BTRTN August 2019 Month in Review: Trump’s China Syndrome...Be-VIX’ED, Bothered and Bewildered

Tom with the BTRTN August 2019 Month in Review.

THE LEAD

Trump’s approval rating held at 43% for the fourth straight month.  Our BTRTN-exclusive “Trumpometer” measure of economic strength under Trump since his Inaugural dropped modestly from +13 to +12.  The month was dominated by three events – the China trade war, the mass shootings in El Paso, Dayton and Odessa, and the G7 talks in France.  Each revealed that Trump’s penchant for erratic policy positions is accelerating, perhaps reflecting his desperation at his re-election prospects in the face of increasing economic uncertainty. 

Congress took the month off to canvass the opinions of their constituents, returning September 9.  What they heard about gun control and impeachment could define the coming weeks.

Joe Biden continues to lead the Democratic field, both nationally and in the four “early” states of Iowa, New Hampshire, Nevada and South Carolina.  Four lesser candidates dropped out, leaving 20 in the race, 10 of whom qualified for the third round of debates on September 12, on just one stage on one night this time around.

THE MONTH

It is not often that one concludes that Donald Trump is vexed.  But it is hard to avoid that conclusion after an erratic August in which Trump flip-flopped like a fish on the two big issues of the month, China and gun violence.  You may be familiar with the “VIX,” the Chicago Board Options Exchange’s measure of stock market’s expected volatility.  If Trump had his own VIX index of personal volatility, it would have been off the charts.  Despite attempts to position his confounding statements as “smart negotiating” to keep his foes “off-balance,” he has indeed appeared to be both bothered and bewildered about the best path forward, particularly on China.

It has never been quite clear what Trump has been up to in China, in terms of strategy.  Obviously, China, the second largest economy in the world, has been a currency manipulator and technology thief, and deserving of a comeuppance of some sort.  But of what sort has bedeviled U.S. presidents for some time.  To the extent that Trump was choosing amongst strategies, which is highly unlikely, he has chosen a perilous one – the “trade war.”  Why the first-term president, a re-election underdog, thought he could outlast a counterpart with a Job For Life, emanating from a culture famous for the “long play,” is beyond logic.  Particularly since China, a foe on trade, is a potential ally that Trump needs in his battle to wrest nuclear capability from North Korea.

Whatever the strategy, Trump and the talks are not in a good place now, with large tariffs already in place and each side threatening new ones later this year, and no talks scheduled.  Trump seems to be anteing up his one good reelection chip – the state of the U.S. economy – and betting he can make Premier Xi buckle before Election Day 2020.  Given China’s uncooperative stance to date, that seems mighty unlikely.

And thus Trump seems to be caught between the realities of the faltering “strategy” on the one hand, with the genuine fear of looking weak if he capitulates and comes home with nothing except his tail dragging behind him on the other.  After announcing a massive new round of sanctions on September 1, he rather quickly delayed them until December – hardly an inspiring stand.  And, at the G7, after musing aloud about second guessing his approach, the White House walked the regrets back and re-positioned the comments as Trump wishing he had imposed even stiffer tariffs.

The markets do not appear to buy Trump’s argument that his volatility is a good negotiating posture.  Markets hate volatility.  On August 23, the Dow dropped 623 points in the immediate aftermath of a sharp Trump tweet “ordering” U.S. companies to find alternatives to China.  Overall the aforementioned VIX has exceeded a level of 20 (and is currently at 18) more times in Trump’s two years than in Obama’s eight years.  And this in spite of a stable U.S. economy with low unemployment.

The shootings in El Paso and Dayton at the beginning of August, and Odessa at the end, thrust the gun control issue back into the national consciousness, and with it Democratic-led calls yet again for strong gun control legislation.  This is a terrible issue for the GOP; their standard call to focus exclusively on the mental health side of the equation is falling on many deaf ears at this point.  With every shooting, American become more educated on exactly how awash our country is in firearms, compared to other nations – nations that also have mental health issues in their citizenry, but nowhere near the epidemic of mass killings.

Trump and Mitch McConnell both paid lip service to universal background checks, the measure that enjoys the most overwhelming support among all Americans, whatever the party.  (Plenty of other measures have majority support as well, including gun licensing.)  But Trump has also stated, rather bluntly, that our current background checks go too far, and of late seems to oppose any significant legislative efforts to limit the supply of guns.  (It might be noted that Texas itself, the victim of two of the three assaults, recently passed a spate of laws to loosen gun controls in their state, and their Governor, the ambitious Greg Abbott, continues to spout the mental health tune.) 

Perhaps one gun rights advocate, Dudley Brown, president of the National Association for Gun Rights, which opposes new gun restrictions, said it best:  “I don’t think the president even knows what he is doing on this.”

Congress's break allowed lawmakers to head home and hear from their constituents, about gun control, impeachment and whatever else may be on the minds of those back home.  For those in swing districts in particular, these are crucial interactions, and could define the congressional agenda in the coming months.  There are now 130 Democrats and one independent calling for an impeachment inquiry, a number that continues to grow.

Trump’s performance at the G-7, during which he backflipped on China, skipped a crucial meeting on climate change, and pushed for Putin’s Russia to be readmitted to the G-7, simply reinforced the notion that the U.S. president is no longer the “leader of the free world.”   In fact, under Trump, the U.S. has actively dissociated itself from our strongest allies, a longstanding pattern of the Trump presidency.  To which one can only conclude that the world cannot possibly be safer from the ravages of global terrorism and economic instability than it was in the Obama years.

