Fiscal cliff = Double-dip

The coronavirus has imposed both a supply shock and a demand shock to the global economy. The supply shock was in the form of disruption to supply chains as factories were shuttered. The supply shock has largely been corrected.

The demand shock was in the form of a loss of demand as lockdown and stay-at-home orders cratered demand. Governments around the world acted to cushion some of the demand shock by way of fiscal support. In the US, a significant part of the fiscal cushion is expiring, which is the risk of a double-dip slowdown.

One puzzle of the stock market rally since the March lows is how stocks can strengthen in the face of the worst economic slowdown since the Great Depression. Sure, central bankers took steps to mitigate the worst of the damage. While they can print money, they cannot print sales or customers for businesses, nor can they print equity.

While some of the risk-on tone could be attributable to central bank action, the real reason for the market’s strength is fiscal policy. While the stock market isn’t the economy, and the economy isn’t the stock market, the two are nevertheless connected. I pointed out last week (see Analyzing the bull case) that US fiscal support had strengthened household incomes to pre-pandemic levels. Retail sales were therefore recovering strongly as a consequence.


All that is about to end as the $600 per week supplemental unemployment insurance payments expire at the end of July. Congress has failed to act to extend the benefits, and the economy is going over a cliff. Brace for the double-dip recession.

Differences in policy time horizon

The differences in monetary and fiscal policy response to the pandemic represent a stark contrast in time horizons. The Federal Reserve believes the effects of the COVID Crash are medium to long term in nature. The most recent July FOMC statement shows the Fed’s believes the pandemic will be a key driver of the medium term growth outlook.

The path of the economy will depend significantly on the course of the virus. The ongoing public health crisis will weigh heavily on economic activity, employment, and inflation in the near term, and poses considerable risks to the economic outlook over the medium term.

The economic recovery will be long and drawn out. Interest rates are going to be on hold for a very long time.


When asked about the triggers to raising rates during the press conference, Jerome Powell replied that they were not even thinking about raising rates. He also pleaded with Congress to enact another stimulus bill to keep the economy from going off a cliff as the Fed cannot do the heavy lifting all by itself [emphasis added].

It will take a while to get back to the levels of economic activity and employment that prevailed at the beginning of this year, and it will take continued support from both monetary and fiscal policy to achieve that.

By contrast, the fiscal response has been short-term in nature. Congress viewed the pandemic as a short-term shock to the economy. A short-term shock meant a short-term response. It was therefore no surprise that the extended $600 per week unemployment insurance benefits in the CARES Act expired at the end of July.

The short-term view was wrong. After raging through Washington State, northern California, New York, and New Jersey, the pandemic went on a rampage through the Sun Belt states. Setting aside the uneven stay-at-home responses of state governors, the populace did not feel safe enough to return to normalcy in the face of infection risks. So much for the reopening and the V-shaped recovery.

Assessing the damage

The main damage of the fiscal response can be seen in the expiry of the $600 per week supplemental unemployment insurance that expired July 31. The deadline was no surprise. House Democrats had passed a $3 trillion relief bill in May. No one expected that the Republican controlled Senate would pass the bill in its entirety. The bill represented the Democrats’ opening gambit in bargaining and it was a signal of its priorities, which were especially important in an election year. The Republican controlled White House and Senate did not take up the relief issue until mid to late July. When it did, it was unclear whether the resulting $1 trillion bill could muster sufficient Republican support in the Senate to pass.

While all sides are continuing to negotiate, there will be a discontinuous break in disaster relief, which could be catastrophic for some of the population. If we were to continue the cliff and precipice metaphor, it’s easier to limit the damage by preventing people from going off the cliff, than to try and rescue them after they’ve fallen.

For some perspective of the economic cliff, over 30 million Americans will see a sudden income cut of 50% to 75% if the $600 weekly benefits disappear. The Republican bill proposed a temporary supplement of $200 per week, to be replaced by two-thirds of the worker’s previous wages, which would be implemented later so that state governments could re-program their computer systems. George Pearkes of Bespoke Investment Group estimated that the Republican proposal represents a -3.2% reduction in GDP.

The economic damage is not just limited to household incomes. Depending on the jurisdiction, hastily enacted eviction moratoriums are either expiring, or have expired. The Intelligencer reported:

At midnight on Friday [July 31], a federal moratorium on evictions will end. Similar bans by state and local governments have already passed or will soon expire. With tens of millions of Americans seeking jobless benefits, and the federal unemployment-insurance bonus set to expire, many American renters will soon be at risk of losing their homes…

[The CARE Act] protected people from eviction if they live in homes or apartments with a federally backed mortgage. According to one estimate, that amounted to roughly 12.3 million units, home to just over a quarter of the country’s renters. There were problems with the law, though. Apart from leaving three-quarters of the country’s renters exposed to evictions, there was also no enforcement mechanism or penalty for landlords who attempt illegal evictions.

