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Peter Atwater: The Real Midterm Election Outcomes

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If you think we'll see Bush vs. Clinton in the 2016 Presidential election, you had better think again.

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It has been two weeks since the midterm elections and it has been fascinating to read the different interpretations of the outcome.

To believe the popular media, it was a huge win for the Republicans. Time even put new Senate Majority Leader Mitch McConnell on its cover.



From a social mood perspective, a more accurate conclusion would be that it was a great night for challengers. Incumbents on both the left and right faced enormous opposition.

While the markets may be at all-time highs, weak Main Street economic confidence was evident across national, state and local elections.

"Me, here, now" thinking led to Scott Brown's "carpet bagging" loss in New Hampshire, the passage of several city and state higher minimum wage laws (even where Republicans came out on top), and the expanding legalization of marijuana. Even more, weak social mood made President Obama's political impotence abundantly clear.

National coattails? There were none. When social mood is weak, all politics truly is local. Two weeks ago it showed.

Closer to my home town, Ken Simpler, the candidate with the best last name in this election (at least from a socionomic perspective), won a surprise victory for Delaware Treasurer. He became the first Republican to win a statewide office since 1994.

If I were a political advisor, I would be looking for candidates with weak social mood last names for 2016: Mr. Small, Ms. Little, Joe Easy, Lucy Local -- anyone whose name brings to mind "me, here, now" thinking when voters head back to the polls.

But of all of the victories in the midterm elections, none was more significant than the one for a name that wasn't even on the ballot: Elizabeth Warren.

She is now THE rock star of the Democratic Party.

While the political elite continue to fantasize about a Bush vs. Clinton battle in 2016, Main Street has already identified its candidate on the left. Even more, Main Street won't be satisfied with Ms. Warren taking a secondary role with a transnationalist like Ms. Clinton as President.

No matter how hard she tries to contort herself to current social mood, Ms. Clinton can't be an authentic "me, here, now" candidate. The Democratic Party would be wise to grasp this sooner rather than later.

They won't.

The only question that remains for 2016 is who the Republicans pick. If mood falls further, I wouldn't be surprised to see Chris Christie's popularity soar anew. While the pundits see Bridgegate as an obstacle, they have completely misread social mood. When a song called Bruises can be a hit for Train, Mr. Christie can easily bounce back.

With Main Street mood weak and folks like Putin rattling sabres, the Republican leadership would be wise to pick a fighter.

While I realize that none of these rather contrarian thoughts matters to investors today, the midterm election results confirm a continuing huge social mood disconnect between the haves and have nots.

People are voting as if the S&P 500 were trading at 1200, not 2040.

At some point this Main Street/Wall Street confidence gap will matter, and as perverse as it may seem today, when it does, I would not be at all surprised to see Main Street celebrating the collapse of the power of the financial elite and by association, the stock market.

And lest there be any remaining doubt, based on midterm voting, bailouts of any kind won't be on offer.

Peter Atwater's groundbreaking book "Moods and Markets" is now available on Amazon and Barnes & Noble.
 
"Peter Atwater brilliantly provides a framework for understanding both the socioeconomic hubris that led to the great credit bubble of the past decade and the dark social-psychological hangover that has resulted from its collapse. In so doing, he offers an invaluable guide to what promises to be a very difficult and turbulent period ahead as we experience what he calls the 'me, here, and now' behavioral tendencies of the post-crash world."  -Sherle R. Schwenninger, Director, Economic Growth Program, New America Foundation


Twitter: @Peter_Atwater
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Position in SH,DBC,USO,JPM
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