Tag Archives: Donald Trump

After 2016: The Trump Landslide

The narrative in the U.S. press has been that Donald Trump, arguably the most divisive major party candidate for President in American history, can’t win the general election. How does someone win the Presidency when the story in the polls says that he’s going to lose every major demographic group except white males?

Until the last week, the only question appeared to be “how big will Hillary Clinton’s victory be?” Now, suddenly, polls that have the two head-to-head. Even with the latest polls, Nate Silver, one of the great masters of polls and statistics, still gives Clinton a 2/3rds chance1 to win the Presidency.

But, one chart in the most recent PEW survey2 tells a very different story. If there are two groups most clearly identified with the opposite sides of the American Culture Wars,7 they are white evangelicals (aka the “religious right”) and the religiously unaffiliated (what PEW calls the “nones”).

The Republican party has been explicitly targeting what came to be called the Religious Right3 since before most Americans were born. In parallel, Nixon’s Southern Strategy4 targeted white southerners who rejected changes that were driven by the civil rights movement. There was significant cross-over between those two group and the two appeals effectively merged into the Republican party’s appeal to white evangelical voters.

Overall, it had a large impact on American religion. Significant numbers of American Christians disagreed with the politics that were pulled into their Churches and the resulting ways the interpretation of scripture changed. They felt shut out and tended to move across the aisle and/or out of those churches or church entirely and became part of the “nones” group.

While the Republic Party has increasingly focused on a specific vision of and for America, the Democratic Party has become the party of everyone else. The “nones” group was both drawn to and pulled in by the Democratic Party.

Getting back to ground zero in the American Culture Wars, how do these two groups –white evangelicals and nones– feel about the two major candidates? Pew turned the results of their survey into a graph:

Trump and Clinto Support among Evangelicals and Nonces
Trump and Clinton Support among Evangelicals and Nones – PEW, 13 July 2016

The headline, Trump support among white evangelical voters on par with Romney in 2012; Clinton support among religious ‘nones’ on par with Obama, says nothing has changed. There’s nothing see, it’s all status quo. The obvious conclusion is that Clinton (like Obama) is going to win. But, that’s not what the numbers in the chart actually show. Compared to their predecessors, Trump’s support is five points higher while Clinton’s is one point lower.

Of course, polls have many problems. The biggest one is that opinions don’t vote. People who, like those who are motivated, get to the polls vote. As an aside, that’s basically why most elections tend to favor the views of older voters: older voters have had more time to form their opinions so those opinions tend to be stronger so those voters tend to be more motivated.

The chart doesn’t say anything about age but it does say something about motivation. Looking at the motivated votes (the ones who “strongly support” their candidate), the number of white evangelicals who strongly support Trump is 10 points (roughly 40%) higher. Clinton’s strong support among the non-religiously affiliated is actually ten points (roughly 40%) lower.

While these groups are not identical with the respective parties, they are a useful map of a very strong divide in the U.S. and the country’s party structure. What that motivational factor is telling us is that if the election was held today, Trump would probably win. While, the numbers are far from exact and they don’t account for many things, many of the things the numbers don’t account for will actually amplify his victory.

One significant factor they don’t account for is the white nationalists who believe Trump is wink-wink nod-noding them, that he’s their guy5. In fact, members of this group have probably never felt like their was a candidate who understood them or represented their views. To actually have a say in an election? This group’s motivation to vote is off the proverbial chart.

More broadly, events and the news narrative is going to increase this gap. Clinton continues to be forced to look backwards to address issues like email scandals. Trump continues to get to run with weekly and daily stories –five police dead in Dallas shooting, truck used in attack that kills more than 80 in Nice, France, attempted military coup in Turkey, three police dead in Baton Rouge6that cater to his strong guy, win at any cost, image.

By November, it’ll be landslide territory, Trump’s party will probably have control of both houses of Congress and the chattering classes are going to sputter what’d we miss, how’d that happen again.

Coda

The study2 notes that the most common reason white evangelical supported Trump was “beating Clinton.” Part of the problem for Clinton is a collapse of alternatives. She, and the Democratic party, don’t really have a coherent alternative vision for the future. Some people used to say there wasn’t any real difference between Republicans and Democrats. It is more accurate to say that Democrats were striving (to steal a Republican line) for a kindler, gentler version of the Republican’s vision.

Both sides of the American political aisle are trapped in the world of neoliberalism and neoconservatism. Neoliberalism, in particular, is the water that most people on both sides of the American political aisle swim in. However, just as the Keynesian approach reached it’s limit in early ’70s and the world shifted to Mises and Hayek, today neoliberalism has reached it’s limits but there is no alternative.

