5 States of Consequence
GOP View: The market, Beltway and media are all focused on the impending Stimulus package being “negotiated” between the White House, McConnell and Pelosi. Pelosi and the Dem Senate had overplayed their hand asking for state bailouts to appease their voters and donors of SALT, allowing for McConnell to leverage Trump’s Executive Orders to undermine the entire deal and give Trump the narrative that he is helping average voters with unemployment benefits.
This allows for a calculated delay in stimulus to create market turbulence and further place blame on the obstructionist Pelosi, allowing for McConnell and Trump to push for a deal on better terms to “save the day”. A short blip in the market would be welcome into next week as lower unemployment benefits add market negative news painting Biden and the Dems as a danger to the economic growth Trump has displayed past 3.5 years.
Dem View: Pelosi has pushed hard to address shortfalls in Dem state budgets affecting social programs in this stimulus fight. The Democratic donor class has been the punching bag for Trump and SALT deductions which has inadvertently affected lower middle class workers. The intent on keeping her position at the negotiating table is to bring market turbulence to the Trump aura of economic growth and use Flu numbers masked as Covid for a negative media aggregator.
First volley of negative news will be in the 10 days prior to Labor Day. This gives narratives a chance to circulate amongst family and friend circles during the holiday. The second wave of negative narratives will be in late September when flu season starts to gain attention.
At this point, the advantage is for McConnell and Trump. The Democrats in my view are in an echo chamber overestimating their COVID message effectiveness and growing blowback to lockdowns. Market dip will be seen as Democrats trying to obstruct growth along with discussions on raising taxes.
Trump also has Mnuchin who can and will pump money into key sectors and companies. Nothing the Democrats can do to stop this, as shown by the Congressional Oversight Committee unable to stop YRC Worldwide loan.
I expect a few days of market drama in the next 2 weeks as the media begin to attack Trump. The most likely situation is both sides come together in the next 2 weeks to sign a package rather than risk a market event and associating blame.
5 States that Matter
I have consistently maintained Arizona, Michigan, North Carolina, Pennsylvania and Wisconsin will be the entire 2020 election. Both Michigan and Pennsylvania start voting in early/mid September. This is an absolute deadline for stimulus and Mnuchin actions to boost Trump poll numbers while keeping an eye on certain Senate races. The beauty of the agriculture sector(MOS, TWI) is that both parties are tied to it and cannot afford to ignore the rural voters. In 2014, Obama had found out what that meant and it resulted in losing the Senate and House majorities…. Pelosi won’t make this mistake again.
Pennsylvania: Tie(133,000 new GOP voters will likely make this too close to call early on)
Michigan: .5 pts Biden(Trend is looking dangerous for Biden here)
Wisconsin: 1.5 pts Trump(Foxconn, Corn/Ethanol, & other economic gains along with Minnesota riots favor Trump)
North Carolina: 2.5 pts Trump
Arizona: 1.5 pts Trump(however marijuana legislation could make this closer)
These internal polls figures look to favor Trump. As of today, I’m 70% in favor of a Trump re-election with 10-12 House seats back in the GOP favor, however losing 2-3 Senate seats but keeping GOP majority.