-alternatives for bail failed to gather enough votes.
• Corporate reaction post-election remains muted. At this stage, the vast majority of U.S. corporations have largely avoided commenting on the election results.

Latest Election Developments

 Presidential Race

Source: FiveThirtyEight, Last Updated 4:45 pm EST

 Pathways to the White House

• For Biden to secure the White House, he needs to maintain his current leads in Arizona and Nevada. With his current numbers, he does not need Georgia, North Carolina, or Pennsylvania to reach 270 electoral votes. However, his campaign has expressed confidence they have the votes to win Pennsylvania.
• For Trump to win he must hold his leads in Georgia and Pennsylvania, then flip either Arizona or Nevada in late arriving ballots. Final results in Georgia may be available as soon as this evening. Results in the other states may take longer.

 Latest from the Battleground States

• Arizona (11 electoral votes) – Biden’s three-point lead over Trump remains steady, with approximately 86 percent vote reported. 450,000 ballots have yet to be counted in Maricopa County (Phoenix metropolitan area). Officials have said they will release the results in two intervals, the first at 9 pm EST this evening and the second around 12:30 am EST on Thursday, November 5.
• North Carolina (15 electoral votes) – Ninety-five percent of the vote has been counted. Trump has a 1 to 2-point lead, but postmarked ballots have until November 12 to arrive and be counted, which means the state may not be called for days.
• Georgia (16 electoral votes) – Ninety-three percent of the vote has been counted. Trump is ahead by two percentage points, but the Atlanta metro area has some outstanding votes to be counted, which leans Democratic.
• Pennsylvania (20 electoral votes) – Trump leads by 9 percentage points, with 80 percent of the vote counted. However, the state has more than 1 million ballots left to count, including a significant number from Democratic-leaning areas such as Philadelphia.
• Michigan (16 electoral votes) – Biden has won the state by a little over one percentage point (more than 60,000 votes). The Trump’s campaign filed a lawsuit to temporarily stop the vote count.
• Nevada (6 electoral votes) – Biden has a slight lead of close to 2 percentage points. However, only 86 percent of expected votes have been counted, and results from mail and provisional ballots will not be announced until 12 pm EST tomorrow, November 5.
• Wisconsin (10 electoral votes) – Biden has won the state by less than one percentage point. The Trump’s campaign announced they would request a recount. 

Senate Races

• As of 2 pm EST, Democrats hold 47 seats while Republicans hold 48. Five races have yet to be called: Alaska, Georgia (one seat still undecided; one seat is going to a runoff election in January), Michigan, and North Carolina.
• Democrats have netted 1 seat in the race. Currently, Democrats have flipped two seats (Arizona and Colorado), while Republicans have flipped one (Alabama).
• Races have been more competitive than previously hoped by Democrats. Despite facing a significant cash advantage from Democratic challengers, Republican incumbent senators Joni Ernst (R-Iowa), Susan Collins (R-Maine), Steve Daines (R-Montana), and Lindsey Graham (R-South Carolina) held onto their seats.
• Democrats face an uphill climb to retake the Senate. If Biden wins the presidency, Democrats would need to gain three seats, as the vice president can cast a tie-breaking vote in a 50-50 scenario.

House Races

• Democrats hold the House, but suffer losses. While Democrats secured their majority in the House of Representatives, their predictions of expanding their numbers were stifled. Republican candidates are poised to pick up between 7-12 seats in the House, according to election analyst Dave Wasserman.
• The Blue Wave of 2018 crashed. The election results show a swift course correction for several first-term Democratic House members who won in 2018. Expectations to flip Texas, a state which had seven competitive House races according to Cook Political Report, fell short this cycle.
• Democrats underperformed with Hispanics in Florida, Texas, and New Mexico. Early in the night, two Democratic incumbents lost their seats in the Miami area (Rep. Donna Shalala, FL-27, and Rep. Debbie Mucarsel-Powell FL-26). Rep. Will Hurd’s open seat in Texas’s 23^rd district was secured by the Republican candidate, Tony Gonzales and Rep. Xochitl Torres Small lost her seat to the GOP’s Yvette Herrell in New Mexico’s 2^nd district. In Florida and Texas, the Biden campaign failed to capture significant Hispanic support.
• Incumbents in South Carolina and Minnesota suffered unexpected losses. In South Carolina’s 1^st district, Democratic Rep. Joe Cunningham lost to Republican Nancy Mace (although he has yet to concede). Similarly, in Minnesota’s 7^th district, Rep. Collin Peterson, who has represented the state since 1991 and was the Chairman of the House Agriculture Committee, was defeated by former Lieutenant Governor Michelle Fischbach.