Keynes, Mises and Hayek built their economic theories in the era of manufacturing. While manufacturing still exists, for decades computers and software have driven our world and its economic growth. That post-manufacturing era is now closing. Sales of computers and software have been dropping for years. Technology is fading into the fabric of life with most of the actual horsepower existing out in the cloud, plugged into via throw-away smart phones and tablets. The gadgets we encounter in person are, to a large degree, non-functional without an internet connection because the real magic happens somewhere else out of our reach.

This decoupling is mirrored in the world of business. A chat bot gets people out of traffic tickets and law firms have begun to hire Ross, an IBM artificially intelligent lawyer. Businesses are actually in the process of decoupling profits from human labor and traditional investment.

While the world is entering it’s second new major economic eras after manufacturing, people still largely battle under the banners of the ghosts of Keynes and Hayek. The theories were built around factories when a factory is now a 3D printer that can sit on a desk.

For Clinton, when I say there’s a collapse of alternatives, the problem is that all the policy wonkiness in the world will never speak to people unless there’s a vision to unify it. For Trump, on the other hand, it is actually to his advantage that there is no current intellectual vision upon which to base his appeal. The complaints about problems with his policy ideas, the words coming out of his mouth, the what-evers don’t matter because in a world where all the theories are so out-of-date, there’s nothing to stop him from painting whatever picture he wants.

Notes

1. Nate Silver’s forecast is updated frequently. His forecast is a 66.7% chance of Clinton victory versus a  33.3% of Trump victory as of Friday 15 July 2016 at 15:14pm Mountain. Five Thirty Eight, “Who will win the presidency?”: http://projects.fivethirtyeight.com/2016-election-forecast/

2. Pew Research Center, “Evangelicals Rally to Trump, Religious ‘Nones’ Back Clinton.” (13 July, 2016): http://www.pewforum.org/2016/07/13/evangelicals-rally-to-trump-religious-nones-back-clinton/

3. One short personal account: Brian Zahnd, “The Jesus Revolution” (1 July 2016): http://brianzahnd.com/2016/07/the-jesus-revolution/

4. Volumes have been written on Nixon’s Southern Strategy including, perhaps most famously Alexander Lamis’ 1984 book The Two-Party South, based in part on an interview he conducted with legendary Republican figure, Lee Atwater that can be found embedded in Rick Perlstein’s “Exclusive: Lee Atwater’s Infamous 1981 Interview on the Southern Strategy,” The Nation (13 November 2012).

5. Nicholas Confesore, “For Whites Sensing Decline, Donald Trump Unleashes Words of Resistance”, The New York Times (13 July 2016): http://www.nytimes.com/2016/07/14/us/politics/donald-trump-white-identity.html?partner=rss&emc=rss

6. Four major events that occurred in eight days: a gun man killed 5 police in Dallas, Texas, USA (7 July), a man in Nice, France drove a truck into a Bastille Day celebration (14 July), a portion of the military attempted a coup in Turkey (15 July) and between final edits, three more police shot in Baton Rouge, LA (17 July). Each was notable. To find a US event comparable to the Dallas shooting, one has to go back to the mass evictions of farmers during the American dust bowl. The attack in France is the first major instance of an attack against a soft target (effectively making anything and everywhere a target). Turkey is a member of NATO, acts as major forward base for operations against Islamic State (formerly ISIL) as well as one of the major checkpoints in western minds against Russian aggression ala the invasion of Crimea. Baton Rouge is notable for multiple reasons including the fact that the US flag is flying at half staff around the country because of multiple horrific events. It’s easy to suspect we may be entering a period where the days when the US flag is not at half staff are the notable ones.

7. (American) Culture Wars is a term coined by Professor James Davison Hunter for the conflict between traditionalist/conservative and liberal/progressive views of the meaning of America. Culture Wars: The Struggle to Define America (1991) http://www.jamesdavisonhunter.com/culture-wars.

Note: there are no new citations in the Coda section at this time because I’ll be digging in deeper on everything that would normally be cited in another piece.

The Great Stock Market Crash of 2016 – part 2

The day before US markets opened this year, I was talking to my wife and I said the US Economy will crash and then Donald Trump will be elected. I’m not sure what went through her head but her face said I love you but, honey, please. Almost everyone still viewed Donald Trump’s chances candidacy as being more than one of those weird blips as crazy. Almost everyone viewed the US economy as fundamentally sound.

The new day, the first day of trading for the US markets, was brutal and things stayed brutal for a while. The VIX (uncertainty index) was frighteningly high. Oil and oil companies took a beating. The news out of China was ugly.

But, things seemed to settle down. The professionals kept saying, meh, it’s going to be fine. But, when you dug into the numbers things were, at best, weak.

Unemployment has been low but hiring has been week and people have kept exiting the workforce. The monsters –Apple, Facebook, Amazon, Google and Microsoft– have been hiring but everywhere else it’s been hold the line or let people go. Economic growth has been edging towards stagnant. And the US Markets have been shuffling sideways for about a year. I’m not the only one who’s been seeing this. For instance, Goldman Sachs announced a few days ago that investors were exiting the market in droves. The only real demand for stocks right now has been companies doing buy-backs; and even that has been dropping off.

