Citi’s Levkovich Hears From More Clients Predicting Trump Upset

Another upset victory for Donald Trump may be in the making, possibly after court challenges, according to Citigroup Inc.‘s Tobias Levkovich, who cited conversations with clients.

“More clients have suggested to us in conversations over the past week that they think another Trump upset could be in the making, but as one noted, he could win ‘ugly’ in terms of court challenges,” said the firm’s U.S. equity strategist in a report.

Should that happen, Citi sees greater potential forsocial unrest, with stocks under pressure, as many fund managers have positioned for Joe Biden policies, he added.

Levkovich kept Citi’s 65% probability of a Biden victory, set in August, but added that “one cannot count out Trump voter enthusiasm and his ‘shy’ supporters.” He also flagged client surprise that Senate races, including in Maine, have narrowed.

Biden led Trump in a series of pollsreleased Sunday, remaining ahead nationally and in battleground states.

Levkovich said he disagreed with some fund managers’ views that stocks would decline if Republicans were to hold the Senate with a Biden win, amid expectations for limited stimulus and infrastructure spending. Instead, he noted that “many Republicans would also want to get money to constituents.” The market had been pricing in a Biden win roughly a week ago, and then had “eased back partially last week as the Street became less convinced.”

Separately, AGF Investments’ Chief U.S. Policy Strategist Greg Valliere wrote that the threat of post-election violence has been a dominant topic in virtually every investor briefing done this fall, but that he’d “never raised the topic of violence — until now.”

Valliere in a note said he was “stunned to see much of the city boarded up” while driving through downtown Washington over the weekend, and flagged disruptions inPortland, Ore., and Trump supportersblocking highways. “In a country this angry — and armed to the teeth — we worry that an inconclusive election could unleash conflict,” he said.

Citi’s Levkovich added that he didn’t see a win for Trump or Biden moving the needle much in terms of index levels, though sector trends may be different.

On Monday,stocks rebounded from the worst week since March as investors prepared for the presidential election.

— With assistance by Bailey Lipschultz

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