Even if Congress were to agree to a rescue package later in August, the discontinuous loss of unemployment benefits has the potential to become a homelessness crisis with dire consequences. Over 40% of renters are at risk of eviction.


The lack of a rescue package has other repercussions. One glaring problem is the hole that the pandemic has blown in state and local budgets.


Without federal aid, state and local governments will have no choice but to cut employment. Despite the improvement in Nonfarm Payroll (NFP) for the past few months, government employment has not recovered. Expect it to drop in the coming weeks and months.


If you thought that employment rebound was a bright spot in the recovery, be prepared for a negative surprise. Former Treasury official Ernie Tedeschi observed that high frequency Census data shows a softening in the jobs market. The market consensus for the July NFP to be released this coming Friday is a gain of about 2.3 million jobs. Tedeschi estimated that, after adjusting for definition differences, timing, and seasonality effects, July NFP is likely to come in at a loss of -2.2 to -4.7 million jobs. Prepare for a jobs report shocker.


Economic data reports are turning sour. Initial jobless claims rose last week for a second consecutive week, indicating a stall in the recovery. The preliminary Q2 GDP fell -9.5% quarter/quarter, or at an annualized rate of -32.9%, which was ahead of expectations but still deeply negative.

The stock market had been rallying on positive economic surprises. The Citigroup Economic Surprise Index, which measures whether top-down data is beating or missing expectations, appears to be peaking out and turning down. To be sure, there is some good news on the horizon, as it appears that the new infection counts are topping out in the Sun Belt. Fatality rates will stop rising and begin to decline in about a week.

Nevertheless, the economic damage is becoming apparent. How will the market behave in the face of the economic cliff and disappointing macro releases?


Other risks

In addition to the economic risks that have been mentioned, there are also other risks that the markets could interpret to be unfriendly.

First, assuming that Congress does cobble a rescue deal together at some point in the future, the economy will need fiscal support after the November election. If the support period of the new package does not last until late January, it may be virtually impossible to pass any legislation between Election Day and Inauguration Day. This raises the risk of another fiscal cliff and sudden stop in economic growth.

In addition, the effects of this economic cliff could affect the election. CNBC reported that 62% of swing state voters support the extension of the $600 per week unemployment insurance. Since this is contrary to the Republican position, it could degrade the Republicans’ electoral odds. As well, the Washington Post reported that Wall Street is showering the Democrats with campaign contributions. Such a level of defection is unusual considering how the Democratic agenda is unfriendly to financiers. A Biden and Democrat victory is likely to translate into higher corporate taxes and a reduced earnings outlook for 2021 and beyond.


There is an electoral silver lining for Trump and the Republicans. Despite the steady drumbeat of polls showing Biden leading Trump, the odds of a Biden victory have been trading sideways at PredictIt for about a month. Biden is not gaining ground in the betting markets, and Trump is not losing ground.


The risk of electoral chaos is also rising. Remember the Florida hanging chad controversy? The US could see a similar episode, but at a higher order of magnitude. President Trump has already questioned the possible legitimacy of the election and raised the possibility of a delay, which is legally questionable and rejected by his Republican allies.


Trump can’t legally delay the election, but he can take steps to question the legitimacy of the results. Business Insider reported that cybersecurity experts believe it could take weeks to determine the winner after November 3.

  • Election cybersecurity experts said Tuesday that “the electorate may not be prepared for how long it’s going to take” for winners to be declared after the general election on November 3rd.
  • A panel that included two cybersecurity experts who served in the White House agreed that simply counting ballots may take a week or two.
  • Any litigation that follows that counting could postpone results for much longer in a scene reminiscent of the 2000 election, when results were delayed until January.
  • The experts also said voters’ loss of trust in the system may be the biggest risk in the upcoming election.
  • Despite fears of foreign interference, hacked voting machines, and disinformation campaigns, there is some optimism that the country is better prepared than in 2016.

Max Boot wrote in the Washington Post that he participated in a “war game” that postulated different electoral scenarios. Most of the time, it resulted in chaos and “near civil war in the streets”.

