Investment Risks Rise As US Mid-Term Elections Near

This is the Labor Day weekend in the USA – the traditional start of the mid-term election campaign. And just as in September 2016, the Real Clear Politics poll shows that most voters feel their country is going in the wrong direction. The demographic influences that I highlighted then are also becoming ever-more important with time:

“Demographics, as in 1960 and 1980, are therefore likely to be a critical influence in November’s election:

Median age in 1960 was just 30, and 29 in 1964. Young people are by nature optimistic about the future, believing anything can be achieved – and their support was critical for the Great Society project

Median age was still only 30 years in 1980. The Boomers were joining the Wealth Creator 25 – 54 generation in large numbers. They were keen to join the Reagan revolution and eliminate barriers

Today, however, median age is nearly 50% higher at 38 years, and the average Boomer is aged 61. The candidates are not mirroring Kennedy/Johnson and Reagan/Bush in focusing on the need to remove barriers. Indeed, Trump’s signature policy is to build a wall”

Two years later, the median age is still increasing, and the average Boomer is aged 63.

But there is one major change from two years ago. Then, President Obama had a positive approval rating at 50.7%. But today, President Trump has a negative approval rate of 53.9%.

This has clear consequences for the likely outcome of the mid-terms, with the latest FiveThirtyEight poll suggesting the Democrats have a 3 in 4 chance of winning control of the House. In turn, of course, this increases the risk of impeachment for Trump and makes it even more difficult for him to stop the Mueller investigation. We therefore have to assume that Trump will do everything he can to reduce this risk over the next few weeks.

Americans are not alone in feeling that their country is heading in the wrong direction, as the latest survey (above) for IPSOS Mori confirms. And they have been feeling this for a long time – as I noted back in November 2016: