Latest / Trend Watch / Episode 43: Trump's Appointments, Midnight Judges, and the 7th Political Party Realignment

Transcript

Episode 43: Trump's Appointments, Midnight Judges, and the 7th Political Party Realignment · Trend Watch

• 0:04
  SPEAKER_01: Ready to take a deeper look at where history, politics, and economics all intersect?
• 0:10
  SPEAKER_01: Well then, you've come to the right place.
• 0:13
  SPEAKER_01: Each week,
• 0:14
  SPEAKER_01: here's where we pull back the headlines and focus on the big trends,
• 0:18
  SPEAKER_01: the stuff that actually shapes our future.
• 0:21
  SPEAKER_01: Through the noise, we focus on the signal.
• 0:24
  SPEAKER_01: I'm your host, Neil Howe, and this is Trend Watch.
• 0:30
  SPEAKER_01: Today is November 13th, 2024, and this is Trend Watch.
• 0:35
  SPEAKER_01: Welcome back, everybody.
• 0:37
  SPEAKER_01: As usual, I have on my fellow analyst, Christian Ford.
• 0:41
  SPEAKER_01: So, Christian, as always, how was your week?
• 0:43
  SPEAKER_00: It was pretty good, Neil.
• 0:45
  SPEAKER_00: Over the weekend, I went to the quarterfinals for the U.S.
• 0:48
  SPEAKER_00: Women's Soccer League.
• 0:51
  SPEAKER_00: and saw dc win they beat uh san francisco in overtime a lot of yellow cards and
• 0:57
  SPEAKER_00: they ultimately won because trinity rodman sent in the ball and it ricocheted off
• 1:03
  SPEAKER_00: of one of san francisco's own players into the goal this is uh dennis rodman's
• 1:08
  SPEAKER_01: daughter is that correct
• 1:10
  SPEAKER_00: Yes, Nasirama's daughter.
• 1:11
  SPEAKER_00: She's probably one of the best American players.
• 1:14
  SPEAKER_01: Wow.
• 1:16
  SPEAKER_01: Well, like father, like daughter.
• 1:20
  SPEAKER_01: And I take it apparently they hate each other.
• 1:24
  SPEAKER_01: Is that correct?
• 1:24
  SPEAKER_00: Yes, she is.
• 1:25
  SPEAKER_00: She's not a fan of her father.
• 1:27
  SPEAKER_01: OK, well, then she's definitely his daughter.
• 1:33
  SPEAKER_01: So anyway, that's that's great.
• 1:36
  SPEAKER_01: I'm glad to see that.
• 1:37
  SPEAKER_01: And D.C.
• 1:37
  SPEAKER_01: actually has a football team this year.
• 1:39
  SPEAKER_01: So, you know, things are things are going D.C.
• 1:42
  SPEAKER_01: 's way.
• 1:45
  SPEAKER_01: Look,
• 1:45
  SPEAKER_01: as always,
• 1:46
  SPEAKER_01: I always remind people,
• 1:48
  SPEAKER_01: if you like this podcast,
• 1:49
  SPEAKER_01: please go ahead,
• 1:50
  SPEAKER_01: share it with your friends and family,
• 1:52
  SPEAKER_01: repost it on social media.
• 1:54
  SPEAKER_01: From now on, only some episodes will remain free.
• 1:57
  SPEAKER_01: And Christian, we have a busy day again today.
• 2:01
  SPEAKER_01: I know last week was the summing up what happened to the election.
• 2:06
  SPEAKER_01: Today,
• 2:07
  SPEAKER_01: there's more election stuff to talk about,
• 2:10
  SPEAKER_01: plus a whole bunch of stuff coming out of the incoming administration,
• 2:16
  SPEAKER_01: their leadership.
• 2:17
  SPEAKER_01: So we're certainly going to talk about that.
• 2:19
  SPEAKER_01: We have some stuff from abroad as well.
• 2:23
  SPEAKER_01: So let's get into today's podcast, right?
• 2:26
  SPEAKER_01: As always, there's a lot here.
• 2:30
  SPEAKER_01: Let's summarize a little bit and then come back.
