Election is Over: Who Were the Winners and Losers?

Election is Over: Who Were the Winners and Losers?

Thanks to social media and 24-hour cable news, it feels like modern America lives in a perpetual news cycle … and a perpetual election cycle.

The most recent of the never-ending campaigns – the 2018 midterms – has concluded, and most of what was expected did not occur.  There was no blue wave, the Republicans did not lose the Senate, and there were zero upsets that would leave you scratching your head.

While several House districts remain to have a final vote tally, it is safe to report as of this writing that the Democrats have taken control of the House of Representatives for the first time since 2010.  Their vote margin will range anywhere between 26 and 40 seats when the final vote counts are reported.

Some contests remain undecided and carry significant political interest, but do not change the balance of power in Congress.  That includes the Georgia governor’s race.  Stacey Abrams has refused to concede, although 100% of the precincts have reported their vote totals as of Wednesday afternoon and she trails by more than 1%.   Counties in Georgia have until November 13th to certify their vote totals, and expect this to be a protracted battle for the next several days or weeks.

With the 2018 election now in the rear-view mirror, at least most of it, we can look back at the winners and losers from this past Tuesday and what it means for you:

I. Who are the top three election night losers?

  1. “Moderate Republicans take it on the chin”: More than 40 House Republican incumbents decided to retire rather than run for re-election … the highest numbers since the Civil War.  Senators Jeff Flake and Bob Corker, both Trump critics, decided to step down.  Moderate House Republicans Carlos Curbelo and Leonard Lance both tried to distance themselves from Trump – and got defeated rather easily.  The mid-terms are about turnout, and you never win a race in a mid-term running from your base.
  2. “Progressive Democrats”: Beto O’Rourke, Richard Cordray  … there are others, but every media darling who received an Obama visit and hundreds of millions of dollars from left-wing PACs and left-wing donors such as Tom Steyer – lost.  And don’t forget Democrats who voted against Senate nominee Brett Kavanaugh – all took it on the chin in red states with the exception of Joe Manchin, who voted for Kavanaugh.  There are still many progressives left in the Congress, and some even won Tuesday night, such as Alexandria Ocasio-Cortez and many candidates in California.  There is no doubt that progressive money, progressive Hollywood, and the Obama machine are ascendant in the Democratic Party … they’re just not that good at winning votes from a majority of Americans, at least not yet.
  3. “President Trump”: This should be obvious, but the President’s party lost control of the House and his Congressional opponents will be ready on day one to launch investigation after investigation into his administration … including but not limited to impeachment proceedings.  No longer protected by his Party in the House, this will make daily governance a significant challenge for President Trump.

II. Who are the top three election night winners?

  1. “Conservative lawmakers”: As strange as it may seem, red state lawmakers survived and in fact the Republicans won several Senate seats to expand their majority.  The Democrats won House seats in the Midwest primarily as they did in 2006 – by selecting pro-life and pro-gun moderate-to-conservative candidates.  Except in California and other blue pockets here and there, conservative candidates were the big winners from Tuesday night.
  2. “President Trump”: That’s correct.  While the House will be pushing an investigatory, impeachment agenda, Trump’s losses are negligible compared to previous President’s … and none have contended with the media hostility he has engendered.  Clinton lost 54 House seats in his first mid-term, and 9 Senate seats.  Obama lost the all-time record of 63 House seats, and 6 Senate seats.  Trump will have lost in the mid-30s when the votes are all counted, and actually picked up three Senate seats.  All-in-all, it could have been MUCH worse.
  3. “The stock market and the economy”: Yes, things can change overnight, but markets like predictability, and gridlock is predictable.  Lots of variables such as Fed Rate Hikes and trade conflicts with China, but in general, the stock market and the main street economy were winners with the election results from Tuesday night.  There should be zero changes to the current low tax, deregulation policies at least for the next two years.

 The election seems to highlight the polarization found on social media, and not the day-to-day blessings of living in America.  There are always winners and losers in politics, but there should only be winning in your financial planning for the future.  Call now to have one of our advisors discuss the safe, simple and reasonable rate of return options for your portfolio! (877) 912-1919

Even with spiked volatility and the inevitable business cycle expectation of a stock market correction, the economy itself continues to hum along!

