2018 us midterm elections

FLORIDA WEALTH AND INSURANCE
STRATEGIES LLC
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MINIMIZING TAX LIABILITIES AND MAXIMIZING VALUE FOR
CURRENT AND FUTURE GENERATIONS
jmorse@pflegerfinancial.com
Mobile France : 07 82 55 17 13, US Cell: (561)-889-7478 1
2018 US Midterm Elections©
By John H. Morse
Investment Adviser Representative
February 2018

FLORIDA WEALTH AND
INSURANCE STRATEGIES
LLC
REGISTERED
INVESTMENT ADVISER
2018 US Midterm Election ©
by John H. Morse, Investment Adviser Representative
All material copyrighted. No reproduction is allowed without written
permission from the author.
by John H. Morse
February 2018
All material copyrighted. No reproduction is allowed without written permission from the author.
If elections were a trade, I could suggest one that has been a winner 17 out of the last 18 times and has
worked over a 70-year period. Since WWII, the President’s party has lost seats in the Midterm elections
except one time, in 2002. We all remember what happened in 2001 that influenced the 2002 Midterms.
The result of the 2018 midterms is the single most important known-unknown for investors for 2018. The
Midterms should eliminate the first unified Republican government since 2006. The question is how bad of
a Republican loss will it be? Will it produce political gridlock in Washington, which has normally been
positive for investors? Or, will Republicans lose both the House and the Senate? Could a large
Democratic win encourage the left wing of the Democratic party to over-reach, produce an anti-business,
anti-investor environment and even put the Trump presidency at risk producing a political crisis?
Mobile France : 07 82 55 17 13, US Cell (561)-889-7478 2

FLORIDA WEALTH AND
INSURANCE
STRATEGIES LLC
REGISTERED
INVESTMENT ADVISER
Markets hate uncertainty. A large Republican loss should have a negative impact on the US Dollar. At a
time that US inflation is heating up, a US Dollar crisis would increase inflationary pressures, increase bond
yields, and cause the stock market to take a swoon.
For the 2018 midterms, all the House seats and 34 Senate seats are up for re-election. Democrats need
to win 24 House seats to take control and 2 seats in the Senate.
According to Gallup’s website, http://news.gallup.com/poll/141812/avg-midterm-seat-loss-presidents-
below-approval.aspx , “Presidents who retain majority job approval from Americans at the time of midterm
elections are much less likely to see their party suffer heavy seat losses than are those with sub-50%
approval ratings. Since 1946, when presidents are above 50% approval, their party loses an average of 14
seats in the U.S. House in the midterm elections, compared with an average loss of 36 seats when
presidents are below that mark.”
The Gallup website’s comparison between “Presidential Approval Ratings and Midterm U. S. House Seat
Change for President’s Party” is in the Excel chart below.
Mobile France : 07 82 55 17 13, US Cell (561)-889-7478 3

FLORIDA WEALTH AND
INSURANCE STRATEGIES LLC
A REGISTERED INVESTMENT
ADVISER
US Midterm Election 2018 ©
by John H. Morse, Financial Advisor
Mobile France : 07 82 55 17 13, US Cell (561)-889-7478
Year President Political Party
% Approval, final
Gallup poll before
Midterm
Seat Gain/Loss
in US House for
President's party
1998 Clinton Democrat 66 5*
2002 G. W. Bush Republican 63 6
1986 Reagan Republican 63 -5
1962 Kennedy Democrat 61 -4
1954 Eisenhower Republican 61 -18
1990 G.H. W. Bush Republican 58 -8
1970 Nixon Republican 58 -12
1958 Eisenhower Republican 57 -47
1974 Ford Republican 54 -43
1978 Carter Democrat 49 -11
1994 Clinton Democrat 46 -53
1966 Johnson Democrat 44 -47
1982 Reagan Republican 42 -28
1950 Truman Democrat 39 -29
2006 G. W. Bush Republican 38 -30
1946 Truman Democrat 33 -55
Source: http://news.gallup.com/poll/141812/avg-midterm-seat-loss-
presidents-below-approval.aspx
Florida Wealth and Insurance Strategies LLC
Registered Investment Adviser
2018 US Midterm Elections All rights reserved
* This apparent gain was negated by the loss of 8 Senate seats
4

FLORIDA WEALTH AND
REGISTERED INVESTMENT
ADVISER
by John H. Morse, Investment Adviser
Representative
All material copyrighted. No reproduction is
allowed without written permission from thejmorse@pflegerfinancial.com
According to numerous news sources, President Trump has never had a popularity level above 50% and
his disapproval has held consistently above 50% since February 2017. The trend is your friend, and the
trend for the midterms looks like it’s going to be against the President’s party, Republicans.
Of the 24 seats Democrats need to win to gain control of the House of Representatives, 23 are currently
held by a Republican member of congress in a district that voted for Hillary Clinton in the 2016 Presidential
election. Sounds terrible for Republicans. Yet, the outcome may not be as disastrous for Republicans as
conventional wisdoms tells us it should be if you dig further into the numbers.
For 15 of these 23 districts, Republican Presidential candidate Mitt Romney carried the district in the 2012
Presidential election, but, the district rejected Presidential candidate Trump in 2016. An anti-Trump
Republican vote doesn’t necessarily mean Republicans will turn against others of the Republican party and
that Republicans will lose all 23 seats.
In the Senate, of the 34 seats up for election in 2018, 26 are currently held by Democrats. Of these 26
seats, 10 are in states that President Trump carried in 2016, and 5 of these 10 states, President Trump
carried by double-digits. Many political experts say that the Democrats have a terrible Senate 2018
election map, having to defend Democratic seats in predominantly Republican districts. Of the 13
contested Senate races, only two are in states that voted for Hillary Clinton in the 2016 Presidential
election, Virginia, and Nevada.
5

