March May Matter More for Investors Watching U.S. Primaries

Even though the Iowa caucuses on 3 February account for only 1% of the total delegates at stake in the U.S. Democratic primary elections, they nevertheless seem to capture the imagination in every presidential election cycle. Not only is Iowa the first contest, but more importantly, every Democratic candidate who has won the Iowa caucuses since 2000 has gone on to win the Democratic nomination (although it should be noted that the last three winners in Iowa on the Republican side have not become the nominee).

However, the Democratic nominating cycle faces a unique confluence of dynamics this year. For one, many bigger states with larger delegate counts will hold their primaries earlier than usual. As a result, the outcome in Iowa (and New Hampshire next week) could matter less than it has historically, and a frontrunner may not emerge for some time, extending the nomination process closer to the Democratic convention in July. There is also a higher chance of a brokered convention than in any cycle in recent history.

Prolonged cycle possible

In the Democratic U.S. primaries, winning a party’s nomination is just math: The candidate who wins 50% of the delegates – or 1,990 delegates – secures the nomination at the party’s convention. This year, because the dynamics are different, it may take longer than usual for one candidate to reach that goal.

Many bigger states, including California and Texas, have moved their primaries up to Super Tuesday on 3 March. In the past, these states held their contests as late as June and at that point, their results simply validated the nominee. With bigger states voting earlier this year, the momentum could shift considerably from a delegate perspective, regardless of who may have won the Iowa or New Hampshire contests. In fact, former New York City Mayor Michael Bloomberg, after skipping the first four primaries, will only begin competing in these larger contests.

In addition, the race remains crowded, and delegates in those large states are therefore likely to be spread across a greater number of candidates than they would have been later in the cycle when the field has usually winnowed. Because delegates from each state are allocated proportionally (vs. winner-take-all) and super delegates (who are free to support any candidate) are now on the sidelines until the convention, unlike previous cycles, it may take longer for one candidate to emerge as a clear frontrunner in the race for delegates, increasing the chances for a protracted primary cycle.