What Keeps Us Awake at Night…

We never hide our excitement for this economy.  Even with spiked volatility and the inevitable business cycle expectation of a stock market correction, the economy itself continues to hum along!

Wall Street is certainly overbought – a decade of bad monetary policy and government over-regulation gave us an artificial increase in our portfolio, without any job growth, wage growth or economic growth.  This means inevitably we will see market reversals.

But the economy itself – Main Street, NOT Wall Street – is as strong as it has been in decades.  Every month continues to bring positive, real growth numbers.  Consider:

1)  3rd Quarter GDP at 3.5% … annual growth rate above 3% for the first time in years.

2) Unemployment is at record lows – +3.7% .. the lowest since 1969!!!

3)  Wages are growing for the first time in a decade, +3.1% year over year, and are still in positive territory after adjusting for inflation.

4) There are 7.1 million job openings, but only 6.2 million available workers at the end of the 3rd quarter.

With all this great news, what possibly could keep us up at night?  As stated many times, the economy has not looked this good since the Reagan era!

Here are the 3 big economic issues that are keeping us awake at night:

1.“US-China conflict is getting hotter by the day”:   China’s military is war-gaming nuclear attacks against the US homeland … Trump is threatening tariff’s on ALL goods coming from China if a deal isn’t struck … markets are influenced by news reports because traders react to the daily headlines and move client money based upon short term information.  The expanding GDP is benefitting from corporate profitability, which will be impacted by changes to the US-China trade relationship.  This is a high-stakes game Trump is playing with China, one we are built to win, but could still take a whole lot of damage along the way.  Make no mistake, this administration is forcing the US and US companies to disengage from China – the outcome remains unknown.  Markets hate the unknown.

 2.“Does the Fed know what it is doing?”  We have supported here in our blog the Fed raising its benchmark rate for years.  When they finally officially ended their zero-interest rate policy (ZIRP) in 2015, and began raising rates, we applauded.   Raising rates and strengthening the dollar is what we argued for, and we believe is a strong move for a healthy economy.  But further rate hikes could be the cause of the correction and could tip the scales from a mild down-trend to a massive sell-off.  Stocks have already lost technical momentum, falling below their 200-week moving average.  The Fed’s new desire to increase rates despite changes in the environment could prove fool-hardy in the long run.

3.“Europe moves against the dollar”:  Such sentiment would have been unthinkable just a decade ago, but while Trump gets pilloried in the mainstream press for his “America First” mantra, he is usually proven right by global events.  Such an event was the most recent European move to create a dollar-less payment facility to allow European corporations to still do business with Iran and help circumvent US sanctions.  The result will be an entity that can accept non-dollar payments on one end, and convert money into dollars on the other side of the transaction, or even preferably, into Euros.  Fellow Western countries, allies, NATO countries seeking to circumvent US security policy in this manner would have simply been unthinkable until recently.  Yet that is where we are.  Never missing a chance to stick it to us, the Russians and Chinese jumped in with full support behind this new payment facility.  Whether it will work remains a question mark … if it does work, what European countries or businesses will be willing to risk losing the US market? Probably zero. But combined with Saudi moves on the dollar from this past spring, and other global players wanting out from under US financial control – this European move has opened some eyes as to what  future dollar-less world could look like.

Halloween has just passed – lots of treats have come our way in the last two years … but there are some tricks that could serve as headwinds if we don’t avoid them.  A business cycle correction we are due for – an epic bear market reaching crisis level risks will happen if we are not mindful of those risks, some of which we have mentioned here.  That is what keeps us up at night.

You can sleep much better if your portfolio has invested in principal protection products…call now!!! (877) 912-1919

Trump Announces Withdrawal from Historic INF Treaty

Trump Announces Withdrawal from Historic INF Treaty 

President Trump announced this week the United States would be withdrawing from the historic Cold War era arms control agreement known as the Intermediate-Range Nuclear Forces Treaty (INF Treaty).  His reason was that the Russians have been cheating – this is not news, it happened under the previous administration starting in 2009 and was admitted by our intelligence agencies in 2014.

The INF Treaty was the first of its kind – not a treaty to limit testing or to limit how many nuclear weapons could be added to our inventory, but an actual reduction and elimination of an entire class of nuclear weapons.  It was an historic achievement, unprecedented in the modern era and one that would cement the historic greatness of President Reagan and help consign the Soviet Union to the “…ash-heap of history.”