FLORIDA WEALTH AND
ADVISER
Representative
If Republicans don’t lose both the House and the Senate, then political gridlock should occur which is
investor friendly. If Republicans lose both the House and the Senate, the political establishment in
Washington will turn from being anti-Trump to “Impeach Trump!”
This “Impeach Trump!” 2019 agenda would most likely focus political attention on Russian interference in
the 2016 US Presidential election, the lack of measures taken by President Trump and Republicans to
ensure the security of the 2018 Midterms, and, more importantly, whether President Trump tried to obstruct
the Russian interference investigation process, an impeachable offense if President Trump were to be
found guilty of it.
While investors were celebrating the best of all worlds in 2017, record highs in the US stock markets with
record low volatility, an “Impeach Trump!” political stage was being set for 2019 if Democrats take control
of the 116th Congress.
On May 16, 2017, the New York Times reported in an article titled, Comey Memo Says Trump Asked Him
to End Flynn Investigation, that “President Trump asked the F.B.I. director, James B. Comey, to shut down
the federal investigation into Mr. Trump’s former national security adviser, Michael T. Flynn, in an Oval
Office meeting in February, according to a memo Mr. Comey wrote shortly after the meeting. “I hope you
can let this go,” the president told Mr. Comey, according to the memo.”
6

FLORIDA WEALTH AND
ADVISER
Representative
On September 21, 2017, Mark Zuckerberg had an eight-minute live YouTube Video, titled “Live discussing
Russian election interference and our next steps to protect the integrity of the democratic process.”
December 3, 2017 President Trump tweeted, “I never asked Comey to stop investigating Flynn. Just more
Fake News covering another Comey lie!”.
If Democrats gain control of Congress, the left wing of the Democratic Party will insist on investigating
President Trump. If their findings don’t clear President Trump of all possible interference in the ongoing
Russian investigation since his election, Democrats will start impeachment hearings against President
Trump. The US would have a political crisis, the US Dollar would drop in value and the US stock market
would follow the Dollar’s downward direction. International markets would follow the US market down.
How likely is this worst-case political chaos scenario for the US Dollar and the stock market? It’s unlikely
but cannot be ruled out as a possibility. President Trump’s approval rating has been increasing and his
disapproval rating decreasing since his tax bill was approved by Congress. President Trump has
“defended” American workers against US businesses planning on moving production to or producing in
Mexico (Ford, GM, Toyota, Rexnord,) and from Mexican, Chinese and South Korean imports. Many blue-
color Democrats elected President Trump. They may sit at home rather than vote for a Democrat who
could impeach their President. Also, midterm elections have a lighter turnout that Presidential elections.
Voters tend to be older and whiter, a demographic that has favored Republicans in the past. This
combination has led some political experts to give Republicans a few points favor for each seat.
7

FLORIDA WEALTH AND
ADVISER
History teaches us that an unpopular President will lose a large number of Congressional seats during
Midterms. Following conventional wisdom, the 2018 US Midterm election should be a landslide victory for
Democrats. How can conventional wisdom be wrong? It predicted Hillary Clinton’s election as the 45th
President of the United States in 2016.
The likely result of the 2018 midterms is the House going Democrat and the Senate remaining Republican,
with no important impact for investors. A Democratic takeover of the Senate, while unlikely, cannot be
ruled out after the election of Democrat Senator Doug Jones in AL against Trump supported Republican
Mike Moore in 2017. Until the last votes are counted, the markets could experience volatility they did not
see in 2017. Contact us for specific ideas on how to protect your investments if you’re concerned.
John H. Morse
February 2018
All material copyrighted. No reproduction is allowed without written permission from the author.
8

ORIDA WEALTH AND INSURANCE
STRATEGIES LLC
ADVISER
The Essential Handbook for Surviving and Thriving as an American
Citizen living in France ©
By John H. Morse
Investment Adviser Representativejmorse@pflegerfinancial.com
John H. Morse, Investment Adviser Representative has worked in the global financial markets since
graduating from Lake Forest College with a major in Economics, a minor in French and part of the
College Scholar Program. His financial market experience spans US, European and, Asian stock, bond
and, currency, futures and options markets, etc. He has worked for banks, investment firms, hedge
funds and for himself. Some of his employers have been Banque Indosuez, Banque de Gestion Privée,
Tradelink, and Merrill Lynch.
He has decades of hands-on experience in the international financial markets, is a published author in
the financial press, has been the subject of articles, and is well-known for his understanding of the
interrelationship of the global markets, and investment structures that seek to maximize tax-efficiencies.
His passion is international economics and politics and how both these subjects impact an investor.
John has many US licenses for wealth management and investment activities in the US. For more
information about Florida Wealth and Insurance Strategies LLC, or John, please contact John at:
WHO WE ARE
Florida Wealth and Insurance Strategies LLC, (FWIS), is a privately owned Registered Investment Adviser located in Palm
Beach County, Florida and is regulated by the Florida Office of Financial Regulation and FINRA.

FLORIDA WEALTH AND
ADVISER
Inflation 2018 ©
By John H. Morse
10
LEGAL DISCLAIMER
All Information in this document is for general information purposes only and should not be considered tax
guidance, wealth management advice, investing advice or a recommendation of any security, strategy,
investment product, news source, website, person, company, etc.
THERE IS NEITHER REPRESENTATION NOR WARRANTY AS TO THE ACCURACY OF, NOR
LIABILITY FOR, TAX AND INVESTMENT DECISIONS BASED UPON ANY INFORMATION IN THIS
DOCUMENT.
For Wealth Management or Investment Advice, contact John at:
0302-2018

2018 us midterm elections

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