Markets politics Trump

Trump Election Delay Could Force World To Rapidly Re-Evaluate Dollar’s Reserve Status

In a dubious (if wholly predictable) development, Donald Trump on Thursday suggested delaying the US presidential election.

For months, the president has insisted that mail-in voting would lead to massive fraud, a largely unsubstantiated claim which prompted Twitter to add what amounted to warning labels to some of Trump’s tweets starting in May. “Get the facts about mail-in ballots”, the tags read.

In a Thursday broadside, Trump suggested that 2020 has the potential to be “the most inaccurate and fraudulent election in history”, something he said would “embarrass” the country. He then asked if the election should be delayed.

While it’s best to avoid trafficking in hyperbole around the president’s bombastic tweets, this does represent the first time Trump has seriously floated the idea of not holding the election on schedule.

He’ll likely say he wasn’t serious (or that he was merely “asking” a question), but it seems obvious that he intends to push the envelope. Indeed, he made that his pinned tweet shortly after it appeared.

Asked by Fox in June if he would accept the results of the ballot were he to lose, Trump suggested he would, but in a subsequent interview with the network’s Chris Wallace, Trump said “you don’t know until you see”, when asked the same question.

On May 26, in “The US Election May Be Decided By June. But Would Trump Leave If He Lost?“, I wrote the following about this scenario:

I do not think it is a foregone conclusion that Trump leaves office if he loses a close election. No sell-side analyst is going to write that, but it should be on your radar, even if you think it’s a ridiculous thing to fret over. I also do not think it is necessarily guaranteed that there will be an election in November if it coincides with a meaningful second wave of the virus and Trump is behind in the polls.

Fast forward exactly two months, and there is, in fact, a meaningful second wave of the virus in the US, and Trump has explicitly floated the notion of delaying the election.

In same linked piece, I wrote the following:

Remember, Trump claimed massive voter fraud even after he won in 2016. He has never dropped that claim. Given how litigious Trump is, and considering the exigent circumstances that may end up surrounding the vote, it is not out of the realm of possibilities that the president simply refuses to leave office. It’s also not at all clear what could be done in that scenario.

I think, as intelligent people who are keen on making predictions about the future of markets and the political outcomes that affect asset prices, we would all be naive not to at least consider that as a possible tail risk.

Thursday’s tweet (shown above) underscores that this is, in fact, a tail risk. Surely we can say that it is no less likely than a pandemic was this time last year.

This has serious implications for the dollar. The following excerpt (from “Why ‘The Tide Is Going Out On US Dollar Exceptionalism’”) now seems particularly prescient, penned as it was on Wednesday evening:

At the same time, the perception that the US suffers from intractable political dysfunction… undermines investor psychology, as does pervasive societal unrest tied to myriad inequities and prejudices seen as increasingly incompatible with the prevailing attitudes and ideals that characterize other modern, developed nations.

The dollar retreated quickly following Trump’s Thursday tweet, before recovering.

You’ll note that the move shown in the figure (below) is most assuredly down to the “delay” remarks, which came a full 16 minutes after GDP and jobless claims figures were released.

“DOLLAR SLUMPS TO DAY’S LOW AFTER TRUMP COMMENTS ON ELECTION”, a Bloomberg headline flashed.

“President Trump floated the idea of delaying the next US election because he maintains without evidence that mail-in voting will lead to fraud”, Ye Xi wrote, adding that “the idea could change the VIX curve, narrowing the spread between [the] October contract versus the rest of the year”.

For those wondering what might have the power to accelerate de-dollarization and force the world to adopt a new sense of urgency when it comes to establishing an alternative avenue for safeguarding global savings and facilitating financial transactions, a move by a sitting US president to delay an election by decree when he is trailing in the polls might well do the trick.

During this week’s confrontational hearing on Capitol Hill, William Barr came across as somewhat noncommittal when asked if he would accept a Trump loss.

“Mr. Barr, what will you do if Donald Trump loses the election on November 3rd but refuses to leave office on January 20th?”, Rep. Hakeem Jeffries wondered.

“Well, if the results are clear, I would leave office”, Barr responded.

“Do you believe that there is any basis or legitimacy to Donald Trump’s recent claim that he can’t provide an answer as to whether he would leave office?”, Jeffries asked, in a follow up.

“I really am not familiar with these comments or the context in which they occurred, so I’m not going to give commentary on them”, Barr said.

Logistically speaking, Barr would be the first line of defense for Trump in the “science fiction” scenario where the president decides to remain in office or delay the vote.

For those inclined to suggest that this is not a possibility (and some readers have, in the past, indicated that even raising the issue is somehow out of bounds, despite the fact that the president has broached the subject on numerous occasions), below is the exchange between Wallace and Trump from the official transcript provided by Fox News. I’ll present it without further comment.

TRUMP: You don’t know until you see. It depends. I think mail-in voting is going to rig the election. I really do.

WALLACE: Are you suggesting that you might not accept the results of the election?

TRUMP: No. I have to see. Look, Hillary Clinton asked me the same thing.

WALLACE: No, I asked you the same thing at the debate.

TAPE: Presidential Debate, October 19, 2016

WALLACE: There is a tradition in this country — in fact, one of the prides of this country — is the peaceful transition of power and that no matter how hard-fought a campaign is, that at the end of the campaign that the loser concedes to the winner. Not saying that you’re necessarily going to be the loser or the winner, but that the loser concedes to the winner and that the country comes together in part for the good of the country. Are you saying you’re not prepared now to commit to that principle?

TRUMP: What I’m saying is that I will tell you at the time. I’ll keep you in suspense. OK?


 

30 comments on “Trump Election Delay Could Force World To Rapidly Re-Evaluate Dollar’s Reserve Status

  1. I take this to be his opening move on quitting.

    The COVID situation is pretty bad, with over 150,000 dead and currently 1,400 new deaths a day.

    The economic numbers are horrible, and in view of the COVID situation not likely to get better anytime soon. Plus, the Senate Republicans are balking at a new stimulus.

    And to top it all off, his poll numbers are abysmal in all the places that matter:

    • Arizona: Biden 46%, Trump 38% (Redfield & Wilton)
    • Florida: Biden 50%, Trump 46% (Mason Dixon)
    • Florida: Biden 48%, Trump 41% (Redfield & Wilton)
    • Michigan: Biden 49%, Trump 37% (Redfield & Wilton)
    • North Carolina: Biden 43%, Trump 42% (Redfield & Wilton)
    • North Carolina: Trump 48%, Biden 47% (Cardinal Point)
    • Pennsylvania: Biden 50%, Trump 41% (Franklin & Marshall)
    • Pennsylvania: Biden 48%, Trump 41% (Redfield & Wilton)
    • Wisconsin: Biden 45%, Trump 35% (Redfield & Wilton)

    He’s trapped, and he knows it.

    So he floats the idea of delaying the election because mail-in is subject to fraud and cheating. He knows full well Nancy Pelosi won’t support this. And so he’ll quit. He’ll say, “F*ck it, I’m not running in a rigged election.”

    • You may be correct. He hates to lose. But if he senses this threat will cause a Constitutional crisis, he might hang on through election, because he loves to be the center of drama.

      On November 4th he could look in the mirror, point a finger at his reflection and yell, “You’re fired!”

    • Except his newly installed pal at the U.S. Post Office may be the one doing the rigging…

      • Oh god – hadn’t thought of that

        • I’ve seen a curve of how much capacity the post office and mail in ballot system has and basically people need to request ballots in August or a lot of people are not going to get ballots.

    • I’m expecting him to end up in cuffs when he is no longer in office. This would be for crimes he committed prior to office. I guess he burns the house down then, effectively, turns himself in sooner by quitting. With COVID-19 raging, negative double digit GDP, and dollar debasement continuing unmitigated, we could see the $USD into the upper 80s easy. …good thing none of us are planning European vacations.

      • good thing none of us are planning European vacations.

        Ha ha…I live in France on U.S. dollars. Tell me about it.

        Fortunately, I stocked up & have at least a one-year supply of relatively cheap euros on hand.

    • Depends if he believes he will face any form of credible criminal charges should he lose

      A person Who perceived himself cornered will always dig in

  2. This scenario is symptomatic of a broken Political System…. of which Trump is symbolic……It is pretty obvious that a divided Nation driven by it’s financial interests not it’s self proclaimed legacy is not going to abide by the rules of a true Democracy……This situation traces back to campaign finance reform …, thus the inability of the system to not bring it’s best Candidates into contention for High office…Hope for the best this year because in this issue we are playing for all the chips….Financial and otherwise….

    • It is a broken system. Further, it has proven itself incapable of reform since problems started arising in the 1980s.

  3. Crickets from Senators who should have immediately condemned the statement from Trump. Drip, drip, drip, of a failed political and financial systems incapable of reform.

    “Der Spiegel,” considered as a characterization of the reaction of Germans to what is happening in America, used the English word “catastrophe” to describe the actions, the relative fall, of America of late. Fitting.

    A delayed election would be an event that would change minds on the reserve status of the USD. I’m in the camp that the USD is not going to lose reserve status in my lifetime. I assign the lose of reserve status in my lifetime a 10-20% probability. I’d move the probability up to 30-40% should this not go off well.

    • Crickets from Senators who should have immediately condemned the statement from Trump.

      In all fairness, both Mitch McConnell and Kevin McCarthy said no way the election gets postponed.

      On the other hand, John Cornyn said the tweet was a joke…

    • Just read that three, prominent Republican Senators have spoken out about this. Good to hear.

  4. Media standards dismantled in last 50 years, no longer truth and accuracy in mainstream news.
    Education system decimated in same timeframe resulting with lack of critical thinking among populace.
    Dysfunctional Democratic primary system allowing Red state South Carolina to pick a weak nominee after previous states dismissed him out of hand.
    Last major federal budget surplus in 2000 giving way to contested presidential election where minority power took office, allowed 911 attack, squandered surplus on two unwinnable wars, thereby accelerating the Fall of the American Empire.
    See Dalio for rest.

    Good and proud times…

  5. PS – Trump will fight to countless death of others before quitting or leaving office voluntarily.
    If here were to do so he might as well go straight to New York State AG’s office and turn himself in.

    John Roberts may be key in all this.

  6. perhaps Trump, family, and friends will flee the country and live in exile. I’m fairly sure Putin and others will put him up somewhere.

    • I am almost certain that he will happen to have a scheduled meeting in Russia right around the election and if he loses, he never comes back.

  7. both sides play winner take all tooo much. if djt sents such a precedent…what happens when their guy isnt in office and THEY want to delay an election. did we vote during ww2, the civil war? then we can vote during a pandemic

    • Play to win? Ha, ha. Given your hypothetical, the Dems would mumble something like “they go low, we go high” or “we don’t want to set a precedent” and then do absolutely nothing. Heads should have rolled in 2008. Instead every bad actor in our financial sector was given a pass. It pays to back a winning horse, or in reality, every horse. No consequences when you have the green.

  8. I think the evil lunatic will lose big in the popular vote, but the presidential vote in November is a meaningless beauty pageant, all the noise and hype notwithstanding.. The only vote that matters is the Electoral College. These Electors are chosen in any way dictated by state legislatures, 305 electoral votes being controlled by Republican legislatures.Faithless elector laws can be readily repealed, so the electors of a state could conceivably be drawn from that state’s GOP donor list.
    Expect finagling and chaos.

  9. In his mind Trump believes that if he gets 6-12 months more the vaccine will cure all and the economy will boom a la Kudlow. He will try to delay the election, we may soon have a real constitutional crisis on top of a recession and a pandemic, probably bullish for equities in our bizarro America.

  10. Tom Swift

    Take into account the procedures of what happens 1/21/21:
    1. The Secret Service withdraws full staff and leaves a lifetime skeleton crew for DJT / Ivanka / Baron (until he’s 21)
    2. Checks are no longer issued to support staff of the Presidential Office in service of DJT
    3. Planes / Helicopters / Cars are no longer assigned to DJT
    4. Cabinet members and staff are dismissed from duty and the pay is curtailed
    5. Personal attendants for the family are dismissed
    6. The moving vans start showing up with the Biden’s personal belongings

    DJT and lawyers might start a ruckus, but it won’t be from the White House.
    Electoral college shenanigans? – not if the Reps want to be relgated to Whig status.

    Most of the USA and the world will be yucking it up over the New DJT sideshow.

    • Forgot Step 5a, Congressional police enter White House and slap cuffs on entire crime family. This is fun!

    • These events only occur if something insane doesn’t happen prior… the collective worry is that insane things will happen because insane things are happening daily.

  11. Nothing about any of this is a joke nor will it be fun by any stretch of the imagination. But sadly, the US is. If this transition does not go well the US will lose what little is left of its claim on world leadership. China is licking its lips (Germany and Japan, too). We have spent the last three and a half years blowing it, finishing ourselves off with this ridiculous parade of idiocy over COVID. Look at us arguing about masks — remember the old saying, “Better safe than sorry?” And there’s us trying to finish off the NHL, NBA, and MLB seasons. Nobody watching but we can’t give all these jocks their huge paychecks if they don’t play. Gotta be normal, right? The ACC announces an eleven game college football season. Who are they trying to kid? And then there is HS athletics. We would risk the lives of our kids and our teachers so a few darling stars can show off their guns for the scouts. Seriously? COVID is real. The US no longer is. In a colossal show of silliness the Kansas legislature passed a law banning the governor from governing until Sept 15 and the governor helped write it and signed it. Wow! We have been spending the last four months increasing our status as the world’s biggest joke. Time to suck it up and stop making excuses. Adults, like it or not, will have to be adults again, all of them.

  12. I wouldn’t trust McConnell as far as I could throw him. What he says now means nothing. Remember the farcical show trial to impeach Trump and McConnell’s promise to hold a fair and unbiased trial in the Senate. Yeah, you can trust McConnell. That A’hole is as much to blame for where we are now as Trump himself.

    • Oh he’s definitely the type to be right there with Trump delaying the election if he thinks he can hold onto power longer.

  13. Trump has played his first card. The election will be fraudulent. He did not lose. He will then be able to shed an onerous presidency that has consistently limited his behavior and still keep influence with his admiring masses. For Trump, what’s not to like?

Speak On It

This site uses Akismet to reduce spam. Learn how your comment data is processed.

Skip to toolbar