This morning, I traded tweets with an economist (Steffen Christensen, @Wikisteff) after he tweeted “I just realized that the current and recent US output gap suggests a recession is imminent”. For historical reasons, I’ve been expecting the market to crash in October but Brexit appears to be this crash’s Lehman Brothers moment.

Tonight, by the time I checked the vote for Brexit only about 25% were reporting. The yes votes were winning with over 51%. And the yes votes stayed above that to the bitter end. Somewhere around 50%, it was all but mathematically impossible for the “no” votes to overtake the lead the “yes” camp had. And, at around 60-70% of the vote counted, even the very careful BBC was forced to call uncle and admit it that #Brexit was going to pass.

Long before the BBC called it, the “oh no they really are going to #Brexit” hit the Asian stock markets, the pound went into free fall (reaching a 31 year low last time I checked) and gold went north with a vengence. As I write this, the DAX is down 8%, The FTSE100 is down 9%, the Nikkei 225 is off 7% and and the broadest US stock market composite, the S&P 500, is down 5%.

I’ve been planning to write this piece for months. The S&P 500 was going to be my illustration. The S&P 500 is just an average of the stock prices of a big basket of US stocks (where “500” is just the number of companies represented).

If you look at a chart of the S&P 500, you’ll see a blue line representing the price. That number jumps around a lot. So, a lot of traders will average that number over a long period of time. The pink and red line are long-term averages. If the stock price is a car slowing down and speeding up in traffic, the long-term averages really tell you the car’s basic momentum. Get rid of the annoyance of stop lights and traffic jams and that average gives you a really good idea of how fast you’re getting somewhere. And those numbers have been going flat: they’ve been converging on about 1845 for some time.

That really isn’t surprising because they are just an average. If you squint at the blue line, it’s been basically been doing the same thing. For almost two years, it’s been going up and down a lot and it always ends up basically where it started.

In essence the stock market has been moving sideways; it’s been stalled and settling down to 1845.

Technical traders will sometimes talk about ‘support’. That’s short hand for finding the last two, ideally three, low points. For the S&P, they’re February 11, August 25 and October 15, 2014. On those dates, the S&P 500 has been almost identical: 1825-1867. Support is important because that’s essentially what buyers thinks of as the low value of the market. Every time it’s hit one of those support numbers, people have rushed into buy and the price of stocks has bone back up.

Any decent technical trader reading what I just wrote will point out what’s obvious to them: if the price goes below both of those numbers, especially if the volume drops (whoops… that was the Goldman Sachs report), people will run for the hills because they have no idea where it’s going to stop. While it may bounce a time or two as some people “bargain shop”, the price basically keeps going south.

If you zoom out, you’ll see that the last time, the US stock markets went into free fall (in 2007), they went from a bit over 1500 to under 800. The S&P 500 keep dropping for eighteen months and lost almost half of it’s value. And once it started dropping the bad news in other areas snowballed. The US financial industry nearly collapsed. Two US car companies and multiple major banks had to be, essentially, bought by the Federal government. And the list could go on for pages.

The drop before that (the one straddling 9/11) was almost identical. The S&P dropped from a bit under 1500 to a bit over 800. The drop took (wait for it) eighteen months and took out many of the early internet startups and decimated much of the telecom sector.

The current magic 1825-1867 range is only about a 170 point drop (8%) from thursday’s close. When I sat down to write this, overnight trading already had the S&P down by 5%. There’s a good chance that the US stock markets will open down by 8%. Tomorrow is very likely going to be an absolute blood bath on stock markets around the world and, if the last two US economic crashes are any indication, the stock markets will continue to drop until over a year into Donald Trump’s presidency.

And, besides the fact I’ve seen Donald Trump’s Presidency coming (oh the joy of being a prophet), the basic fact of life in US presidential politics is that whatever party holds the Presidency when the economy crashes gets murdered come November. And that makes a certain amount of sense because a party’s candidate is carrying the mantle of the policies of the party’s time in the Presidency. In this case, Hillary Clinton has been explicitly running on Barrack Obama’s record in the White House. In the public’s mind, that record on economics was just nuked.

When I talk about After 2016 being a fundamentally different world, the US Economic crash and the Donald Trump presidency are, unfortunately, just the beginning. Over the coming days and weeks and months, I will continue to flesh out what “After 2016” looks like. I just wish I’d done my job, turned into the wind and began sharing that sooner.

 

Note: Originally released around a bit before midnight Mountain on 23 June 2016. Line editing completed an hour later. Thanks to Steffen Christensen (@Wikisteff), for the some of the information cited. And, any blame for mistakes, etc., lies squarely on my shoulders. Suggestions welcome and comments remain open for a week.