1. 3Q Economy Grew Faster Than Expected at 3.5% GDP
2. Voter Turnout Set to Top 50-Year Record in Midterms
3. Backlash Against Trump Spurs Interest in Midterm Election
4. I Predict a “Record Wave” Election by Both Parties

Overview

Voter turnout for the November 6 midterm elections is widely expected to be at or near a record high. Emotions are high on both sides of the political aisle for this election, and pollsters are predicting a huge turnout by Republicans, Democrats and Independents.

The implications are huge because many politicos believe the House of Representatives could be retaken by the Democrats, and some even predict that control of the Senate could be in the crosshairs. I doubt the latter but this is shaping up to be one of the most interesting midterm elections in many years.

Two months ago, it looked like the Democrats would retake majority control of the House in a so-called “Blue Wave.” They only need to pick-off 23 Republican seats to do so. As I wrote in my Blog on September 27, presidents with an approval rating below 50% lose an average of 37 seats in the House in midterm elections. The Dems were looking very good.

But then came the embarrassing fiasco of Judge Brett Kavanaugh’s Supreme Court nomination. The Democrats went way over the top in trying to defeat Judge Kavanaugh, made a spectacle of themselves on national TV and changed the whole election dynamic. Now the election hangs in the balance. The much-heralded Blue Wave no longer looks likely.

Why is this so important? If the Democrats take over control of the House (and possibly the Senate), they have made it clear that they will initiate impeachment proceedings against President Trump and try to reverse his tax cuts and deregulation efforts. If successful this would be very bad news for the economy.

I don’t know what will happen in the upcoming midterm election, but what I can tell you is that voter turnout is likely to be record high on both sides. Today, we’ll look at the implications of that and see if it leads us to any indication of the outcome. This could be a really big deal for the markets, one way or the other.

Before we get to our midterm election analysis, let’s take a look at last Friday’s better than expected initial report on 3Q Gross Domestic Product.