Armstrong Economics Blog/Politics
Re-Posted Nov 4, 2018 by Martin Armstrong
On the one hand, the Midterm Elections really mean nothing. The Democrats cannot reverse their declining trend since they peaked with FDR, and the Republicans cannot deliver the final death blow to the Democrats to put them out of their Marxist misery. While we have provided the target ranges for the vote, we also have to consider the fact that vote manipulation and rigging will be starting with this election without Russians
It is truly ironic that the Democratic Party was founded by Andrew Jackson to support slavery and then they adopted the Philosophy of Karl Marx to promise Socialism for all. At the end of the day, we end up where we began – endless toxic politics that has turned into bitter hatred which divides the country more so than at any time since the Civil War. All they are doing is creating an equal and opposite reaction from their opponents. The trench between both sides has opened at it is becoming the Political Grand Canyon.
The political climate from here on out looks very dark and grim with no hope of actually returning to any possible form of civility. All we are doing now is waiting for the first shot to be fired that will literally be heard around the world. There will be no return to civility. It will only get worse from here on out. There is no going back. We have actually crossed the point of no return. It is all over. We just have to wait for the fat lady to finish the last song and then the Opera will come to its violent and bitter end.
The Midterms are upon us and the most interesting aspect has been the fact that the Democrats have waged the most hateful campaign I have ever witnessed in my entire life. Instead of looking to tone down their rhetoric, they have chosen to move even more extreme left. The 28-year old Alexandria Ocasio-Cortez won 57.5% of the vote, while her opponent, Joe Crowley, had 42.5%. Crowley has represented New York’s 14th District since 1999 and had been touted as a potential future House speaker. Instead of the Democrats realizing that is is really the Trump Revolution where whoever is in power is just being thrown out, they instead assumed that the people wanted more Socialism, taxing the rich, and exploiting anyone who has whatever they arbitrarily assume is not rich – meaning household income of $250,000. They have misread the tea leaves and become even more left-wing. This will end up destroying their party and they are unable to offer anything but free gifts paid for by taking it from those who work. Just looking at the stats demonstrates that sales pit worked for FDR, but for just one campaign cycle. They have been losing ground ever since yet they keep preaching the same old party line.
The Republicans keep preaching lower taxes but they too have been hallowed words. An important but very strange poll is one that Fox News did. This poll they put up because the results were so baffling to them. They asked the question: Who did you identify with, Trump or the Republican Party? The stunning result was that 46% said they associated with Trump compared to 25% with Republicans. After all the Hate Trump campaign launched by the Media and the Democrats and Michael Avenatti using porn stars to try to take Trump down, they seem to actually be making him a stronger leader figure in the process polarizing the nation. Perhaps their hateful tactics are just not working the way they expected. Yet there is something else lurking behind this poll. That is the blunt fact that Trump is really a 3rd Party candidate still and the Republicans are just the same old people occupying Washington for self-interests as the Democrats. There is something hiding in the bushes – the frustration with both political parties.
When we run our presidential models they are still showing a rising trend in 3rd party activity. This looks to be continuing into 2023/2024 Presidential election. It all appears to be starting to take off following this Midterm Election. This is why I warn that the computer really does not care who wins the House – neither side will accept a loss. They can trash Trump all they want and even start a #MeToHateTrump movement. The real story here is that we are witnessing the disintegration of party politics as we move ahead into the conclusion of the Economic Confidence Model come 2032.
The Democrats have been losing power steadily as I have pointed out just from a technical perspective. Just plotting the numbers without any political bias demonstrates clearly that the Socialist agenda has been declining after FDR managed to get into office. What many do not know is how did FDR get into office? The Private Wave which peaked in 1929.75 was not really about the evil corporations and the economic decline. FDR gained the national nomination because he was Governor of New York State and jumped on a campaign to clean the city of the worst political corruption period perhaps in history up to that point which bribes and murders. He personal sat as a judge to remove the mayor of New York City which everyone assumed was in the pocket of the Mafia which was made rich and powerful thanks to Prohibition.
The polls have been so wrong in most countries because those who are taking them are also deeply divided. In an analysis, this means they have already determined what the poll should say so they look only for those results to prove their predetermined conclusion. That was not merely self-evident in the US 2016 election, but also BREXIT in Britain. Additionally, people in this field of politics make it their life. They all talk to each other and thus there is no counterbalance. This is why our WEC events are so popular. The audiences are international, not merely local Americans. The room gives off the vibe of international capital flows and people get to meet others from around the world. We then get to listen to all the various concerns and points of view rather than just talking to friends who all just agree. That external viewpoint is necessary to prevent biased analysis.
Our own polls among institutional clients I speak with shows a deep-seated fear that a Democratic victory will destroy the world economy. They will do everything in their power to undo everything Trump has done just for spite rather than economic sanity. Outside the USA, Trump fairs even better. From Asia, they think he is the best President since World War II because he is the first to get North Korea to blink. From Europe, many saw Trump as exposing the stupidity of trade negotiations for they had no idea that 28 members each had a right to veto trade deals preferred by other members.
