The question going into the New York primaries yesterday was not if Donald Trump and Hillary Clinton were going to win, but by how much. Both needed a big victory last night – and that is what they got. For the Democrats, Clinton’s win largely cleared the path toward her nomination. For the Republicans, however, uncertainty is likely to continue until California’s primary in June, or beyond. What should investors pay attention to as this lengthy presidential election season continues?
In the Republican race, by winning 89 of the available 95 delegates in New York, Trump helped to distance himself from Sen. Ted Cruz in the critical battle for delegates. However, while Trump’s road to the Republican nomination became marginally smoother last night, it is by no means certain: He still needs to capture an average of 58% of the remaining delegates (according to the latest delegate count from Real Clear Politics) to secure the nomination. Next week’s contests in the Northeast and mid-Atlantic should be positive for Trump, but the big question is how will he do in states like Indiana and Nebraska in early May, especially when Cruz has dominated similar states? Regardless, the earliest we’ll know definitively whether Trump will secure the nomination is after the biggest – and last – primary contest on 7 June in California – and perhaps not even then.
On the Democratic side, last night’s decisive victory in New York went a long way toward securing a Clinton nomination. She needed to win her adopted home state to thwart the momentum of Sen. Bernie Sanders’ campaign and also to increase her margin of pledged delegates. And she did just that: She won 139 delegates, bringing her total delegate count to 1,930 to Sanders’ 1,189 (2,383 delegates are needed to win the Democratic nomination). Assuming Clinton continues to do well in next week’s primaries (where she is favored to win), expect increasing pressure on Sanders to drop out of the race before the May contests take off in earnest as the delegate math gets harder for him.
Bottom line for investors? While Clinton looks increasingly likely to secure the needed delegates to win the nomination over the coming weeks, the Republican race is still far from decided. Indiana on 3 May will offer some clues but we won’t know for certain whether there will be a contested convention until California’s primary on 7 June.
While markets have remained impervious to the unconventional election cycle so far, we can expect investors to take more notice, especially if a messy, contested Republican convention in July becomes likely.