Market Overview

28 October 2020

Where Could Mail-In Ballots and Fraud Accusations Lead Stocks?

Global stocks continued to decline for the third day in a row with the U.S. S&P 500 broad market index forming fresh dips below the 3350 point landmark on Wednesday's European morning vs more than 100 points higher close of the previous week, and less than 24 hours after prices were struggling to hold the levels above 3400 points on Tuesday. The lows of this autumn are located near a 3200 technical support. Major European financial markets echoed the price action across the ocean, as the French CAC 40 stock index and the Pan-European Euro Stoxx 50 index renewed their minimum readings since June. It is still difficult to say how deep inertia may lead the markets. 

Google-parent Alphabet, Amazon, Apple, Facebook are among the big tech players reporting later this week. Most of them are going to publish their financial results on Thursday. In any other "normal" year, the market's attention would have been focused directly on these Q3 results in an effort to quickly analyse and select some suitable objects to add the proper volume of shares to investment portfolios, or at least to define a planned price for the postponed investment procedure. But that probably will not be the case right now, as most fund managers and private traders are not willing to face high risks by entering the market  on the Friday or Monday just before U.S. Election Day. Instead, many people will probably remember all these corporate results in detail in order to put them in their intellectual "piggy bank" inside their minds and within the proper folder fairly bulged with other documents for a better time. 

For example, the Microsoft Corporation reported on Tuesday a brilliant $1.82 profit per share on excellent $37.15 billion revenue beating most of Wall Street estimates by far and being supported by its flagship cloud computing business against a background of increased work-from-home arrangements. But its shares even slipped more than 1.5% after the bell, at least before hours of regular trading session today. There are quite a lot of examples of similar behaviour over the previous days concerning share prices of other companies. It happened even with some commodities like oil or copper futures, when those assets just suddenly slipped in the course of the last several days on uncertainty worries. 

It seems that the investment community is becoming more and more nervous ahead of November 3 and this feeling will probably remain so on November 4 or even  for a couple of hard weeks ahead. More than 46 million mail-in ballots of American citizens have already been cast all over the USA before today. The counting of high volume of postal ballots may take a significantly longer time than ever before. "It's very possible there won't be a clear winner on election night, nor for a good few days after that," BBC News broadcasted. More details about tossup states have already been discussed here.

But a possible time delay is not the only problem. There are high chances that a lot of mail-in ballots authenticity could be contested. 

There are several ways mail-in ballots are protected from fraud. Ballots are printed on special card stock with an exact page size, thickness and colour varying by state, or even county or town. Ballots feature particular design elements that are rather difficult to copy. The text is also different from place to place, as presidential candidates are the same across the country, but each state has different races for members of Congress, as well as for a state governor or attorney general. It’s also very hardto duplicate mail-ballot envelopes. Plus, at least legally, only valid voters can get a ballot in the mail, so that people should not get ballots in the mail by accident. Some states mail them to all registered voters automatically – as in Oregon, Washington, Utah, Colorado and Hawaii, which conduct all elections by mail even when there’s not a pandemic. These states mail ballots to eligible voters at the address where their registration form says they live, while in many other states, voters have to request a ballot first – and it should not be mailed out to a person until an election official has confirmed that the person is an eligible voter. 

Voters must affirm their identity, and each state has its own process for verifying that mail-in voters are really who they say they are. For example, voters have to sign the outside of their return envelope, and the signature cannot deviate too much from the signature on their original voter registration card, or the ballot has to be rejected. When counting the votes, election administrators may even unfairly reject authentic votes due to some slight signature difference. One more thing, the U.S. Postal Service also has a duty to flag any ballots that deviate in even minor ways from typical procedure. There was a case, not this year, when a county commissioner from Texas was deemed guilty of voter fraud after a post office employee found him improperly returning 56 mail-in ballots completed by other voters. 

Although there has been very little public evidence of actual fraud for now, the unprecedented expansion of mail-in voting in these elections pushed sitting President Donald Trump to step up the pressure by warning his millions of followers on social media and his election events' crowded audience of "big problems and discrepancies with mail-in ballots". As an example, speaking at a rally in mid-October, Donald Trump said: "In Virginia, 500,000 applications were made that were false." It was discovered that for these applications, absentee ballot form were sent out with the wrong return addresses. Yet, the electoral authorities in Virginia said there was no fraudulent intent and then the mistake had been corrected. The Virginia Centre for Voter Information admitted: "We worked for weeks to make sure that no Virginia voter was inconvenienced as a result of our printing error." 

Later, President Trump tweeted: "In Ohio, 50,000 ballots were wrong, fraudulent - 50,000." The fact was that about 50,000 voters did receive the wrong ballot in the post, in Franklin County, Ohio, in early October. But, of course, there is no evidence that this was done fraudulently. The local Elections Board said that "everyone affected has now been sent the correct voter slip, with safeguards in place to ensure no-one votes twice". But the board added, the ballot error had been a "serious mistake". In a direct response to Mr Trump's tweet, it added: "Our board is bipartisan and our elections are fair. And every vote will be counted." As for any previous well-publicised cases, there is a story with North Carolina primary elections in 2018, which was re-run after a consultant for the Republican candidate tampered with voting papers. In New York, nearly 100,000 ballots are being re-sent to voters after some names and addresses were printed incorrectly. In Michigan, about 400 postal ballots listed the wrong running vice president for President Trump - the Libertarian Party's Jeremy Cohen instead of Mike Pence. President Trump claimed this had been deliberate. But the Michigan secretary of state said it had been an error and "impacted voters immediately received an accurate ballot and guidance to ensure their vote counts". 

In Wisconsin, mail that included some absentee ballots was found in a ditch near the town of Greenville. How this happened remains unclear, despite running investigations. In New Jersey, a mail carrier was charged after dumping hundreds of items of mail in a dumpster, including almost 100 election ballots. Later, the ballots were sent on to its intended recipients. BBC News also wrote, in Pennsylvania, nine discarded military ballots were discovered. Seven of them, according to the U.S. Department of Justice, "were cast for presidential candidate Donald Trump". But, of course, all these "isolated incidents" will be easily recollected and reminded at any opportunity to demand recounting of ballots by one of the two unsatisfied presidential rivals. Given how many millions of votes were cast in by the mail, observers and the local election committee members may now grab their heads if they have not done it already. 

The public and very transparent procedure was already announced for an important tossup state of Pennsylvania, with its 20 Electoral College votes.The second night of unrest, with more than 1,000 participants, started several hours ago in Philadelphia, which is the biggest city of Pennsylvania. It happened after the fatal shooting by police, when Walter Wallace, one more Afro-American, was killed. An incident was captured on video. Police were called dozens of times in recent months about problems at Walter Wallace Jr.’s home, and had responded twice on Monday to reports of disturbances at the West Philadelphia house before two officers answered a third call and shot him as he apparently approached them with a knife, according to law enforcement sources, it was published by the Philadelphia Inquirer. "What happened during those earlier visits — including which officers responded and how much they knew about Wallace’s mental health problems — remained unclear Tuesday. Asked at a news briefing, Commissioner Danielle Outlaw declined to offer details about prior contact police had with Wallace, saying the incident remained under investigation," reporters added. 

A lawyer for Wallace’s family, Shaka Johnson, said that before the shooting, relatives had called 911 asking for an ambulance — not police officers — to help mitigate the 27-year-old’s spiralling condition. Calling the shooting “unjustified,” Johnson said that Wallace’s pregnant wife had told officers when they arrived that her husband had bipolar disorder. “Officers who are properly trained should notice certain things when they arrive at a scene,” Johnson said Tuesday. “Especially when his wife tells you, ‘Stand down officers, he’s manic bipolar.’” Joe Biden and his running vice president  Kamala Harris issued a statement saying they were heartbroken for Wallace’s relatives. President Donald Trump’s administration said it was following the investigation and was prepared to deploy federal resources to Philadelphia to counter any violence. The looting reports precipitated the stay-inside requests for the citizens from the Philadelphia Office of Emergency Management. Of course, everything that happens is just urging the fire, so things become toxic for less than a week before November 3 and ahead of many days of a proposed public mail-in ballots counting in Philadelphia convention hall. 

According to the polls, Joe Biden is still enjoying a consistent lead over President Donald Trump, so that some investors have been even cautiously betting on his victory. But over the last days the intermediary polls results have become closer just in several battleground states that could determine the outcome. "It appears the gap between Biden and Trump is shrinking a bit lately. In particular, Biden's lead in swing states doesn't look that different from Hillary Clinton's in 2016. People still remember the 2016 experience and those who have bet on a blue wave are probably taking some profits now ahead of the event," said Nobuhiko Kuramochi, market strategist at Mizuho Securities. Wall Street's CBOE Volatility Index (VIX), which is a measure of market expectations in share price swings, rose above 36 points today, almost 8.5% for the last 24 hours. The single European currency edged below 1.1750 on concerns, with U.S. Dollar nominated Treasury bonds are considered as a safe-haven asset at least until the S&P 500 would continue to slip lower.

 

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