The Cable

Citi: FBI’s New Clinton Probe Is a ‘Black Swan’ That Could Turn the Election

The bank still predicts Clinton will win, but the new FBI review — and any fresh revelations this week — could poleax the Democratic nominee.


For those backing Donald Trump, the latest email scandal is a real smoking gun. Last week’s revelation that the FBI is reviewing additional emails found on a laptop belonging to the estranged husband of top Hillary Clinton aide Huma Abedin has upended a race many viewed as finished.

While many pundits, and Democratic surrogates, have played down the impact of the emails, Wall Street now thinks they could end up helping Trump and hurting Clinton. In a research note published Monday, Citi researchers led by Tina Fordham found the latest revelation could throw the race off course.

“In our view, these developments do constitute an ‘October surprise’ that could have a meaningful impact on the race,” the new research note said.

Fordham and her team have long warned of the risk of so-called “black swan” events, like scandals or revelations unearthed by WikiLeaks, that could shake up the presidential race. They have maintained that the risks from these kind of unexpected turns are “extraordinarily high.” This has kept them less bullish than some other Wall Street firms, which view Clinton’s victory as a near certainty.

Futures markets are also feeling the impact from the latest revelation. Last week, prediction markets showed Clinton had an 81 percent of winning. On Monday, that number fell to 75 percent. For many, futures markets are more telling than the polls, though not infallible: Prior to Britain’s decision to leave the EU, prediction markets forecast a victory for the “Remain” camp. They were wrong.

Still, Citi gives Clinton a 75 percent chance of winning the White House. The new probe, though, could depress voter turnout, and it has “added a significant obstacle to the Clinton campaign and [will be] likely to further dent voter confidence.”

And even if it doesn’t derail Clinton’s campaign, Citi expects the email issue to follow her into the White House. Republican lawmakers have already said they are planning multiple investigations into Clinton’s actions if she wins next week. Citi said the risk of Clinton being impeached is “non-negligible.”

The Citi note comes as the 2016 campaign has reached a new level of vitriol. As the Republican nominee and his surrogates cast the new probe as proof that Clinton is unfit to be president, Senate Minority Leader Harry Reid (D-Nev.) expressed concerns Sunday in a blistering letter to FBI Director James Comey that the bureau was not releasing information about its investigations of Trump’s possible ties to Russia. Further, Reid said Comey may have violated the Hatch Act, which prohibits political activity by federal employees.

“As soon as you came into possession of the slightest innuendo related to Secretary Clinton, you rushed to publicize it in the most negative light possible,” Reid wrote in the Sunday letter to Comey.

Polls taken after Friday’s announcement still show Clinton in the lead. But there could be more October surprises even in November: WikiLeaks has promised “phase 3” of its election coverage, which so far has overwhelmingly hurt the Clinton camp.


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