The US Midterm Campaign Trends Ken Fisher Is Watching

Transcript

Ken Fisher:

As we face June, into the beginnings of the heat of battle of the midterm elections. The primary season is not over, but both parties have a lot of headwinds and some tailwinds. It's going to be an ugly fall. That's not unusual for midterm. The fact is, if you look at the Republican Party, they inherently suffer from very thin margins.

In the House of Representatives and to a slightly lesser extent, the United States Senate. The redistricting efforts that have gone on have helped the Republican Party some. But in the scale of a normal midterm election, where you normally get the opposition party to the president gaining seats. Even a subnormal effect in that regard, this time, would hand the House of Representatives to the Democrats. The Republicans suffer further from the fact that they're not very popular right now, and that the president is not very popular right now. The president's popularity numbers are at levels that have never been ones that possibly allow the president's party not to get hit pretty hard in midterms. On the other hand, the president has pulled a lot of rabbits out of the hat in his career when people didn't think he could, including his reelection in 2024. We don't know if he has some tricks up his sleeve he intends to try to deploy. And if he gets his popularity up before the midterms, maybe that isn't a problem. Will he? Your guess is as good as mine. I don't want to go there. I don't want to go for, and I don't want to go against. But that's the way the game is played.

The Republicans also, to their advantage this time, relative to the Democrats who routinely in modern history have had a lot more money to spend than the Republicans have had, that field is leveled a lot more this time. The Republicans have done well in fundraising. The Democrats still will have more, but not as much more as in normal conflicts in elections. And so that helps the Republicans. I said a moment ago, and let me restate that, the president could get his popularity numbers up from here. It's also possible he gets them down from here. And if you look at them, the easiest way to see these numbers, which are very likely wrong, but the trend of them is very likely, right. You can see them on the website Real Clear Politics. And on the home page, go down the home page on the left and you'll see where there's presidential approval rating numbers. And you can go on those. You can see each of the individual polls and the aggregate of them over time and again, these polls historically have tended to be more negative on the president than has been reality when it's come time to vote. There's a bias there. Hard to be 100% certain why, but the trend of them is reflective of reality, whether the absolute number is wrong or not, which it usually is. So you want to keep an eye on that.

On the Democratic side, the problem is central to a flip side problem that the Republicans have. The Democrats are not very popular right now. There's generic ballot preferencing that ask a simple question, "Would you prefer to see Democrat or Republican control of Congress?" And normally the Democrats are typically about 5% ahead of the Republicans. That's kind of the base case, and that's about where they're running, which you would think right now going back to polling would be bigger. When you see the individual elections that have been coming down this year going mostly to the Democrats, but the Democrats are not very popular. And part of that is because of the progressive wing of the party pulling on the Democratic Party as a whole. And part of that is because to date, but not necessarily before the election's over, to date, the Democratic Party hasn't been able to coalesce around a message other than anti-Trump. Now, anti-Trump is not a message that doesn't have some juice to it with a lot of people. I mean, the Republican base is clearly not swayed by that.

But the independents, they've got a lot of independents that are swayed by that. The fact is, however, the Democrats would be better off if they could coalesce around a simple message that said, "Put us in power and we'll do this and this and this." "And if you like those three things, vote for us because that's what we'll do for you." The promise of what we will do for you is what the voters most want to hear in a way that they believe. And that is true whether it's the Republicans or the Democrats. The Republicans also suffer from not having that centralized message. And partly that is because so many Republicans in office, as we go through primary season, are fearful of not having the support of the president, that they don't want to vocalize anything other than what it is the president wants and says.

So from that, you don't have an open issue with Republican senators and Republican members of the House coalescing around a simple message like they had in 1994, led by Speaker Newt Gingrich at the time, who wasn't speaker to have the contract with America. Or more recently, Kevin McCarthy's leadership with a program of here's the things we'll do for you. But neither the Republicans or the Democrats have that. So they're both kind of staggering a little on what the message is voters are to believe they're to render. And these are all headwinds for them. The tailwind for the Democrats is normally midterms go against the president's party. They just normally do.

Now, if we think about that in the House, normally you'd expect a pickup of maybe about 20 seats in the Senate. You've got close races in a lot of places. Thom Tillis is not running for reelection in North Carolina. That race is one that right now handicaps with a lean toward the Democrats. If they can take that seat, that's one down the Democrats could. If the Democrats could pick up four seats, they got the Senate. The Republicans have to stave that off. Similarly, in Ohio, (Jon) Husted has got Sherrod Brown running against him, former senator lost in the last election, but knows the state inside out, knows how to campaign, will have money. And that's a close one in a state that leans Republican, if they can take that seat. Then in Maine, there's Susan Collins, who is the only, openly recognized, as the only Republican that can win that state. And she has defied history repeatedly. And there's a good chance she will again and keep the state for the Republicans. But she might not. So that would be three.

In reality, there's also concern in Alaska with Dan Sullivan. And the wonky voting system that Alaska has, as a state, in ranked choice voting, which is very hard to predict. And then in my state of Texas, there's just this open. concern about how the primary comes out. And does that leave as the two combatants in the runoff for the Republican nomination for Senate, current Senator John Cornyn and Attorney General Ken Paxton keep attacking each other. Does that leave a wounded Republican incumbent vulnerable? Now, Texas has been a pretty Republican state, but recent polling has been moving the other direction, making it in play. And all of this is something where there's potential there.

On the other hand, the Republicans have a few opportunities to. And the reality is they may be able to gain a seat here and a seat there, likely in places like Michigan. And in that as you look at those seats, it's not impossible that Republicans hold their own and keep it. It's not impossible the Democrats take the Senate. So there's headwinds and tailwinds for both sides. This is going to be an ugly fall with a lot of accusations thrown, a lot of things pulled out of nowhere late in the election cycle, and an awful lot of money spent where you're not going to want to see all the TV ads being thrown at you. So anyway, with that, I don't know what else there is to say other than it remains to be seen. It's a long ways from here to the election itself. Primaries aren't even begun to be finished and won't be until the end of the summer. Even a few staggering into September. Most vividly, for example, Virginia's, which tied to the redistricting effort that they used, which failed, pushed their primary back in time from its normal June date. But it all remains to be seen. I don't know that I've said anything that's very unique here. I hope you find it useful.

There's going to be a lot of blather about all these elections and a lot to look at. But in the end, midterm elections, for the market, tend to create relative gridlock, of which Congress is a pretty gridlock right now. And markets tend to like that. And this election probably leaves that not terribly different, regardless of these shifts. And a not bad world for stocks because stocks don't like a Congress, whether Republican or Democrat, they can make big radical moves and we will not have one that can do that. Thank you for listening. I always enjoy talking with you.

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