November 07 2024

1. ELECTION 2024 ROUNDUP
2. TRUMP 2.0
3. THE WORLD REACTS TO TRUMP
November 7, 1944: FDR wins unprecedented fourth term

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CORRECTION: In yesterday's newsletter, I forecast a 54-46 Republican majority in the Senate. While Republicans are still certain to control the Senate, the likely outcome now appears to be 53 Republicans and 47 Democrats. I did not include the race in Arizona, where Republican candidate Kari Lake is trailing Democratic challenger Ruben Gallego. Additionally, since yesterday, the Republican candidate in Nevada has fallen behind the Democratic incumbent. Betting markets currently forecast losses for both Republican candidates in these states.

1. ELECTION 2024 ROUNDUP

A. Betting markets give Republicans 97% chance of retaining House 

Democrats’ dream of blocking a Republican governing trifecta is dwindling down to a handful of West Coast races, as California’s large cache of still-untallied ballots and its notoriously slow count now take center stage in the national political drama. The party had long seen the nation’s two blue bulwarks — New York and California — as the decisive staging ground for its quest to retake the House majority. In the Empire State, it flipped two GOP-held seats, a rare bright spot in an otherwise nightmarish election night for Democrats. But after Republicans ousted two Pennsylvania Democratic incumbents, the GOP appears the slight favorite to keep its narrow majority in the House — an outlook party leaders such as Speaker Mike Johnson and Republican campaign chief, Rep. Richard Hudson One Republican working closely on House races believes that, at worst, the party will lose only one seat, and that the GOP could pick up a seat or two. (Republicans currently hold a 220-212 advantage in the chamber.)  

B. Republicans make gains in state legislatures   

Buoyed by strong election showings on the national level, Republicans appear poised to break up Democratic control of state governments in Minnesota and Michigan, and possibly take full control of the Pennsylvania legislature. Coupled with unexpected gains in Democratic strongholds like Vermont, the results of Tuesday’s elections point to a strengthening of the Republican Party’s grip on power at the state level. If the current returns hold, Republicans would have a state government trifecta — control of the governor’s office and both legislative chambers — in 23 states. Democrats would have 15, a loss of two from the last election cycle.  

C. NYT OPINION: “Kamala Harris Took Women for Granted”  

This was supposed to be the big gender gap election. The data showed women leaning heavily Democratic, with abortion rights a primary driver. Women were expected to line up in droves, ready to reel in the vote for their designated glass-ceiling-shattering heroine. That, at least, seemed to be the Harris campaign’s assumption. Why think otherwise? Everywhere on social media and across college campuses, women were appalled by Donald Trump’s cave man antics and JD Vance’s callous “childless cat lady” bro talk. The word “fury” appeared in heavy rotation. Come Election Day, this female rage would surely smack Trump, a rapist, clear across the face. Things didn’t go according to plan. Instead of a yawning gender gap, exit polls showed a real but not determinative disparity between how men and women voted. If early exit polls hold, Harris’s advantage with women may have been narrower than Biden’s in 2020.  

D. State abortion ballots mixed  

Supporters scored notable victories, passing ballot measures to enshrine abortion rights or protect reproductive rights in seven states’ constitutions, including Montana, Arizona, Nevada and deeply conservative Missouri. The outcome in Missouri overturned a total ban for the first time anywhere in the country and could affect more than 1.2 million women of reproductive age. The results also were the first time an abortion ballot measure failed as Florida’s proposed Amendment 4, viewed by each side as a crucial mark, fell short of the 60 percent threshold required — despite a majority of voters supporting it. Several hours later, voters in Nebraska solidly rejected an initiative to expand abortion access. South Dakota then followed suit. All are Republican-controlled states.  

E. DOJ to drop federal cases against Trump  

Prosecutors are discussing how to drop two federal criminal cases against Donald Trump as he prepares to return to the White House, in a significant victory for the former president who has faced a series of legal battles since his first term in office. Jack Smith, the special counsel appointed by US attorney-general Merrick Garland to oversee two cases against Trump, “is examining how to wind down” the proceedings “before he takes office to comply with long-standing department policy that a sitting president can’t be prosecuted”, a Department of Justice official familiar with the matter said.   

