Over the past couple of weeks, as the world tries to come to terms with what exactly Donald Trump is trying to accomplish with his increasingly aggressive stance on trade (because remember, the idea that a narcissistic billionaire actually cares about reviving blue collar jobs in America beyond the political benefits is a cruel joke), the consensus among analysts is that this is just a gambit to bolster Republicans in the mid-term elections.
Previously, the biggest threat to the GOP in November emanated from that lunatic Steve Bannon and his imaginary “war” on the Republican establishment, but after the Roy Moore debacle, Steve was pretty much relegated to the dustbin of political history. So now, the focus is back on ensuring there’s not a Democratic avalanche which is looking more and more likely all the time. Recall the following from Barclays:
Amid declining employment in manufacturing and stagnant wages, a portion of the American electorate has become more skeptical toward free trade. Politicians from both parties have channeled that skepticism. Despite evidence showing strong gains from trade, protectionist rhetoric can be a useful political strategy. Since the benefits of free trade are widely dispersed among many, the beneficiaries are likely to protest only mildly to protectionist measures. Meanwhile, the costs of free trade tend to be acutely borne by a few, with whom protectionism resounds strongly.
And then this from BofAML:
The current brand of populist politics is more inward looking and seeks to play on voters’ fears about globalization and migration. Populism, therefore, has become more about protectionism: putting up barriers to entry and reworking free trade.
The reason the mid-terms are so crucial for Trump is obvious and ironically, there’s an argument to be made that the political rationale for announcing the tariffs is the same rationale for ensuring that they don’t ultimately spark a global trade war. Here’s Marko Kolanovic to explain:
First let’s look at the risk of a trade war that would be disruptive to US equities. Our analysis is inspired by game theory, and we simplify the problem to “two players,” two asymmetric outcomes, and a non-zero sum game. We project the complex web of political relationships to 2 players: 1) actual actions that could lead to/avoid trade war (that can in turn destabilize global equities), and 2) rhetoric (that can be used for political purposes). Our analysis suggests that there will be no trade war meaningful enough to destabilize equity markets. In fact, we already had the same setup and used the same approach with the ‘border adjustment tax’ last year (when many investors wasted resources analyzing an extremely unlikely outcome).
Let’s note that there is a large asymmetry of the outcome rewards by participants. A significant trade war started by this administration would destabilize global equity markets. Should this happen ahead of the November election, it would impair the administration’s ‘market scorecard’ and likely lead to an election loss. Lost elections open a path to impeachment, and other complications.
It’s with all of that in mind that we consider the results of a new NBC/WSJ poll which shows that despite Trump’s approval rating haven risen recently, Democrats still enjoy a 10-point lead over Republicans in congressional preference ahead of the midterm elections. To wit:
Fifty percent of registered voters say they prefer a Democratic-controlled Congress, while 40 percent want a GOP-controlled one.
That double-digit lead — typically a sign of strong Democratic performance for the upcoming election — is up from the party’s 6-point edge in January’s NBC/WSJ poll, which was 49 percent to 43 percent, though the change is within the poll’s margin of error.
So that’s obviously bad news both for Republicans and for Trump, but the real punchlines (plural) come when you look at the historical approval ratings for a President after 14 months and also at which political figures and and institutions enjoy the worst and best net positive ratings.
On the former, Trump still ranks dead ass last in overall approval rating after 14 months in office even after the recent uptick:
And guess which institution has the highest net positive rating? That’s right, the FBI:
I’m sure you can find some bias in here if you really want to (and someone will invariably want to), so here are the raw results for you to parse at your leisure.