• 2:33
  SPEAKER_01: I know you have the market news,
• 2:36
  SPEAKER_01: but let's talk a little bit about what's coming up,
• 2:40
  SPEAKER_01: what we do want to talk about,
• 2:43
  SPEAKER_01: or at least what I want to talk about,
• 2:44
  SPEAKER_01: right?
• 2:45
  SPEAKER_01: Okay.
• 2:45
  SPEAKER_01: One is how well the betting markets did.
• 2:49
  SPEAKER_01: They did a better job than the pollsters.
• 2:51
  SPEAKER_01: So let's talk about that.
• 2:55
  SPEAKER_01: I know pollsters, you know, have resented betting markets, right?
• 3:02
  SPEAKER_01: But let's give betting markets their due.
• 3:04
  SPEAKER_01: They did okay this time.
• 3:07
  SPEAKER_01: The 2024 turnout will be close to a record, probably not a record.
• 3:13
  SPEAKER_01: But as we predicted, it's going to be very close to what it was in 2020.
• 3:19
  SPEAKER_01: The Electoral College advantage for the GOP.
• 3:23
  SPEAKER_01: has virtually evaporated in this last election.
• 3:26
  SPEAKER_01: So I do want to talk about that, right?
• 3:27
  SPEAKER_01: Everyone thought that this was a long-lasting Republican advantage.
• 3:33
  SPEAKER_01: But it turns out that advantage can appear and disappear.
• 3:37
  SPEAKER_01: And it looks like in 2024, it's completely disappeared.
• 3:40
  SPEAKER_01: Record amount of campaign spending, campaign spending in 2024.
• 3:46
  SPEAKER_01: The Democrats lose despite significantly outspending the Republicans nationwide.
• 3:52
  SPEAKER_01: High partisanship and polarization near a record number of trifecta states after the 2024 election.
• 4:00
  SPEAKER_01: The lowest number of split party Senate delegations ever.
• 4:05
  SPEAKER_01: That's really interesting.
• 4:06
  SPEAKER_01: Only three states will have split delegations.
• 4:10
  SPEAKER_01: That is to say one state and one party,
• 4:13
  SPEAKER_01: you know,
• 4:13
  SPEAKER_01: one senator from one party,
• 4:14
  SPEAKER_01: one senator from the other party,
• 4:16
  SPEAKER_01: which is amazing.
• 4:17
  SPEAKER_01: It's a record low since we started electing senators in 1914.
• 4:24
  SPEAKER_01: So that's kind of amazing.
• 4:26
  SPEAKER_01: A record rate or a near record rate, we're not sure yet, of House incumbency.
• 4:32
  SPEAKER_01: So that's a kind of a disturbing thing that we're going to see.
• 4:35
  SPEAKER_01: I'm going to talk a little bit about how 2024 solidifies the seventh great political party realignment.
• 4:44
  SPEAKER_01: And of course, we have more on the Trump administration.
• 4:46
  SPEAKER_01: We'll be talking about the Biden and Senate Democrats racing to confirm judges
• 4:52
  SPEAKER_01: while they still have time.
• 4:54
  SPEAKER_01: Trump demands that the Senate allow recess appointments.
• 5:01
  SPEAKER_01: We'll see how far he gets with that.
• 5:04
  SPEAKER_01: Trump's odds of getting the Senate to bow to his object compliance...
• 5:10
  SPEAKER_01: may have fallen when this just came out today, right?
• 5:13
  SPEAKER_01: The Senate voted for South Dakota Senator John Thune as majority leader.
• 5:20
  SPEAKER_01: So we're going to talk about that.
• 5:21
  SPEAKER_01: And obviously, Trump picks his cabinet.
• 5:23
  SPEAKER_01: So we'll certainly be talking about that.
• 5:26
  SPEAKER_01: Finally,
• 5:26
  SPEAKER_01: in global news,
• 5:27
  SPEAKER_01: I think there are really two things that we're going to mention,
• 5:30
  SPEAKER_01: which are certainly significant.
• 5:32
  SPEAKER_01: One is Germany's traffic light coalition of three parties,
• 5:37
  SPEAKER_01: the Social Democrats,
• 5:38
  SPEAKER_01: the Greens,
• 5:38
  SPEAKER_01: and the Free Democrats,
• 5:41
  SPEAKER_01: collapsed last week when Chancellor Olaf Scholz fired his finance minister,
• 5:49
  SPEAKER_01: a member of the Free Democratic Party.
• 5:52
  SPEAKER_01: That's broken apart the coalition, so we're going to have new elections here.
• 5:55
  SPEAKER_01: And then finally,
• 5:56
  SPEAKER_01: after its crushing defeat at the polls in July,
• 5:59
  SPEAKER_01: Britain's conservative party elected a new leader,
• 6:02
  SPEAKER_01: Kemi Badnock,
• 6:04
  SPEAKER_01: a 44-year-old daughter of Nigerian immigrants who has long invaded against woke progressivism.
• 6:13
  SPEAKER_01: Again, that's Britain's new Tory party leader.
• 6:18
  SPEAKER_01: So with all that coming up, Christian, why don't you take us through markets and we'll get into it.
• 6:26
  SPEAKER_00: All right, Neil.
• 6:26
  SPEAKER_00: Well, the markets today were pretty flat.
• 6:28
  SPEAKER_00: The S&P was up 0.02%.
• 6:31
  SPEAKER_00: And over the last five days, it is up 0.95%.
• 6:35
  SPEAKER_00: As for the global Dow, that closed down today 0.19%.
• 6:38
  SPEAKER_00: And over the last five trading days, it's down 1.09%.
• 6:41
  SPEAKER_00: VIX, lower than what we were seeing.
• 6:43
  SPEAKER_00: It's at 14.08%.
• 6:43
  SPEAKER_00: And as for the 10-year Treasury, that is at 4.47%, up 2.2 basis points over the last five trading days.
• 6:56
  SPEAKER_01: Yeah, I will certainly say that this 10-year is up.
• 7:00
  SPEAKER_01: And in fact, if you look over the last month, and this is the Trump trade, so to speak.
• 7:07
  SPEAKER_01: A month ago, it was 3.66.
• 7:08
  SPEAKER_01: It's now 4.47.
• 7:08
  SPEAKER_01: That's a climb of 81 basis points.
• 7:18
  SPEAKER_01: Most of that has been increased in the real rate,
• 7:20
  SPEAKER_01: meaning people are betting on more economic activity in the future.
• 7:25
  SPEAKER_01: They're betting on a lot of borrowing, crowding out spending, crowding out investment spending,
• 7:37
  SPEAKER_01: And the breakeven inflation expectations are part of it as well because that's up
• 7:44
  SPEAKER_01: 0.27% or 27 basis points.
• 7:45
  SPEAKER_01: So you add those up, right, 50 basis points, 27 basis points.
• 7:55
  SPEAKER_01: That's what gets you up to about 80.
• 7:58
  SPEAKER_01: So you can see, right, people are betting for higher inflation and higher real interest rates coming up.
• 8:05
  SPEAKER_01: And that,
• 8:07
  SPEAKER_01: I mean,
• 8:07
  SPEAKER_01: we have a new president who wants to come in there and cut taxes massively and
• 8:11
  SPEAKER_01: spend more on everything.
• 8:14
  SPEAKER_01: So, you know, and what's that going to, you know, where is that going to go?
• 8:20
  SPEAKER_01: Well,
• 8:21
  SPEAKER_01: for the time being,
• 8:22
  SPEAKER_01: particularly because of the tariff proposals,
• 8:26
  SPEAKER_01: that's going to pull up the dollar as well.
• 8:29
  SPEAKER_01: But of course, that's the question, how long?
• 8:33
  SPEAKER_01: How long will that last and where is that going to go, particularly in terms of inflation?
• 8:37
  SPEAKER_01: Remember,
• 8:38
  SPEAKER_01: this is a presidential nominee who ran on his willingness and his ability and his
• 8:49
  SPEAKER_01: pledge to put an end to the Biden inflation threat and constantly lambasted the
• 8:58
  SPEAKER_01: Biden administration for letting inflation go.