The danger of an undemocratic outcome only grows in other scenarios that were “war gamed” by other participants. For instance, what if there is no clear-cut winner on election night, with Biden narrowly ahead in the electoral college but with Michigan, North Carolina and Florida still too close to call? The participants in that war game concluded the result would be “near civil war in the streets.” Far-fetched rumors are enough to bring out armed right-wing militias today; imagine how they would respond if they imagined that there was an actual plot afoot to steal the election from their hero.

Such an outcome would create uncertainty, both politically and in the financial markets. Risk premiums would rise substantially under such a scenario and markets would tank.

A second demand shock

In conclusion, the pandemic has imposed both a supply and a demand shock to the global economy. The supply shock was in the form of disruption to supply chains as factories were shuttered – this has largely been corrected.

The demand shock was in the form of a loss of demand as lockdown and stay-at-home orders cratered demand. Governments around the world acted to cushion some of the demand shock by way of fiscal support. In the US, a significant part of the fiscal cushion is expiring, which is sparking dire consequences in the following forms:

  • Over 30 million Americans will see an immediate 50% to 75% loss of income. A moderate scenario, based on the Republican proposal of a reduction of the $600 per week unemployment insurance to $200 per week, would result in a -3.2% fall in GDP. Even if Congress were to come to an agreement on a rescue package at a later date, the fiscal cliff damage will be difficult to undo.
  • The expiry of eviction moratoriums has the potential to spark a homelessness crisis.
  • Without federal aid, state and local governments are poised to start mass layoffs.

Even without the fiscal cliff, what reopening recovery was already flattening out, and the July Employment Report has the potential to see a large negative surprise. In addition, the economy is likely to need further support between Election Day and Inauguration Day, which will be virtually impossible to achieve.

Say goodbye to the V-shaped recovery. Wall Street has penciled in a steep earnings recovery for the rest of 2020. Get ready for downward estimate revisions as the prospect of a double dip recession gets factored into analysts’ models.


47 thoughts on “Fiscal cliff = Double-dip

  1. I am sure there will be more stimulus on the way, to buy time, until we get a vaccine.
    American and global scientific communities are on target to develop a Covid vaccine. Until such a time, US and other wealthy countries will keep supplying helicopter money.
    Such money lines the pockets of the current “toll takers” (FAANG, WMT Nvidia, ATT, VZ, Big pharma). As expected, these stocks have shown gangbuster earnings. So far, the stock market reaction has been tepid in response to these earnings and that is technically a bad development (agree with Cam short, on a short leash though). Next week is key in this respect.
    There appears to be a one to one relationship of gold prices to money printing. Every ten Trillion$ pushes price of gold by 1000 $ per oz, give or take (say 20% on either side of that equation). I have earmarked 50 Trillion $ in my idle musings as stimulus money. You do the math!
    Sorry Cam, I wish you had never talked about gold being overbought circa 1500 $ per oz. Sure, I get the COT positioning, back then, and now, but the way the $ is dropping, gold never had a chance of correction. For now, watching the band between 92-94 on DXY and then around 86 on DXY. I sincerely wish there is a better entry point!
    So, the million $ question remans on everyones mind, what would cause a deep correction in the markets (50%). Here is the way I see it:
    As Cam has pointed out, political uncertainty after November 2020 has that potential. Thanks for the excellent analysis in this respect in todays article. We can call it hanging chad version 2020!
    The timeline for the above would be Q4 2020 and Q1 2021. IMHO this is a dangerous time frame unless there is a peaceful and seamless transfer of power, that is IF there is transfer of power and that is a big IF IMHO.
    Stocks are up based on Helicopter money. I would like to think that the Fed has learned its lessons and that printing presses will keep running until the cows come home making stocks the only place to be (? 3-5 years). If, and again, this is a big IF, the Fed tries to normalize money policy, stocks should correct.
    Some of the new developments on the vaccine front should now be seen as positive developments (and slowly in the rear view, in couple of months or so?). Here is one such paper;
    What the above paper describes is a robust immune response in monkeys. These monkeys were given the m1273 vaccine (Moderna) following which they were injected with Covid 19 virus. What they found was an astounding response against the virus. This is very very encouraging news. Though early days, there is new news on this front every day. The virus is an existential threat to mankind and there are huge efforts being made to find a durable solution.

