2016 Electoral Analysis

I again made a chart designed to help estimate the likelihood of the incumbent president's reelection. The percent vote margin in the 2016 presidential election is shown for each state (note that a few states separate Congressional Districts in the electoral process). The states are shown in order with the strongest margin for Clinton on the left, and the strongest margin for Trump on the right. The number after each state name is the number of electoral votes for that state. Trump's margin of victory was 74 electoral votes, meaning that half that number (37) electoral votes will need to move from Trump to the Democrat for Trump to lose in 2020. Based on this data, this would most easily happen with three states (Michigan, Pennsylvania, and Wisconsin) moving from Trump to the Democrats. Without looking at any polls, I would estimate that this is a possibility. Trump won these states largely because of promises of manufacturing and mining jobs. While Trump did achieve a lot of economic growth and low unemployment before the pandemic started, the largest job growth was actually in healthcare and education. Mining and manufacturing actually continued to lose jobs. On the other hand, the Democrats have continued to blunder their way through the election, showing no signs of a winning strategy, and failing to identify galvanizing candidates. 

Gold, Copper, Natural Gas, Oil

Many people watching federal debt levels and Federal Reserve policy are bracing for inflation as far as the eye can see, but is the ‘buy gold’ mantra really the best way to go given the current situation? I compared one year of futures prices for gold, copper, oil, and natural gas. With gold near all-time-highs, and oil still far below last year’s prices, oil may have more upside potential. Moreover, I think there is strong political will for massive infrastructure spending, so a commodity that benefits from industrial activity is likely to perform well. I think there is a strong case for oil producers being the winners for the second half of 2020.

 

Multiples and Total Return for 33 Mega Cap Stocks

Multiples are a key part of fundamental analysis used in stock picking. There is some debate over which multiples are best, or whether any of them are really useful. I put data for seven multiples into a spreadsheet for 33 of the highest market cap stocks traded on US exchanges. (I attempted to analyze the highest market cap stocks, but a a few were excluded because incomplete data was available for them.) I obtained the multiple data on Sunday, November 10 (primarily from TD Ameritrade). I calculated the total return (including dividends) supposing someone bought at the opening price on November 11, 2019, and sold at the closing price on August 4, 2020. I then charted the results for each multiple. The results were not promising for people who use multiples to invest. The linear regressions should be expected to have negative slopes, but this was only the case for PEG ratio. In other words, companies with low earnings and low book values had better returns for investors. I think I'll check the returns after a full year before I start buying stock with the lowest earnings I can find. 

Percentage of Deaths Caused by Covid-19

I calculated the percentage of all deaths reported by the CDC that involved Covid-19. The data was last updated July 16. The total number of deaths is much lower for recent weeks because of a lag in processing of death certificates, but unless the lag for Covid-19 involved deaths is greater than deaths from other causes, the percentages still indicated that the pandemic (as measured by number of deaths) peaked in mid April and is now in decline. Reporting of surging infection rates is probably mostly a result of increased testing, but the discrepancy between number of infections and number of deaths is likely also due to improved treatments and the fact that new infections may be affecting healthier populations as compared to those infected in April.

Week    All Deaths  Deaths From  Percentage of Deaths Caused by

Ending  Involving   All Causes   Covid-19

        Covid-19
04/18/20   16928    76133        22.2%
04/25/20   15261    73060        20.9%
05/02/20   12997    68319        19.0%
05/09/20   10983    65572        16.7%
05/16/20    8972    62896        14.3%
05/23/20    6984    59608        11.7%
05/30/20    5921    56843        10.4%
06/06/20    4738    55281         8.6%
06/13/20    3863    53233         7.3%
06/20/20    3258    51142         6.4%
06/27/20    2501    46892         5.3%
07/04/20    1440    36602         3.9%
07/11/20     413    19408         2.1%

Minnesota and Racial Disparity

Criticism of Minnesota's racial disparities is not new, but the murder of George Floyd and ensuing protests and riots have amplified the attention these disparities are getting from news media. According to US News, Minnesota ranks 43rd in terms of equality as measured by racial income gap. That's pretty bad, but it should be noted that California (the most populous state) ranks 48th. A popular inference seems to be that Minnesota's high racial disparity indicates a greater level of racism in Minnesota (despite Minnesota's 'liberal facade'). I live in Ward 9 of Minneapolis, which is where George Floyd was killed. With the exception of Donald Trump and Mike Pence, every elected politician representing Ward 9 is a Democrat. That includes the city council, mayor, county commissioner, members of Congress, governor, lieutenant governor, secretary of state, state auditor, and state attorney general. I will also note that of these 13 elected politicians, two are Latina, one is Native American, and four are black. I decided to compare Minnesota to the five states with lowest racial income gap. In order starting with the lowest gap, these are: New Hampshire, Kentucky, Virginia, Missouri, and Washington. I'll preface this by saying that I don't claim to have a definitive measurement of racism, but I do think the judgement that Minnesota is particularly racist may be ignoring the context of the situation. Firstly, we'll consider the percentage of the vote Donald Trump received in these states in 2016:
New Hampshire 46.61%
Kentucky      62.52%
Virginia      44.41%
Missouri      56.77%
Washington    36.83%
Minnesota     44.92%
Of course, Donald Trump and Hillary Clinton are both white. I also analyzed the propensity for non-white people to be elected to Congress by these states. The first numeric column is the percentage of the congressional delegation that is non-white. The second is the percentage of the state's population that is non-white (2019 estimate). The last column is the ratio of non-white people in the congressional delegation to non-white people in the state.
               CD          Population          Ratio (CD/Population)
New Hampshire   0           6.11%               0
Kentucky        0          12.21%               0
Virginia       15.38%      31.42%               .49
Missouri       20.00%      17.21%              1.16
Washington     16.67%      22.73%               .73
Minnesota      10.00%      14.70%               .68
The data from this measure is limited because of the small size of some of the congressional delegations. New Hampshire and Kentucky have all white congressional delegations, but these delegations only consist of four and eight people, respectively. The ratio in the last column indicates the degree to which non-white people are underrepresented in the delegation (or, curiously in the case of Missouri, overrepresented). The data suggests that non-white politicians in Minnesota have a greater propensity for being elected than three out of the five 'most equal states' (after adjusting for the demographics of the state). 
The final statistic I will consider is the change in the proportion of black residents in these states. These are the percentages of 'black or African American alone' for 2000 and 2010, and the percent change of these proportions:
                 2000    2010    Percent Change
New Hampshire    .73%     1.14%  56.16%
Kentucky        7.32%     7.78%   6.28%
Virginia       19.64%    19.39%  -1.27%
Missouri       11.25%    11.58%   2.93%
Washington      3.23%     3.57%  10.53%
Minnesota       3.49%     5.17%  48.14%
While New Hampshire experienced the most rapid increase in its black population, at 1.14% in 2010, the number remains very low. The rate at which Minnesota's black population is increasing is far faster than any of the other four states. While many have decried Minnesota as a bad place for black people to live, the fact remains that black people continue to move there. Other factors, such as birth rate or even emigration of other races, may have had an impact, but with Minnesota's black population increasing 60% over the course of 10 years, it would be reasonable to estimate that most of the black people in Minnesota spent much of their lives in other places. Before states like Kentucky are used as models for Minnesota to remake itself after, other factors impacting racial disparities ought to be considered.