While so many rely on GDP and unemployment numbers to gauge the economic conditions for a swing in the election, if that were the real factor by itself them the Republicans should win 100%. The average person could care less what the official statistics say. If the economy was bad, things would look even worse for Republicans. What is clearly taking place is we are indeed setting the stage for a civil war for the hatred is manifesting in deeply resented Partisanship which has been increasing since the Democrats lost in 2016. Traditionally, fewer people vote during the midterms than at presidential elections.
When we dive into the numbers for the Democrats in the House of Representatives we are currently at 45% or 193 Democrats to 235 Republicans with 7 vacancies*, which are split 2 Democrats and 5 Republicans. Many are forecasting that the Republicans will lose 38 seats. That would result in the Democrats having 231 seats out of 435 or 53.1% of the House. We do have a Minor Bullish Reversal at 52.6% and technical resistance at 54-56%. The technical support comes in at the 48-49%. The Major Bullish Reversal stands at 61.5% which is unattainable. If the Democrats really exceeded that number of 52.6%, hiding under the covers is just not going to work. Keep in mind they came in at 45% for the last election so they are starting from below technical support. The Minor Bearish Reversal rests at 40.9% and electing that would signal the end of the Democratic Party which would then split between the extreme left and the moderate Democrats forming so sort of new party lines. The Major Bearish Reversals rest at 24% and 23.5%.
Now when we turn to the Republicans in the House, we can see a clear uptrend since the Great Depression compared to a steady downtrend for the Democrats without involving personal bias or opinion. The Democrats have been making lower highs and the Republicans have been making higher lows – plain and simple. At the last election, the Republicans came in with 54.9% – still not an overwhelming mandate. The technical resistance for this midterm stands at 56.8% to 58.7% and the support is in the 45% zone. If the Republicans lost 38 seats, as is predicted, that ironically would still not break the technical support for that would be 45.2% managing a retest of the Uptrend Line.
The Minor Bullish Reversal stands at 59% Major Bullish Reversal stands at 69.9% followed by 76% for the Republicans in the House. Don’t forget, we had elected three or the four Bullish Reversals on this aspect. The Minor Bearish Reversal rests at 47.1% followed by 46.2%. If the Republican come in under 47.1%, then you might want to look at buying a nice warm thick blanket for they will be following the Global Warming trend to raise taxes on anything that gives off heat. With the latest being that pets are now responsible for 25% of global warming because it takes energy to wag their tail when you come home, we could end up with federal license fee to have a pet in the first place.
- Conyers (D), MI resignation effective 12/05/2017
- Slaughter (D), NY died 03/16/2018
- Bridenstine (R), OK resignation effective 04/23/2018
- Meehan (R), PA resignation effective 04/27/2018
- Dent (R). PA resignation effective 05/12/2018
- DeSantis (R), FL resignation effective 09/01/2018
- Jenkins, Evan (R), WV resignation effective 09/30/2018
What is interesting is trying to sort things out from the polls. They have been biased and completely inaccurate in both the USA and UK for that matter. When we look at President Trump’s approval rating, it is at or above 50% in all the political battleground states for this election concerning the Senate. Yet in only two states, North Dakota and Tennessee, does a GOP Senate candidate hit 50% support. Many states are just a toss-up as in Arizona and Missouri Senate races. Even the Republican Senator Ted Cruz is only up 3 points ahead of O’Rourke the Democratic candidate. Many of these polls show it is a narrow race overall with no one side running away.
The Major Double Bullish Reversal stands at 61% followed by 64% for the Democrats in the Senate, which are well above the current levels. Minor Double Bullish Reversal for the Democrats in the Senate stands at 51% followed by 53% and 57%. This tends to warn that there is significant overhead resistance. The Democrats are currently at 47%. The Major Bearish Reversal rests at 45.6% followed by 44.7%, just below current levels. The Minor Bearish Reversals rest 47% followed by 46%. The last election closed right on the Minor Bearish Reversal so any loss in the Senate will be quite serious for the Democrats going forward.
The technical perspective should resistance at 54.8% followed by 56.6%. The major support lies at 39.5%. We have 48.7% and 48.9% which are pivot points. Since the current position is 47%, they are ideally resistance points. This means that the Minor Bearish Reversals at 47% and 46% become incredibly important. If the Democrats lose just one seat, it will be a bearish signal for that party looking into 2020.
Now, turning to the Republicans who finished in 2016 with 51%, the Major Bullish Reversals stands at 62.2% and 64.1%. The Minor Bullish Reversals stands at 53% followed by 54% for the Republicans in the Senate. The Minor Bearish Reversals rest at 48% followed by 47%, 45%, and 43%. We can see that technical resistance stands at 54.9% with support at 49.3%, 48.8%, and 44.3%.
When we put the system numbers (Reversals) alongside the technical numbers, we have this series of projection ranges for the Midterms.