      Here is another paper that shows that monkeys are protected by a different Covid19 vaccine (not Moderna). The approach used by these researchers is different and opens another battle front in the fight against Covid19.
      There are professionals reading these posts and I shall leave it to them to critique these two papers which I see as seminal developments in the last week or so.
      I see the fight against Covid19 as a fight against Third Reich, circa 1944-45. Several battle fronts were opened simultaneously, including in the Pacific, ever immortalized by Brigadier General Paul Tibbets, USAF, who flew the B29 bomber named after her mother Enola Gay.
      And, no, I am not that old! Lol.

    2. D.V. I think there will be a vaccine or two released before the election. However, it will not be approved for the general population immediately. I may be wrong on the public release since production is already underway.

      I have read some bad side effect stories about the Moderna vaccine but nothing bad about the Novavax version. Of course there are others. But it will be too late to save the election from the mail-in fiasco that may happen. There will be so many challenges of millions of mail in ballots that we may never know the winner. Of course, I still remember when they found a car trunk full of ballots that pushed Al Frankin into the lead for a last minute Senate victory. I still believe that was voter fraud. Episodes like that will be endless if we use mass mail in voting in 2020.

  2. Elliott Wave says oil to correct to $20 – $31 before going to $140. This fits in with what Sentimentrader and McClellan are saying. Sharp short term correction, but long term bullish. Dem and Republicans are supposed to talk today. We’ll find out today what Monday brings. I’m glad to still be 95% cash in redeemable fix income after reading Cam’s work today.

  3. It’s possible that the negative effects of the pandemic, including potential future scenarios hypothesized by the media, were completely priced in on March 23. It was, after all, an unprecedented drop in global market values terms of speed/intensity.

    The question in my mind is – what might the market be pricing in now?

    1. HK is not constrained by law on election delay. The election in HK is now only a facade and order is ultimately enforced by the PLA. Not sure if you want the same sort of structure in America.

  4. Wow! I’ve never seen such a negative report from you, Cam. However, I believe many of the sources you site have a bias to want the economy to fail prior to the election. I take their comments with a grain of salt.

    But, the Democrats are asking for unreasonable stimulus in excess of $3 Trillion and I’ve seen them upping the anti from from that to make it nearly impossible to reach a compromise. This is the main risk right now, that nothing can be agreed to.

    And, it isn’t the conservatives who are rioting and burning down the country. It is the liberals and there is zero condemnation from democrats. In fact, some are even participating. If a civil war like confrontation happens, it will mostly just be conservatives defending their homes and public and private property.

    1. The fiscal cliff is real. It’s astounding that the Senate would recess for the weekend.

      As I pointed out, the Democrat bill is only their opening salvo in negotiation. Each side is allowed to start from a position and then work their way into the middle. What’s surprising is the Republicans delayed and dithered and couldn’t even come up with a position until the last minute. When they did it wasn’t clear that the proposal would even pass the Republican controlled Senate.

      As for the riots etc. Under a scenario of electoral chaos and uncertainty undoubtedly both sides would come out and protest. Everyone has their right to express their opinion.

      1. Cam, that isn’t what Pelosi said. The Republicans presented three versions of the bill last week and got ZERO counter offers from the democrats. When Pelosi was asked about their initial bill that suggested the $600 weekly unemployment bonus continuation she said that was last month, now they want double that if I recall the amount.

        I don’t think the democrats are going to let a bill pass until the poll number show they are being blamed for the stall.

        1. The Democratic leadership also said that it’s difficult to negotiate because there are several blocs of Republicans and they can’t present a united front. No one is in charge. Otherwise Mitch McConnell would have passed some version of the rescue package in the Senate. He can’t even get enough Republican votes.

      2. P.S. No one is protesting. These are RIOTS. Of course the MSM denies that but all you have to do is look for the footage being released.

        1. Riots usually begin as protests first. Notice how things have calmed down once the federal presence withdrew from Portland?

      3. As usual, your both (sides) are right. Sort of.

        I live 3 miles from Minneapolis precinct 3, riot center. Closed and burned out buildings everywhere where I did my weekly shopping. Hardly a mention in 2 months by (even local sycophant) media. This is all democrats politics to harm people and try to blame it on Trump (who I dislike nearly as much as Democrats). It’s laughable there’s right wing opposition here in the People’s Republic of Minneapolis or other riot centers.

        My unemployment from 3612 to 1032/mo is a huge drop. Already, 30 homeless tents in the nearest city park appeared, like most parks now. This will greatly expand without continued help.

        Polls are again unreliable in this environment. I’m favoring the idea democrats will block major aid, crash the economy, blame Trump. Some kind of election decision chaos seems very likely. It’s hard to short after being burned in this rally but more difficult to think something here won’t spook the market out of it’s wild optimism by YE.