F. Supreme Court appointments  

Some prominent voices on the left called earlier this year for Supreme Court Justice Sonia Sotomayor to retire while Joe Biden was still president, so a Democrat could nominate her replacement regardless of who won the election. Sotomayor, 70, is the oldest liberal justice and has Type 1 diabetes. Advocates feared a repeat of what happened with liberal Justice Ruth Bader Ginsburg, who declined to retire during President Barack Obama’s tenure and died on the bench in 2020, while Donald Trump was in office. The vacancy allowed Trump to nominate Amy Coney Barrett, cementing a powerful 6-3 conservative supermajority. Even if Sotomayor did step down now, “it’s far from clear that Senate Democrats would have the votes to confirm a replacement,” said Alex Aronson, executive director of Court Accountability and former Senate Judiciary Committee staffer. Democrats have a slim 51-49 edge in the Senate until the newly elected lawmakers take office in January. Sen. Joe Manchin III, a Democrat turned independent who caucuses with his old party, said in March that he wouldn’t vote for any judicial nominee who lacked Republican support. He then softened his position and agreed to move forward on judicial nominees without Republican support in some instances.  

Editor note: The other liberal justices on the U.S. Supreme Court are: * Justice Elena Kagan, born April 28, 1960, is 64 years old. * Justice Ketanji Brown Jackson, born September 14, 1970, is 54 years old.  

G. NJ a swing state in 2028?  

Normally a reliable blue bastion in federal elections, New Jersey surprisingly put up swing state numbers on Tuesday, coming the closest it has in a generation to casting its electoral votes for a Republican president. Vice President Kamala Harris still won the state over Donald Trump, but the former president gained major ground in New Jersey. Having lost the state by double digits in 2016 and 2020, Trump closed election night down just five points — the closest presidential showing for a Republican since George H.W. Bush lost by 2.4 points in 1992.

Article Source: Politico, NYT, WaPo, FT

2. TRUMP 2.0

A. WSJ: “Wall Street Salivates Over a New Trump Boom”  

Wall Street has rarely been more excited by an election.  U.S. stocks’ capitalization rose by $1.62 trillion on Wednesday, their fifth-best one-day showing ever, following Donald Trump’s decisive election victory. The surge highlights the opportunity that investors, bankers and others in finance are hoping to embrace over four years of tax cuts, deregulation and economic expansion. “Investors are celebrating,” said Jack Ablin, chief investment officer at Cresset Capital in Chicago. He was among those buying shares of smaller companies, on the bet that Trump’s policies will rev up the economy. The enthusiasm is especially heated in a few areas, investors and bankers said. Banks and other financial companies climbed, with the KBW Bank Index rising 11%. Investors expect regulatory scrutiny will ease in a Trump administration. Some also expect more dealmaking, potentially among smaller and midsize banks. The expected departure of Lina Khan, who leads the Federal Trade Commission and has been a thorn in the side of executives hoping to work out tech acquisitions, was cheered by investors and bankers.  

B. The Trump 2.0 transition  

Donald Trump’s campaign team launched into transition mode barely 12 hours after polls closed — a jarring turn that left exhausted staffers and members of the media scrambling on Wednesday. Huddled in West Palm Beach, Florida, Trump’s advisers by midday were hurriedly ironing out transition plans, particularly how to handle a deluge of questions about the people and policies that will shape the second Trump White House. After his election night rout, Trump’s advisers have made clear his top Day One priorities include executive orders on border security and oil drilling, and other measures to promote energy independence. With Congress potentially under full Republican control, Trump’s team is emboldened to push aspects of his America First agenda as soon as he re-enters office.  

C. Elon Musk went all-in on Trump, he’ll have big influence in Trump 2.0  

Musk’s decision to fully immerse himself in this election, including what appeared to be manipulation of the “For You” algorithm, funding a massive GOTV operation, and campaigning on the ground in Pennsylvania on a near daily basis for the last few weeks. Musk identified the U.S. regulatory state as a fundamental limiter on SpaceX in particular, and a threat to himself and his businesses generally, and instead of playing both sides, went all in on getting one particular candidate elected, knowing that an all-in bet would have the highest possible pay-off. This tweet summarized it well:  

@isaiah_p_taylor: Let it be noticed that once he decided that this race was existential, Elon basically just set up camp in PA and sat there until it flipped.  This is how he does everything.  Find the one lever that moves the world and then just go jump up and down on it, relentlessly