Why would President Trump withdraw the United States from such an important treaty between our country and Russia?

It is actually rather easy to understand.

First some INF Treaty history.

Trump Announces Withdrawal from Historic INF Treaty 

Reagan and Gorbachev negotiated the treaty in response to the Soviet Union’s buildup of SS20 missiles in Eastern Europe.  The United States responded in kind with the deployment of Pershing II missiles to West Germany.  Some have forgotten, and younger people have not been taught, the deep anger and resentment towards the United States by Western Europeans who did not want additional US nukes in Europe.  Riots and protests were held for weeks throughout Europe, and millions participated.  Given the polarized politics of our today, we are quick to forget Reagan’s arms buildup and the global fear of a US-Soviet nuclear exchange back in the early 1980s caused widespread political conflict with our NATO and European allies.

Trump Announces Withdrawal from Historic INF Treaty Trump Announces Withdrawal from Historic INF Treaty 

Reagan correctly believed in 1980, when he was elected, that the Soviet system could not keep up with American freedom, democracy, and capitalism, and he was right.  Facing terminal bankruptcy, the Soviets cut deals to help reduce their own growing budget deficits.  Unlike previous treaties such as SALT I and SALT II, which simply capped the growth rate of nuclear weapons, the INF Treaty required both sides to eliminate the entire class of intermediate range weapons and remove their deployment from Europe.

So why has Trump opted out? Today, in the 21st Century, this is a no-brainer.

 The Top 3 Reasons Trump had to Withdraw the United States from the INF Treaty:

  1.  “The treaty never applied to anyone else … specifically China”: The treaty was not a global ban on the intermediate range nuclear missile, it was simply a ban on the Soviet Union and the United States possessing the weapon.  In 1987, we were the only two countries who possessed the weapon, and the only two – at the time – who could build such a weapon for the foreseeable future.  That is no longer the case.  The Chairman of the Joint Chiefs of Staff Joseph Dunford recently testified before Congress that China now has “…significant capability in the realm of short range and intermediate range missile technology … they have deployed more than 2000 weapons in the field that we can verify, and enjoy a global superiority in the numbers of such weapons.”  A treaty which does not allow America to have a weapon that potential enemies do have is not a treaty worth keeping.
  2. “The treaty is obsolete for the modern era”: Anti-access/Aerial denial … drone swarms … AI guided cruise missiles … EMP pulse … malware … an intermediate range nuclear missile is an important in-theater weapon for a global exchange between global superpowers.  But it presupposes the nature of warfare will remain the purview of destroying the planet in a mutually assured destructive fight.  It is unlikely that the Russians – atheist under communism, and nominally orthodox Christian under Putin – want to blow up Western Europe and have nothing but radiation and flattened earth to conquer.  They benefit much more from a thriving political economy in Europe which they can buy from, or they can steal, the modern technological advances of the Western world.  While important to have if they have, they are not a risk to the continental US … only the Europeans.  Who ironically, don’t want them.
  3. “The Russians are cheating, pure and simple”: The signing of the INF Treaty in 1987 included one of the great lines from the Great Communicator himself:  “Trust, but verify.”  The strict verification standards eroded over time as most of the weapons were dismantled.  At some point in 2009, the US became aware of multiple INF missiles being manufactured and deployed by the Russians in violation of the treaty (In this case the 9M729 Ground Launched cruise missile, which replaced the 1980’s era SS20’s).  This was then admitted publicly by the Obama Administration and not denied by the Russians.  They simply say that we were in breach first.  The blatant cheating continues, and combined with Chinese missiles, both countries have technological and numerical superiority over US forces in NATO and in the Pacific.

There is nothing wrong with admitting that the time of a particular agreement has expired, that the other party is violating the terms of the agreement, and then terminating the agreement.  This is the current circumstance we find ourselves in, and it is the right move for now.

It would be great if international relations could be reduced to the simpleton answers of the peace movement, or the ideological beliefs of the left.  But sober minded leadership charged with protecting Americans knows better.  The INF Treaty was an historic moment for peace on Earth, it helped bring an end to the Cold War, and was the signature achievement of President Ronald Reagan.  But with Russians cheating, it is also a treaty we can no longer keep.

Call now to get your money protected from these global events that can impact your investment portfolio. (877) 912-1919