Also in the month Trump did his usual share of red-meat loving, constitution-bending actions against “The Squad,” stating that they should not be allowed to visit Israel because of their policy stances on Palestine.  He also took more direct action against immigrants, including legal ones (taking steps to limit their access to social programs, such as food stamps), and weakened the Endangered Species Act.

And the month also featured the usual array of sheer Trump madness.  Trump nominated Representative John Ratcliffe, who had appallingly little intelligence experience, to replace Dan Coates as Director, National Intelligence, simply because Ratcliffe was rather combative when Robert Mueller was on the stand (Trump had to withdraw the pick in the face of bi-partisan backlash).  He decided it would be a good idea to buy Greenland (and when Denmark’s Prime Minister objected, he called her “nasty.”)  He mused repeatedly that nuclear weapons could be used to blast hurricanes to bits (think: nuclear fallout spewed over thousands of square miles).  He raged against Puerto Rico while Hurricane Dorian bore down on it, while soberly supported Florida when the maps pointed to a landing there.  We could add a sentence that summarized what these various rants reflect in Trump’s personality, but it has all been said before and is so painfully obvious there is no particular reason to reprise the refrain.

The Democrats continued their plodding process to find the candidate who can beat Trump, and appear to be caught in a despairing box:  the candidate who beats Trump most consistently in head-to-head polling (the ultimate “electability” test), Joe Biden, is almost serially devoid of inspiration (and has a UPS truckload of baggage), yet the other four contending candidates, Elizabeth Warren, Bernie Sanders, Kamala Harris and Pete Buttigieg, while plenty inspiring (in their own ways) are clearly less electable.  The best that can be said about the Democrats in August is that at least the field is beginning to winnow, from 25 to 20 at this point, as the detritus of candidates have started to realize that 1% support is not a “wave” (unless it is a “wave goodbye”).  Only ten candidates earned the right to be on the stage for the September 12 debates, so perhaps more of the “next ten” will follow suit soon, as they should.

TRUMP APPROVAL RATING

We simply report, as we have with mind-numbing regularity, that Trump’s approval rating remained at 43%, now for the fourth straight month, falling within the 40-45% range for the 20th consecutive month. 

TRUMP MONTHLY APPROVAL RATING
	2017			2018			2019
	Jan	Jun	Dec	Jan	Jun	Dec	Jan	Feb	Mar	Apr	May	Jun	Jul	Aug
Approve	45	40	39	41	42	43	42	41	42	42	43	43	43	43
Disapprove	44	55	56	55	53	53	54	55	54	54	54	54	54	53
Net	1	-15	-17	-13	-10	-10	-12	-14	-11	-12	-11	-12	-11	-10

TRUMPOMETER

The Trumpometer did not change in the month, remaining at +12.  The +12 Trumpometer reading means that, on average, our five economic measures are +13% higher than they were at the time of Trump’s Inauguration, per the chart below (and with more explanation of methodology below). 

The Dow dropped a bit in a volatile month, and the revised Q2 GDP also was slightly lower than the previous estimate.  Consumer confidence also nudged down.  But these slightly negative trends were offset by a solid drop in gas prices.  There was no change in the unemployment rate, thus all changes netted out and the overall Trumpometer was unchanged.

The “Trumpometer” was designed to allow an objective answer to the economically-driven question of the 1980 Reagan campaign:  “Are you better off than you were four years ago?”  The Trumpometer now stands at +12, which means that Donald Trump can definitively claim that the answer to that question is “yes.”  (Whether he deserves credit for that score is another matter.)

TRUMPOMETER	End Clinton  1/20/2001	End Bush 1/20/2009	End Obama 1/20/2017 (Base = 0)	Trump 7/31/2019	Trump 8/31/2019	% Chg. Vs. Inaug. (+ = Better)
Trumpometer	25	-53	0	12	12	13%
Unemployment Rate	4.2	7.8	4.7	3.7	3.7	21%
Consumer Confidence	129	38	114	136	135	19%
Price of Gas	1.27	1.84	2.44	2.80	2.66	-9%
Dow Jones	10,588	8,281	19,732	26,864	26,403	34%
GDP	4.5	-6.2	2.1	2.1	2.0	-5%

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Notes on methodology:

BTRTN calculates our monthly approval ratings using an average of the four pollsters who conduct daily or weekly approval rating polls: Gallup Rasmussen, Reuters/Ipsos and You Gov/Economist. This provides consistent and accurate trending information and does not muddy the waters by including infrequent pollsters.  The outcome tends to mirror the RCP average but, we believe, our method gives more precise trending.

For the generic ballot (which is not polled in this post-election time period), we take an average of the only two pollsters who conduct weekly generic ballot polls, Reuters/Ipsos and You Gov/Economist, again for trending consistency.

The Trumpometer aggregates a set of economic indicators and compares the resulting index to that same set of aggregated indicators at the time of the Trump Inaugural on January 20, 2017, on an average percentage change basis... The basic idea is to demonstrate whether the country is better off economically now versus when Trump took office.  The indicators are the unemployment rate, the Dow-Jones Industrial Average, the Consumer Confidence Index, the price of gasoline, and the GDP.