To say this was high-risk is a massive understatement; ever since Musk bought Twitter he has been hit by an onslaught of judicial and administrative actions, including having his shareholder-approved pay package retroactively undone, and being sued for SpaceX not employing refugees even though, as a national security entity, it can’t. It seems likely all of that would have gotten much worse had Trump lost. At the same time, one of the best ways to succeed is to go all in; this is one of the advantages startups have versus incumbents: they have nothing to lose. That Musk operated this way given he has a lot to lose is remarkable; it’s also why this tweet is true:  That is fascinating is how this fundamentally transforms any attempt to evaluate the Twitter acquisition. From a business perspective it’s a massive failure, and might always be: Musk paid too much for Twitter as it was, and in the intervening years the flight of advertisers from the platform has made it worth even less. From a Musk Inc. perspective, however, X played a pivotal role in ensuring that the incoming administration will do whatever Musk needs at the exact moment that SpaceX is gaining the capabilities to actually make a trip to Mars, if only the FAA in particular will give him the freedom to do so. That alone is almost certainly worth $44 billion to Musk!

Article Source: WSJ, Politico, Stratechery

3. THE WORLD REACTS TO TRUMP

A. WSJ: “America’s Friends and Foes Brace for a New World Under Trump”  

Leaders of U.S. allies and adversaries on Wednesday braced for quick shifts in American economic policy and the country’s approach to relations with the rest of the world as the scale of Donald Trump’s victory became clear.  Trump, whose Republican party also regained control of the Senate, has pledged to increase import tariffs and cut support for allies that don’t spend adequately on defense. He has also said he would work for a rapid end to Russia’s war in Ukraine. Global heads of state and government congratulated Trump on his win, which could jolt both U.S. friends and foes. For China, Trump’s return promises to ignite a new phase in a trade war that began during his first term of office at a time when broader relations between Washington and Beijing are strained.  Trump on the campaign trail floated plans to impose tariffs of 60% on all Chinese imports, a significant increase from the more modest tariff increases on some Chinese goods that were a signature policy of his first term as president.  In the Middle East, a second Trump administration is likely to go back to a “maximum pressure” policy on Tehran, as it did during Trump’s first term, according to people briefed on thinking within Trump’s circles. That could reshape dynamics in a region where Iran and its proxies are engaged in a multi-front conflict with Israel. Israeli Prime Minister Benjamin Netanyahu, a Trump supporter who quickly congratulated him, could push back harder against Iran. For Ukraine, where Russian troops control almost 20% of the country, a Trump presidency increases uncertainty about Kyiv’s continued ability to fend off Moscow’s invading forces without the enormous financial and material support the U.S. has provided. At North Atlantic Treaty Organization headquarters in Brussels, officials now face questions about the U.S.-led organization’s future. Trump has repeatedly spoken harshly of the military alliance because most European members have long lagged behind the U.S. on military spending.  

B. Iranian currency crashes  

The Iranian rial plunged to an all-time low early Wednesday morning as it became clear that Trump would retake the White House. The rial-to-dollar exchange rate dropped to 703,000-to-1 as networks began to call Pennsylvania for the former president, down from the already weak figure of 584,000-to-1 on July 30, when Iranian President Masoud Pezeshkian was inaugurated. When the Iran nuclear deal was signed in 2015, the exchange rate was a mere 34,000-to-1.  

C. German government collapses  

Germany’s fractious coalition government collapsed on Wednesday, tipping the economically embattled nation into a political crisis and adding uncertainty for Europe as the region grapples with Donald Trump’s election win in the U.S. Chancellor Olaf Scholz dismissed Finance Minister Christian Lindner, chairman of the pro-business Free Democratic Party—the smallest member of his three-way coalition of free-market liberals, social democrats and Greens—because of disagreements over economic policy, a spokesman for Scholz said.

Article Source: WSJ, The Daily Scroll

November 7, 1944: FDR wins unprecedented fourth term

Sources

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D https://www.washingtonpost.com/politics/2024/11/06/states-abortion-measures-election-impact/
E https://on.ft.com/3NXOnbl 
F https://www.washingtonpost.com/politics/2024/11/06/supreme-court-trump-nominees-sotomayor-thomas-alito/
G https://www.politico.com/news/2024/11/06/new-jersey-swing-state-red-00187965

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