        1. I tend to agree with you Allen. I guess we need to think about what is going to happen to the market in this environment.

          It seems to me that the market would have fallen already if traders thought there was going to be a big permanent disruption to the economy.

  5. I am stunned and astounded by the ‘sky is falling’ tone of this report. Go hide in a cave, chaos and protests will rule the day. I am almost certain tomorrow’s report will be to get to extreme defensive positions!

    I am more optimistic. Our leaders will come to an agreement. Situation on the ground is not worsening and may soon start getting better. I see more activity around me – people are adapting and adjusting. That is what humans do. Vaccine effort is like no other in modern history the world over. No end in sight to monetary and fiscal stimulus all over the world. Yes, temporary hiccups but not an existential crisis.
    Politics and economy are intertwined. Two parties come at it differently. House was gone for a month during the second fiscal stimulus package. A weekend off for Senate is a disaster?
    I am inclined to watch and wait, no need to panic. Yet.

    1. A vaccine will help things in 2021, but we have to contend with a collapse in spending now. if you have a specific objection to my analysis I am quite happy to engage you on specific points.

      1. I think I stated my points in the second paragraph above. More than anything I have faith and hope in us.

    2. (a) The DJIA plunged -500 points on Thursday, and the decline was bought.

      (b) The DJIA retested Thursday’s lows with a -300-point drop on Friday, and the decline was bought.

      Those are two beautiful candles – Friday’s on decent volume.

      Investors/ traders are aware of the issues, including the fiscal cliff – indeed, given the relentless coverage in the media can there be anyone who is unaware? Yet bears have been unable to take the market down. The market response to bad news offers valuable ‘intel.’ It’s up to each one of us how we interpret the price action.

    1. I’ve heard the GOP Tea Party group of 20 Senators want to block aid packages. They see Trump losing in November and want to block spending bills of a Dem house. If they support big spending now, they would be seen as hypocrites later.

      Just like they blanket blocked all Obama initiatives during the recovery from the GOP GFC mess. If President Biden can recover things in a socially cohesive way ala FDR in the 1930s (after GOP 1929 CRASH), then the GOP will be in the doghouse for a decade or more.

    2. That’s an improvement from last week, RX. But there are some things the democrats want that a no go. Especially the additional funding for mail in ballots. SCOTUS has already said they aren’t going to side with additional mail in voting this year if the states don’t individually approve it for themselves.

    3. “Perhaps half of Senate Republicans, mostly conservatives and those not facing difficult election races this fall, are likely to oppose any deal”

      Translation: If the WH wants a bill passed, it will need significant support from Democrats in the Senate. Is Trump willing to capitulate to the Ds demands?

      1. Seems like Republican Senators up for election are starting to distance themselves from Trump.

        1. I think just the opposite. Those who are safe don’t want to grow the debt farther.

          When the democrats realize the hole they are in they will offer a real compromise. And Trump will never let Pelosi get the mail-in ballot money she wants.

  6. I want to endorse Cam’s view. In fact, a plunge is imminent – the S&P has run away from the A-D line. (Look up $SPX:!ADLINENYC, with reference to its 200dma. Note periods Jan ’18; Oct ’18 and Feb ’20.)

    1. Louis, I do tend to agree

      As an aside: I have been reading Cam’s work for many years, and I remember him being one of the few analysts I follow who correctly analysed the tricky markets of 2015 in real time**.

      I put serious weight and pay attention to what he writes. So, yes, at minimum, now is not the time to be rampantly bullish, I suspect.

      **Monday, May 18, 2015
      Why I am bearish (and what would change my mind)
      Now that SPX has reached further all-time highs, I received a number of comments to my latest weekly market outlook post (see Where’s the new high celebration?) which amounted to “you’ve been bearish and wrong for the past few weeks and now it seems that you are stubbornly making up reasons to stay that way”. Under the circumstances, I feel compelled to respond and explain.

  7. I agree with others who will say that there will be a stimulus, but the unemployment benefits and eviction ban have already expired as of yesterday. Does that matter?
    Trump is very fickle but ultimately stands for nothing and will probably cave to whatever Meadows and Mnuchin want, even though he tweeted about payroll tax cut again today (which is a no go). Mnuchin and Meadows sounded constructive in the meeting today. In contrast, McConnell is more of an ideologue who is fixated on getting liability waivers for businesses. I have not heard any Dems say they will support that.
    at least 7 Dem Senators will be needed to pass anything through the Senate. Joe Manchin is effectively a Republican so make it 6. I don’t see Doug Jones caving to Republican wish lists immediately like Manchin will.
    For Pelosi Schumer they are going for test and trace, school funding, unemployment, hospital funding, and essential worker hazard pay. I don’t see them caving on much of that. Schools will not reopen nationwide without it and without rapid testing and contact tracing funding we are dead in the water as a nation and economy. Work from home stocks will likely continue to thrive. Jeff Stein at Washington Post @JStein_WaPo is on Capitol Hill and updating his Twitter hourly.

