In our view, the media & market is circulating a false narrative regarding relationship between President Trump reelections prospect and US growth. The thinking goes that a weaker economy will lower Trumps changes for a second term. Therefore, he will have to pick between winning a trade war or support weakening economic growth. Our view is that Trump can, “have his cake and eat it too”. While Trumps generic polling numbers have a relationship with economic outlook, his core base remains unmoved and extremely strong. As the world has learned in 2000 and 2016 presidential elections’ its not the popular vote but electoral college that puts a person in the White House. Trump hold of this base will deliver a win in 2020.
July Purdue Center for Commercial Agriculture latest survey of farmers sentiment indicated popularity among farmers rose to 79% from 74%. Fifty-three percent said they “strongly approve” of President Trump, up from 50% in June. Farmers have been on the front line in the trade war. Their continued support indicates the devotion of Trumps political base. Reuters/Ipsos public opinion poll shows approval among members of his Republican Party at a solid 72%. In fact we could see Trump escalate tensions in order to force the Fed to cut interest rates 25-50bp. Should Trump manufacture lower Interest rates and negotiate lower of US-China trade tensions the US economy would slingshot higher, just in time for Presidential Elections.
By Peter Rosenstreich