Voter turnout in the United States fluctuates in national elections rather dramatically. During the early 1800s, people were more responsible for voting. It appears that the majority of Americans have become complacent about the Midterm Elections. The Democrats have used all sorts of hate speech to turnout a vote and we have an amazing number calling for riots and civil unrest even from the mouth of Hillary Clinton. Then we have Hollywood figures doing the same and some such as actor James Cromwell warns publicly that there will be “blood in the streets” if Democrats don’t win the election, which is obviously highly treasonous for it says there should be no democracy but they have a right to dictate to everyone else what they should do.
In recent elections, about 60% of the voting eligible population votes during presidential election years, and about 40% votes during midterm elections. Turnout is lower for the odd year, primary and local elections. However, upon close examination, the trend was significantly different in the past. For example, Andrew Jackson who instigated the Panic of 1837 by shutting down the Bank of the United States which was acting as a quasi-central bank, set in motion the worst economic depress with not just the Broken Banknote Crisis, but also the Sovereign Debt Crisis of states permanently defaulting on their debt. The most fascinating element that jumps out at you from the data is the voter turnout jumps sharply during this period and during the midterm election of 1838, one year into the Panic of 1837, the turnout was higher than that of the Presidential Election in 1834. That is the ONLY Time that took place. We can also see from the above chart that the voter turnout reaches consistently higher levels entering/during/after the Civil War period.
Therefore, it will be the post-election numbers that reveal perhaps an even more important trend – is voter turnout rising as it did go into the Civil War?
The spin out there is that the Democrats are likely to win back a number of House seats in next week’s midterm elections that “Republicans were lucky to have” because they won seats in districts where Democratic nominee Hillary Clinton defeated President Trump. They argue that this stands to reason that the GOP will lose a number of those seats in the midterms. We can see that we have Directional Changes in 2019 with the big turning points are interesting. The Democrats show 2020 are the big one and the Republicans show 2023 with another Directional Change leading into the 2024 Presidential elections.
When we look at the Senate, we see the big target for the Democrats will be 2020 and the Republicans will be 2023/2024. We have Panic Cycles lined up the same 2020 and 2022. The Directional; Changes provide a picture of really chaotic choppiness.
Our models on taxes do show that those in power will raise taxes sharply rather than reform.
Now when we actually step back and look at the voter turnout since 1828, first we can see that even when Roosevelt was elected, there was a surprisingly low turnout compared to 100 years before. Looking just at the Presidential elections, we did elect a Yearly Bullish Reversal that was at 53.6% in 2004 which was the incumbent Republican President George W. Bush who defeated Democratic nominee John Kerry. The Yearly Bullish Reversals now stand at 56.1%, 62.5%, 65.2%, and 74.7%. The Yearly Bearish Reversal lies at 49%. The voter turnout was really 55.5% in 2016. Therefore, the neutral range is 49% to 56.1%. Breaking out of that range would indicate things are getting more heated and we can witness a significant rally as we did following the Panic of 1837.
Now lets us turn to this Midterm Election. The last Midterm in 2012 was the lowest turnout that came close to matching the 33% in 1942 with Roosevelt. The numbers came in as 34.1% – the lowest post-World War II. We have two Yearly Bullish Reversal at 36.9% and 39% on the Midterm elections. The technical resistance stands at 37.4% with significant breakout type resistance standing at 49.8%. It looks like it would take a real crisis to reach that level. Our cyclical models point to huge turnout coming in 2020.
It does not appear that the Democrats can make a sweeping victory. Despite all the support of the media and the Hate Trump campaign, what it really appears is that whoever wins the House, we are looking at a rise in civil unrest. NEITHER side appears willing to accept the result. The Democrats are indeed historically the most violent so we should expect this trend to continue. With Panic Cycles showing up even on the combined House/Senate perspective in 2019 and 2021, this clearly reflects an unwillingness to accept the end result. This is part of the Crisis in Democracy we have been warning would become the hallmark of this 51.6-year Wave on the Economic Confidence Model.
The Democratic Party is in serious trouble. The hostility is off the charts and really the computer is showing that it really does not matter who wins the House, the trend is toward more obstruction and inaction. The Senate is more important for if the Democrats lose just one seat, the will elect a Bearish Reversal. We DO NOT show any chance that the Democrats would reverse the downtrend in motion. This is why the computer is rather ambivalent on this election. The volatility will rise next year so regardless who wins the House, neither side appears willing to accept the result.
The polls are not really reliable as has been the track record. The press is so hateful and is out to destroy the Republican Party that many people really do remain in the closet about who they really support. This is a sad state of affairs that people are actually afraid to even display a TRUMP sticker because of threats and violence. When a police officer rams a car intentionally simply because they had a TRUMP sticker, this is a warning sign of what is really coming from here into 2021.
Ironically, a Democratic win in the House will be taken as EXTREMELY bearish for the economic future of not just the United States, but the entire world. Nevertheless, that may actually end up being just another reason capital flees the bonds and moves with greater intensity into private assets. The worse it may appear, the more bullish it may be for the capital shift.