As Donald Trump continues to rumble towards the 2016 Republican Presidential nomination, many GOP insiders and media pundits continue to insist the billionaire can’t possibly win the general election against likely Democratic nominee Hillary Clinton.
Polling data has consistently shown that Clinton would indeed clobber Trump come November — 49% to 40.5%, according to one recent survey. Odds makers see a 72.7% likelihood that Clinton will win the White House, compared to just 15.9% for Trump.
But don’t bet the college fund on Hillary just yet. I recently had a fascinating conversation with Dan Clifton, Director of Policy Research for Strategas Research Partners. Both Clifton and Strategas Chief Investment Officer Jason Trennert think the odds makers – and maybe the polls – are off the mark. Clifton shared their thoughts on how Trump could prevail in November.
Disclosure: I was a contestant on the second season of The Apprentice in 2004 and thus worked closely with the Trump organization. There is much I admire about Trump, particularly from a business perspective, but I’m a market analyst, not a political guy. My interest is simply to understand how the outcome of the fall election will impact the economy and your bottom line.
Clifton begins by noting one difficulty of handicapping this race: Trump and Clinton are the two least popular Presidential candidates in at least 30 years. Trump’s “net favorability” rating is almost -35% while Clinton’s is about -18%. By comparison, when the politically polarizing George Bush ran for reelection in 2004 his net favorability was roughly +5%. Trump and Clinton’s deep negatives mean anything could happen in November.
Here are 3 potential Trump paths to the white house:
- Historic Realignment – Americans are deeply dissatisfied with both a stagnant economy and the political establishment’s perceived disconnection from the people. Nearly three-quarters of Republicans are upset with the GOP-controlled Congress while Bernie Sander’s notable success illuminates Democrats’ frustration with their own party. Trump could ride this tidal wave of negativity into the White House with his promises of dramatic change to the status, says Clifton. There have been six similar “realignment” elections in the past, won by Andrew Jackson, Abraham Lincoln, William McKinley, Franklin Roosevelt, Ronald Reagan and Barak Obama. Interestingly, all of these “throw the bums out” elections came in the midst or right after major financial crises. What’s more, new media played a critical role in each of these Presidential races. In the past 100 years that included the radio for FDR, direct mail for Reagan and Facebook for Obama. Trump is, of course, a master of the newest new medium, social media.
- People Really Don’t Like Hillary – As noted, both presumptive nominees are unpopular. But, man, voters really don’t think much of Hillary Clinton. Just 37% of voters consider her “honest and trustworthy.” A quarter of Bernie Sanders voters insist they will not support Clinton if she’s the Democratic nominee. Clinton is an establishment politician in an anti-establishment year. She is often perceived as willing to do/say anything to get elected. The FBI investigation into her use of a private email server continues to dog her, as does her handling of the terrorist attack on the US consulate in Benghazi, Libya in which the American ambassador was killed. Clinton’s unpopularity could dampen Democratic voter turnout. That would be especially problematic in a year when voting in GOP primaries is up 60%. Says Clifton, “We are not generally of the view that a candidate can win because the other candidate is terrible. But there could be exceptions for this election.”
- Change It Up – Americans frequently elect a President who is 180 degrees different from the Commander. Examples: Eisenhower was old, Kennedy was young. Carter was perceived as weak, Reagan as strong. Bill Clinton was seen as immoral, George W. Bush as Moral. President Obama ran on “hope” while Trump reflects an opposite emotion – anger. Of course, all of this is offset to a degree by realities that favor Clinton. Among those identified by Clifton:
Democratic Base is Growing: Democrats historically attract a coalition of young voters, non-white voters, and well-educated voters. Those groups have been growing since 1980. Millennials, (age 18-34) are now the largest generation in the country. Hispanics, an important voting block, have a deep dislike for Trump. His net favorability rating with that group is -65%.
The GOP Brand is a Mess – The GOP is less popular with the general electorate than at any time since President Obama’s 2008 reelection.
GOP Infighting: Trump’s candidacy has deeply split Republicans. If the party can’t coalesce around Trump, it has no chance of winning in November.
Obama Rising: President Obama’s popularity has been on the upswing since 2015, which could mitigate the desire to “change horses” after eight years of Democratic presidency.
So, who will be moving into the White House come January? Anyone who claims to know the answer is full of baloney in this once-in-a-lifetime election cycle. Yes, as Clifton and Trennert note, there are some historical trends that seem to favor one candidate or the other. But as we financial guys always like to remind people: Past performance is no guarantee of future results.