September 23, 2020

IronFX, What's happening? US Presidential Elections and Supreme Court

Could the US Presidential elections be in stake? Find out the current situation of political activities.

What's-happening-US-Presidential-Elections-and-Supreme-Court What's-happening-US-Presidential-Elections-and-Supreme-Court

US elections: Going to court

The news of the death of liberal Supreme Court Justice Ruth Bader Ginsburg on Friday, hit the media fast.

The Supreme Court Judge was notorious for her liberal stance on various issues and a fierce fighter for women’s rights before her placement at the Supreme Court.

However, what was even more impressive, was how fast Republicans and especially President Trump moved to replace her, even before the late Judge was buried.

The issue opens yet another front as the US Presidential elections are nearing and tend to divide the public and make the US presidential elections tenser.

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The process and its implications

Actually, the process to fill the vacancy is rather straight forward.

A nominee is presented by the US President and if approved by the Senate, fills the vacancy.

The idea here is that there would be a set of checks and balances, as the appointment is highly influential and a lifetime appointment.

That would imply that the executive branch of government and that would be the US President, could propose a nominee, while the legislative part (Senate) would approve an appointment.

Currently, both the Presidency and the Senate are controlled by Republicans, practically handing over the power to appoint a nominee of their pleasure.

As President Trump stated in a recent rally,

“So, Article 2 of the Constitution says that the President shall nominate justices of the Supreme Court. I don’t think it can be any more clear, can it?”.

Yet some seem to disagree.

The US has a tradition that vacancies in the Supreme Court are not filled in an election year.

It’s characteristic that Abraham Lincoln delayed such an appointment until after the elections, when he regained the popular vote, while Barack Obama was denied by the Senate the chance of appointing a member of the Supreme court by the US Senate exactly on the justification that it was an election year.

So, the issue seems about to polarize the US public even further, given that the elections are so near.

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The possible nominees and the balance of power

President Trump has stated to media that there is already a list with possible names, which could replace Ruth Bader Ginsburg.

It was characteristic that he stated on Saturday evening that he will be putting forth a nominee next week and that it will be a woman.

Media headlines seem to project the name of Barbara Lagoa (53) which serves at the 11th Circuit Court of Appeals in Atlanta.

Amy Coney Barret (48), which serves at the Chicago based 7th Circuit Court of Appeals, is another name cited by media as a possible contender.

Other names mentioned are Kate Comerford Todd and Joan Larsen.

All candidates seem to share the features that they are women and conservative.

Should one of these be actually chosen for a seat at the Supreme Court, that would strengthen the balance of power within the Supreme Court in favor of more conservative judges against more liberal judges from current 5-4 towards 6-3.

Please note that the seat is for life, practically stabilizing a more conservative Supreme Court for a number of years to come if not decades to come, possibly affecting a number of political issues, from voting and gender rights to environmental regulation and big business matters.

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The appointment and the twist in the US Senate

It would seem like the US is rolling down on one of the most stressful political tests in decades.

A presidential election and an appointment in the US Supreme Court at the same time.

All of that with keeping in the background the demonstration for racial equality and police brutality, given that the COVID 19 pandemic and its heavy hit on the US economy is still evolving.

US President Trump seems to be intensifying efforts to appoint his third judge at the Supreme Court, while the leader of Republicans in the Senate Mitch McConnell is pressing ahead to confirm a pick of Trump for the position by the Senate.

It’s characteristic how Mitch McConnel has made a U-turn as he was the one which denied Obama the chance to nominate a member of the Supreme Court in 2016, on the reason that it was an election year.

Back then, McConnell stated that voters should decide the destiny of the Supreme Court in choosing a new President.

But McConnell turned his back on his own made-up rule with a Republican in the White House.

On the flip side, Democrats are mobilising to maximize what they perceive as a potential benefit of the nomination process for Joe Biden’s campaign and at the same time prevent the President from using the unexpected issue to deflect from current issues of the pre-election period, such as the economy and handling of the pandemic so far in the US.

It was characteristic that the democratic candidate for the US Presidency declared Trump’s plan as an “exercise of raw political power” and called on Republican members of the Senate to abstain any process that could fill the vacancy at the US Supreme Court.

Joe Biden pledged to nominate an African American woman to the court, which would be a historic first should he be elected and have the chance.

It was characteristic that Senator Lisa Murkowski of Alaska said she did not support Trump’s plan to move fast on filling the seat, becoming the second, after Senator Collins, of the 53 Republicans in the 100-seat chamber to object publicly.

Given that the two Republican Senators, the Democratic Senators and the six independent Senators, vote against the actions to fill the vacancy, that leaves the Republican party with little margin for error as there will be a slim majority of 51 to 49 in favour of Trump’s choice.

We expect that the dynamics within the Republican Senate Team will become clearer in the coming week, as the Trump may announce a nominee and more Senators will express their opinion.

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Could the US Presidential elections be in stake here?

Analysts have argued that the US elections could be decided marginally, given the high degree of polarisation observed.

Also given that mail voting is expected to play a key role in the outcome and that President Trump has not clearly declared that he would be ready to accept their result it could be the case that the Supreme Court may be called to clear the dispute.

The most recent event was in 2000, when the US Supreme Court practically handed the presidential election to George W. Bush.

Despite the fact that a Trump proposed appointment would probably cement the majority of perceived conservative judges against liberals, tilting the scale in favor of President Trump, we would like to remind our readers that at the Supreme Court there is already a perceived majority of conservative judges.

On a more indirect level though the issue could play a key role for the US elections.

It’s characteristic that the US President tries to mobilize his base behind him in order to improve his ratings, while on the other hand Joe Biden seems to be reinforcing his lead against Trump.

Currently, polls seem to show that the Americans would prefer the appointment to be postponed after the US presidential elections, providing more dynamics for the Democratic candidate Biden.

Nevertheless, the intense polarisation of the public on the issue, along with the fact that the issue has been politicized, serves as a painful reminder of the deep division within the US.

Also, should the results of the election be close, or could be contested, that could result in considerable political uncertainty and further unrest.

In this case, even a Supreme Court ruling may not be able to cool the flames of division within the US society.

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Can the US stock markets remain in green territory?

Major US stock markets moved higher yesterday regaining some of the lost ground of the past daily sessions.

More specifically the S&P500 gained +1.05% and moved upwards after consecutive daily sessions of moving lower.

The DJ Industrial Average 30 gained +0.52% performing the smallest rise among the top indexes, while the biggest gain was performed by the Nasdaq100 with a +1.88% surge, performing its second consecutive green day this week.

The major US Indexes may had been supported by the ongoing talks on further stimulus aid discussed by some important figures in thee US.

For the main part of this report we will be looking into some of the major stock market movers during the past days.

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FinCEN Files are leaked

Yesterday, reports by the Wall Street Journal and other media sources provided information on illegal financial transactions that had taken place within the financial world during the past decades.

The information is said to have been leaked by the US Treasury Department.

Past records from banks and regulators may be evidence that anti-money-laundering had taken place in order to clear terror finance, drug trafficking, arms proliferators and other bad actors.

Even though the news received enough attention, most people in the industry already know that these activities have taken place in the past and even continue to be carried out in many countries around the globe, not only the US.

The point is that the financial system around the world still has weak points that some tend to take advantage of.

In any case, the system as such has holes that enable criminals or illegal activity organizations to clear their funds.

In our view, the lack of awareness of the system is the reason that illegal cash flows continue to be laundered and in this case many popular financial institutions could be caught doing such activities.

BBC in another report mentioned banks that may have been associated with such activities in the past.

Some banks were HSBC, JP Morgan, Deutsche Bank and Barclays.

We do not have solid evidence that these banks have made red-flagged financial transactions for the time being, yet any evidence could move share prices significantly.

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Tesla’s development and stocks

Among the top losers yesterday was Tesla Inc., that shed -5.60% and closed the session at $424.23.

Yesterday was Tesla’s 2020 Annual Shareholder Meeting and Battery Day.

Through this event Tesla’s CEO Elon Musk took the time to make a public overview of the past year but also future expectations.

Some of the most important comments made follow.

Starting, the CEO made reference to Tesla’s Shanghai factory that was built from scratch and has already started production in only 15 months.

Furthermore, another fascinating statement made was regarding solar roofs installation which Tesla charges $1.49 per watt.

Also some charts indicating that the firm had been profitable for the first time in consecutive quarters outperforming the competition in 2019 were displayed.

For the future, Elon Musk forecasted vehicle deliveries to surge by 30 to 40 percent compared to the year before, which is a continuation from a previous goal statement made by the firm to deliver half a million cars in 2020.

However, what may have displeased investors during the event forcing them to sell Tesla’s share, may had been comments on vehicles with lower prices.

According to the CEO it could take 3 years for Tesla to be able to produce an electric fully autonomous vehicle at a price nearby $25,000.

Yet, Tesla’s boss also stated that even though it seems that Tesla is generating immense revenues, they have averaged profits by 1% per quarter.

In our view, the event has displayed a lot more positive signals than negative for Tesla.

However, as Tesla’s stock has been up +407.05% on a year to date basis, some investors may be looking to book profits with every opportunity available.

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Increasing digital sales of Nike Inc.

Nike Inc. was among the companies that made gains after positive data the company publicized yesterday.

First and very notably Nike announced a significant rise in digital sales.

Selling online is the name of the game in the tough times we are currently going through and Nike, has been taking full advantage offering online services to its clients.

We must note that digital sales for Nike have been increasing since 2019 and the fact that numbers are still rising vindicates the firm’s decision to invest in this service.

According to the 2021 financial results for its first quarter ended August 31, 2020, Nike’s online sales soared by 82%.

In addition to the positive news was a rise in Chinese sales by 6%, while despite a revenue drop in North America by -2% the revenue generated was higher landing at $4.23 billion higher than the analysts’ predictions for $3.39 billion.

Also revenue in Europe, Middle East, and Africa had risen during the period.

At the moment, Nike is in a very good financial position and has made the best out of the Covid-19 outbreak as it has gained +15.36% on a year to date basis after rebounding from losses suffered in March and even breaking higher lately.

Yesterday, Nike Inc. gained +3.09% on the session and closed at $116.87 under the DJ Industrial.

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US Stock Indices declining

As a final note, the major US indexes mentioned in our intro had performed three weeks in a row of declines, a statistic we have not seen for a long time.

Investors may feel more secure locking in profits at the moment due to the significant upward run the indexes had performed in the previous months.

Is this an indication of worries over the future performance of the markets?

Are the rising virus cases in many countries meddling with investor’s choices?

We would advise traders to try to identify an edge before engaging the market.

It would also be wise to question everything you come across in the media as this could help form more accurate and useful decisions.

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