States/Local Races and Key Ballot Initiatives

Gubernatorial Races

• Last night, 11 gubernatorial seats were up for election, with 3 of the seats viewed by early polling as competitive (Montana, Missouri, and North Carolina).
  • Montana (92% of the vote reporting) – Greg Gianforte, the current Republican member of the U.S. House of Representatives, has been declared the victor in the race over the Democrat challenger, Mike Cooney. The race was for an open seat currently held by Democrat Steve Bullock, who was term limited.
  • Missouri: (97% of the vote reporting) – Incumbent Republican Governor Mike Parson has been declared the victor in the race over his Democrat challenger, Nicole Galloway. The race was leaning towards the Republicans in a state that has strongly favored President Trump in both the 2016 and 2020 elections.
  • North Carolina (94% of the vote reporting) – Incumbent Democratic Governor Roy Cooper has been declared the victor in the race over his Republican challenger, former Lt. Gov. Dan Forest. Cooper currently sits at 51.5% of the vote, while Forest holds 47.1%. In 2020, Cooper won by a greater margin compared to his 2016 election run, where he only won by 0.2%.

Key Ballot Initiatives

• California’s Proposition 22, classifying app-based drivers as contractors, passed with 58.4% of the state vote. This measure confirms ride-hail and delivery drivers are independent contractors and not “employees” of their respective firms, which would have entitled them to more benefits.
• California’s Proposition 24, which expanded the existing California Consumer Privacy Act (CCPA), has passed with 56% of the state vote. The proposition, also known as the California Privacy Rights and Enforcement Act of 2020, includes provisions to allow consumers to direct businesses not to share personal information, removes time period in which businesses can fix violations before being penalized, and creates state-level agencies to enforce the respective privacy laws.
• Florida’s Amendment 2, which endorsed a gradual rise in the minimum wage to $15 an hour through 2026, passed with 60.8% of the state’s vote. The passage of this amendment helps build on recent efforts to bolster the purchasing power and income equality of the lower-income workforce.
• Arizona’s Proposition 207, which legalized possession of marijuana up to one ounce for adults over the age of 21, has passed with 59.8% of the state vote. Similar efforts in Mississippi (Measure 1), Montana (I-190), New Jersey (Public Question 1), and South Dakota (Amendment A, Measure 26) passed, thus paving the way for legalization in multiple areas of the country.
• Multiple states were able to pass amendments and measures addressing hate speech and the removal of slavery connotations from their respective constitutions. Measures in Alabama, Nebraska, Utah, Rhode Island all passed. However, California’s Proposition 16, which intended to permit affirmative action measures in government policies and repeal Proposition 209, failed with 43% of the vote.
• California’s two propositions designed to implement crucial criminal justice reform in the state had mixed results. Proposition 17, designed to restore the voting rights to individuals upon completing a prison sentence, passed with 59% of the vote. On the other hand, Proposition 25, which intended to offer risk assessments as an alternative to cash bail for those awaiting trial, failed with only 44.5% of the vote.

Corporate Reaction

• Corporate reaction post-election remains muted. The vast majority of U.S. corporations have largely avoided commenting on the election results, with a few notable exceptions:
  • JPMorgan Chase CEO Jaime Dimon advised employees to “have faith in our electoral and judicial systems” and stressed patience to await the final results.
  • Tim Ryan, U.S. chair and senior partner at PricewaterhouseCoopers LLP, advised employees to “pull together as a team and stay focused” as the results come in.

With contributions from Prashanth Rajan, Matt Ogren, Carolina Portela-Blanco, Jackson Cherner and Anna Weckmuller and Gadi Dechter.