• 9:00
  SPEAKER_01: So a little bit maybe disturbing to see the break even continuing to rise.
• 9:06
  SPEAKER_01: We're going to see where that goes.
• 9:08
  SPEAKER_01: A lot of it will depend on the cabinet is going to be selected and obviously the
• 9:13
  SPEAKER_01: policies that he begins to implement when his administration begins.
• 9:18
  SPEAKER_01: What else do you have going on domestically?
• 9:21
  SPEAKER_00: Well, if we look at indicators, talking about inflation, we had the CPI report.
• 9:27
  SPEAKER_00: Year-over-year inflation rate rose from 2.4% in September to 2.6% in October.
• 9:34
  SPEAKER_00: That's the first increase in inflation we've seen in seven months.
• 9:38
  SPEAKER_00: We also got the preliminary consumer sentiment, which rose from 70.5% in October to 73.0% in November.
• 9:46
  SPEAKER_00: That's the highest reading we have seen in seven months.
• 9:49
  SPEAKER_01: That's interesting.
• 9:51
  SPEAKER_01: Yeah.
• 9:52
  SPEAKER_01: Well, you know, we'll see.
• 9:55
  SPEAKER_01: I mean, we'll get the PCE deflator, I guess, later this month.
• 10:00
  SPEAKER_01: I've just noticed you're looking the month over month didn't look so bad.
• 10:05
  SPEAKER_01: Yeah, 3.3 up slightly.
• 10:06
  SPEAKER_01: Core is also up slightly.
• 10:11
  SPEAKER_01: But, you know, this looks fine for now.
• 10:13
  SPEAKER_01: I mean,
• 10:14
  SPEAKER_01: net,
• 10:14
  SPEAKER_01: I think the traders are kind of indifferent at this point between fears of the
• 10:21
  SPEAKER_01: recovery pushing up inflation too much.
• 10:25
  SPEAKER_01: Inflation already has come down a lot.
• 10:28
  SPEAKER_01: And the inflation losing steam because of inadequate demand.
• 10:32
  SPEAKER_01: So this is probably as good as you can expect for traders.
• 10:36
  SPEAKER_01: I think, well, we'll see.
• 10:38
  SPEAKER_01: We'll see where both where employment and where inflation is going to come next month.
• 10:45
  SPEAKER_00: Do you want me to go over my one international indicator?
• 10:49
  SPEAKER_01: Please.
• 10:50
  SPEAKER_00: All right.
• 10:50
  SPEAKER_00: We got one from the Eurozone.
• 10:52
  SPEAKER_00: Again, preliminary economic sentiment, which fell from 20.1 in October to 12.5 in November.
• 11:01
  SPEAKER_00: That's a large decline, Neil.
• 11:03
  SPEAKER_00: A lot of that came from the big decline in sentiment from Germany, which...
• 11:08
  SPEAKER_00: I know later on in this podcast, we will discuss what is going on there.
• 11:12
  SPEAKER_01: Well,
• 11:13
  SPEAKER_01: remember that the United States doing very well and the dollar rising always means
• 11:20
  SPEAKER_01: that the rest of the world suffers,
• 11:22
  SPEAKER_01: right?
• 11:22
  SPEAKER_01: So if you remember that even before the Trump trade, America was a locomotive for the world.
• 11:32
  SPEAKER_01: Well,
• 11:32
  SPEAKER_01: a higher dollar right now,
• 11:35
  SPEAKER_01: you know,
• 11:36
  SPEAKER_01: both,
• 11:37
  SPEAKER_01: you know,
• 11:38
  SPEAKER_01: causes all kinds of hardship for the rest of the world.
• 11:43
  SPEAKER_01: You know, both because they, you know, mainly because of all the money they...
• 11:52
  SPEAKER_01: Let me repeat that.
• 11:53
  SPEAKER_01: A higher dollar poses all kinds of dangers for the world,
• 11:58
  SPEAKER_01: and to a large part,
• 12:00
  SPEAKER_01: particularly in the emerging economies,
• 12:01
  SPEAKER_01: all the money they borrow in dollars and now find it much harder to pay back.
