Having delayed the avalanche of macro data just ahead of the Party Congress (with no explanation), and having now ‘crowned’ Xi to his third term, it appears China is more than willing to share what data it decides the rest of the world needs to know now.

With just two minutes notice, China dumped everything from import/export data to GDP to unemployment at 2130ET… and it will likely surprise no one at all that the data was significantly better than expected (well you can’t start a third term on a down note can you?).

Chinese GDP grew 3.9% in Q3 – significantly better than the +3.3% expected – and far better than the +0.4% recorded in Q2.

Chinese Industrial Production also beat expectations in September (+6.3% YoY vs +4.8% exp)

However, