2020 US Elections Debate Preview: Eighty Percent of success is showing up

• Debates rarely determine the outcome of US presidential elections.
• Most voters have already made up their minds about the candidates.
• A poor or excellent performance for either candidate may not matter.
• Markets and the electorate will only respond to a catastrophe.
• Market prefer certainty, especially in elections, if they can get it.

The attractions of tonight’s first presidential debate are those of the spectacle and high-stakes sports event rather than a policy deliberation between learned contestants.

President Donald Trump and challenger former Vice-President Joe Biden will attempt to convince the few remaining uncommitted voters and the even scarcer changeable ones, that each deserves the most powerful position in American politics.

Chris Wallace of Fox News, who will moderate the debate at Case Western University in Cleveland Ohio, has chosen six topics, approved by the nonpartisan Commission on Presidential Debates. He will devote one of six 15 minutes segment to each. 

The topics are the records of President Trump and former Vice President Joe Biden, the Supreme Court, COVID-19, the economy, race and violence in the cities and the integrity of the elections.  The discussion will run 90 minutes without interruption.

Candidates

Both candidates are experienced debaters though their styles are very different.  President Trump prefers a less formalized approach with an almost incidental use of facts, driven by his slashing and disconcerting attacks on his opponents.  In 2016 he disposed of 16 Republican candidates in the primaries, almost all of whom had far more political experience and greater exposure to the standardized format of televised political debating.

Biden has been in office for 47 year and is considered excellent at political argument. In the 2012 campaign he easily disposed of the highly regarded  Speaker of the House Paul Ryan in their debate.  

Agendas

Mr. Trump and Mr. Biden will  bring their own agenda.  Each will attempt to stress the points for himself and against his opponent that his campaign considers the most telling and praiseworthy or damning.  Without a specific format for addressing each other, they will try to fit their attacks into answers and questions from Mr Wallace.

President Trump will try to tie Biden to the Democratic Party positions on the recent riots and looting in many cities controlled by Democrats. He will talk about the Democratic support for the extreme environmental measures of the so-called Green New Deal, the Democratic support for health care for illegal aliens and $4 trillion in new taxes the candidate has said will be enacted ‘immediately” if he wins. 

When Mr Biden was asked if some police funding could be redirected to other uses he said, “Yes, absolutely.”  Mr. Biden is also vulnerable on his and his Vice-Presidential candidate Kamala Harris’s opposition to fracking, a major industry in Pennsylvania, Ohio, and other essential swing states.  

His son Hunter’s business dealings in China and Ukraine while his father was Vice-President will be worked in by Trump as could be Tuesday's report that the Obama administration was informed in September 2016 that the ‘Steele dossier’ used against Trump in the election and later as a basis for the Mueller Special Counsel Investigation was a Russian disinformation product procured and shopped by the Clinton campaign. 

All of these topics will appear in Mr. Trump's brief.

Mr. Trump’s record will be a major point of attack for Biden, led by the President’s performance in the COVID-19 pandemic, a topic with which every American has recent and perhaps frightening experience. 

Trump’s many comments and tweets will no doubt be quoted and repeated by the Democrat as evidence of attitudes Biden will characterize as objectionable if not racist. The Republican’s checkered business history and associates will be pitched against him. 

The President's nomination of Amy Coney Barrett to the Supreme Court will be called hypocritical since the Republicans refused to consider President Obama’s final choice in 2016.  This week’s New York Time’s story on Trump’s taxes will perhaps be cited by Biden as proof of questionable dealings.

Presidential debates

Despite their large audience and obsessive media focus debates have not been decisive factors in American presidential elections.  In 2012 Mitt Romney was widely seen as the victor in his first debate with President Obama who went on to an easy triumph.

Most voters have long-since decided who they are backing by the September and October debates, either because of long-established preferences or familiarity with the candidates and their records. The universe of persuadable voters is very small.  

Debate performance is not going to change the minds of the vast majority of the electorate.  Still, with the miniscule margin of Mr. Trump’s victory in 2016, those few voters who are available for persuasion are the deciding factor for both candidates and they will compete hard for the advantage.

Each candidate will try to throw his opponent off stride with attacks, accusations and probably questions and charges posed directly to the other, ignoring the moderator.  Mr. Trump in particular is known for the slang and derogatory names he coins for his rivals and his aggression.

Catastrophic risks

Each candidate has a particular vulnerability and how or if it surfaces will probably determine the outcome of this debate and, if egregious, the election.

Mr. Biden’s question is his fitness for office.  His campaign has, compared to the frenetic activity of Trump’s, barely registered in public. 

Mr. Biden has held few in-person campaign stops, conducted only a handful of press briefings, usually with submitted question and held no rallies.  There have been questions about his reading answers from Teleprompters and a seemingly unending series of misstatements and odd non-sequiturs in speeches and interviews. 

The Trump campaign has harped on these mistakes to such a degree that in the last few days they have let it be known that they consider Biden a dangerous competitor.  Clearly they have recognized the problem of low expectations for Mr. Biden’s performance.

For Mr. Trump the risks are two-fold.  The first is message discipline. His natural bombast can lead him to statements and positions that stray far from his intended delivery and risk seeming both evasive and ill-informed. Second, his inherent aggression and instinct to hit back can and has in the past, pushed him to statements that appear callous and offensive.  His greatest risk is that a Biden attack will goad him to a quote that will be used against his campaign to deadly effect. 

In the final analysis Mr. Biden’s risk, though perhaps smaller, is far more dangerous.  Any notable sign of cognitive decline will be seen by the audience and probably sink his candidacy. 

Conclusion: Markets risk and the electorate

Even though they approach the debate from very different analytic and emotional dimensions, the response of both the markets and the general electorate to a catastrophic debate event will be the same, though the timing will be different.  The market response will be immediate and the electorate’s will take a week or more to register in the polls.

If Mr. Biden or Mr. Trump falters, the uncertainty generated will damage both the dollar and equities and boost credit prices, lowering interest rates. 

However, if over the next week or so polling then begins to tilt towards Trump or towards Biden the greater the turn the more the chance of a stronger dollar and stock prices.

In the end markets are more interested in a decision than they are in specific candidate.  If the debate can provide an answer now, it is better than waiting for the election.