• 12:06
  SPEAKER_01: And it also reflects the fact
• 12:10
  SPEAKER_01: that demand is lower in the rest of the world.
• 12:14
  SPEAKER_01: And a lot of people are putting their money in the U.S.
• 12:17
  SPEAKER_01: economy because real rates of return are higher because economic growth rates are higher.
• 12:21
  SPEAKER_01: So anyway, all of that is a problem for the rest of the world.
• 12:27
  SPEAKER_01: And it's also going to be a real challenge for incumbent governments to stay in power,
• 12:33
  SPEAKER_01: as you're going to talk about when you get to Germany later on.
• 12:36
  SPEAKER_00: Right.
• 12:37
  SPEAKER_00: Right.
• 12:37
  SPEAKER_00: All right, Neil, let's get into our election discussion.
• 12:42
  SPEAKER_00: We've done many presentations on this election,
• 12:44
  SPEAKER_00: and we've always been looking at the polls and the betting markets.
• 12:48
  SPEAKER_00: And towards the end of the campaign,
• 12:50
  SPEAKER_00: really,
• 12:50
  SPEAKER_00: that last month,
• 12:51
  SPEAKER_00: maybe month and a half,
• 12:53
  SPEAKER_00: the polls showed Harris ahead,
• 12:55
  SPEAKER_00: but the betting markets showed Trump with the lead.
• 12:59
  SPEAKER_00: So now that we see that the betting markets were largely more correct, what do you make of this?
• 13:06
  SPEAKER_01: Yeah, it's kind of interesting, too.
• 13:07
  SPEAKER_01: And of course,
• 13:09
  SPEAKER_01: you remember,
• 13:10
  SPEAKER_01: to some extent,
• 13:11
  SPEAKER_01: the New York Times and the Harris campaign were blaming the markets,
• 13:14
  SPEAKER_01: you know,
• 13:14
  SPEAKER_01: poly markets getting a lot of,
• 13:17
  SPEAKER_01: you know,
• 13:18
  SPEAKER_01: infusion of cash from pro-Trump whales living abroad or something like that.
• 13:24
  SPEAKER_01: No, it turns out that they just properly discounted the polls because of the fact that...
• 13:32
  SPEAKER_01: as I said repeatedly,
• 13:33
  SPEAKER_01: you know,
• 13:34
  SPEAKER_01: on this podcast and in other presentations,
• 13:37
  SPEAKER_01: that there are reasons for discounting the poll results.
• 13:41
  SPEAKER_01: And that is, you know, the turnout bias favored the Republicans and the non-response bias favored
• 13:53
  SPEAKER_01: favored the Republicans.
• 13:55
  SPEAKER_01: It had favored them in 2016.
• 13:56
  SPEAKER_01: It favored them in 2020.
• 13:59
  SPEAKER_01: And because as I assessed polling techniques,
• 14:03
  SPEAKER_01: there wasn't anything the pollsters were doing that was properly remedying for that.
• 14:07
  SPEAKER_01: Just readjusting for more demographic variables does not adjust for that, right?
• 14:14
  SPEAKER_01: And so I said that it was likely to happen again.
• 14:17
  SPEAKER_01: And it happened again.
• 14:18
  SPEAKER_01: And I think that's what the betting markets were looking at.
• 14:21
  SPEAKER_01: And they properly looked at that and they got it right.
• 14:26
  SPEAKER_01: Interestingly, they got the election right.
• 14:29
  SPEAKER_01: They also didn't even do that badly on the magnitude of Trump's victory.
• 14:35
  SPEAKER_01: Just before polling stations closed, about 27 percent were the odds.
• 14:42
  SPEAKER_01: on polymarket that trump would achieve a popular vote victory right 27 odds you'd
• 14:50
  SPEAKER_01: have a popular vote victory uh that was much higher i think than anyone else was
• 14:55
  SPEAKER_01: giving for that right right um and in fact of course that turned out to be true um
• 15:02
  SPEAKER_01: so you know there you go um let's see moving on uh the 2024 turnout