The GOP seems to be on its back foot heading into the midterm elections and that has the party nervous. The political bombing attempts and the synagogue horror have both sent Trump’s approval rating sharply lower. Now the party is worried that pre-Trump Republicans in affluent suburbs may not show up to vote, which is making them worry they may lose more ground than forecast. According to polls, this group of affluent long-term Republicans has a lower overall interest in the midterms, which may sap much needed votes against the more motivated Democrats.
FINSUM: This is a problem in itself, but the fact that the midterms have become so much of a referendum on Trump at the same time as his approval rating is falling is not a good sign for the party.
President Trump has been complaining about the Fed’s hawkish behavior for several months. However, yesterday he seemed to escalate his discontent into something more specific. He told the media that he “maybe” regretted appointing Powell to lead the Fed. He said he was intentionally signaling the Fed that he wanted lower interest rates, but he acknowledged that the Fed was an independent entity. When pushed about the circumstances under which he would fire Powell, the President declined to comment.
FINSUM: Investors should keep an eye on whether Trump escalates his rhetoric into action. We doubt he will do anything about the Fed in the near term, but the market would certainly have a big reaction.
One of the things that has become transparent on the midterm campaign trail this Autumn is that the Republican tax cut of last year has not proved a big selling point with voters. Many voters in high tax states are frustrated with the near elimination of SALT deductions. However, Trump is responding to the frustration with a new pitch he debuted on Saturday in Nevada—that a big new tax cut is coming for the middle class in the next few weeks. Treasury secretary Mnuchin confirmed the new middle class tax plan, which Trump called “a very major tax cut”.
FINSUM: The lack of a SALT deduction is really hurting Republicans in some critical voting areas. This seems like a plan to win some of them back.
Republicans are feeling a lot of heat on the campaign trail because of one of their most contentious tax policy changes. Anecdotal evidence suggests that many voters says they will vote democrat in high-tax states because of the Republican-led change to greatly reduce SALT deductions, which has sent tax bills soaring for many affluent residents of high-tax states. Democrats have promised to abolish the SALT deduction limit.
FINSUM: The interesting thing here is that the most pain from the tax change is being in felt in some of the districts that went red in 2016. For example, there are many affluent suburbs in New Jersey that are now feeling the pinch from the changes, which could, in aggregate, change the outlook for midterms.
Investors need to be aware that big political news may be released any minute. That may not sound like much of a statement these days, but Bloomberg is reporting that Robert Mueller may release the findings from his investigations very soon. Bloomberg says Mueller is under immense pressure to release the findings of his probe or cease his investigation. He is especially under pressure to release whether he has found evidence of collusion between Trump and Russia and whether the president did anything to obstruct justice.
FINSUM: It seems likely that these findings won’t be released until after the midterms, but you never know if a politically-motivated early release right before the election might occur.
It looks like Michael Bloomberg, founder of the eponymous financial data firm, is eyeing a run at the White House. The move, which the Financial Times quipped was one New York Billionaire trying to replace another as president, surprises no one, as Bloomberg has been hinting at his run for some time. He has given over $100m to Democratic candidates for the midterm elections, something a staffer said was “a hell of a lot of IOUs”. Bloomberg will be 78 years old in 2020.
FINSUM: Speaking purely from a competitive standpoint, we have mixed feelings about whether he would be a good candidate for the Democratic party. On the one hand, he is more centrist than a lot of other Democrats, so could get some Republican votes. But on the other, he is also a New York billionaire, which could turn some off.