    I have a question for Cam and the group– what are the implications of AAPL splitting its stock? Is it true that tends to be associated with further increases?

    1. The studies that I’ve seen have mixed conclusions. Some say that splits are bullish, others say it doesn’t matter.

    2. With the revolt of Republican Senators who are opposed to another bailout, Trump will need the substantial support of Democrats to pass a bill. That means giving Pelosi and Schumer most of what they want. The WH will have to make a political calculation of passing a huge spending bill and allow the Ds to claim victory while rescuing the economy, or to go over the cliff and blame the Democrats. My guess is Trump picks the latter course of action.

      1. Thank you… what a tragedy that would be! I personally do not think the market is pricing it in because they equate the Fed with fiscal stimulus and perhaps do not get how entrenched GOP and Dems are in Congress right now.

  8. I don’t think the democrats here realize what they are wishing for. Have you read the preliminary platform for the DNC convention? Probably not.

    If you vote for Joe Biden, you are voting to fundamentally change America from what our Founding Fathers intended for us. You are voting for the scrapping of the Constitution. You are voting for censorship. You are voting for authoritarianism. You are voting for the racist ideology that we are to judge people based on the color of their skin. You are voting for the elimination of the police. You are voting for a globalist world without borders. You are voting for the utter destruction of the United States of America.

    Fortunately, Trump’s approval is soaring and internal polling is showing a Biden fade. I don’t think he can be elected.

    1. Wally I don’t agree with your view but obviously to each their own.
      As a meta-comment, if we cannot agree on this message board, does the market expect that McConnell/ Mnuchin/ Trump vs. Pelosi/ Schumer and Ds will magically resolve all their differences in a matter of days? if so… yikes.

    2. Wally,

      You’ve made your views on the election outcome clear and they are different from the market consensus. From a trading perspective you can make very good money if you are willing to bet in accordance with your conviction.

      The Trump contract is trading at about 40c on PredictIt, which means you can make 1.5x your money if you are right.

      Otherwise everyone please tone down your political views on this site. The focus here is on investments, which includes the investment implications of policy decisions. Not on whether the decisions are right or wrong.

      1. Great reminder Cam. This is definitely about the investment implications of the stimulus not the politics, and it actually helps to hear a range of views rather than stay in our respective bubbles. Cheers everyone 🙂

    3. What world do you live in? Geez… Cam is making fair points here and you are blathering on about a bunch of right wing bulls..t. Please, save this for other sites.

  9. Cam, I think the donations and betting predictit odds need additional context.

    For donations:

    The higher wall-st contribute to D is actually good news to Trump with the additional context from NPR. Trump currently out-raises Biden (including pacs) by a lot. If D is getting more money from the big corps and rich donors, it stands to reason Trump is getting tons more contributions for the little guys (ie, actual voters). Sure enough, FEC individual contributions seem to point that out as well.

    For betting odds:

    the official “odds” are partially based on polls. The actual bets, well, reflect perhaps people’s general distrust in polls.

    Generally, the public loves to bet on favorites and “overs”, when the public instead bets on “unders” (aka trump in this case) , it suggests perhaps the odds are off.

    1. Most of the reports I have read show that the Biden side outraised Trump on a monthly basis. The NPR report you cited shows that the Biden PAC (Biden Victory Fund) trailing the Trump PAC (Trump MAGA Committee) badly but that’s on a quarterly, not monthly basis.

      Not sure what to make of your betting comment, but it’s a market, and I suppose that markets can have both value and momentum (what you cited) effects. What’s interesting is the odds have been range-bound for about a month, even the Biden lead has widened in the polls. So value is dominating momentum in that respect.

      1. Morning. The NPR report is updated monthly, usually around the 20th of each month (I’ve been paying attn to this since the original article in May, FEC data is lagging by one month though). I think the breakdown includes both the campaigns themselves as well as their respective PACs.

        Not much of a betting person myself, I just thought it was interesting money has been going against the odds. But maybe that’s just the fav-longshot bias at work. I quite like your “value vs momentum” analogy.

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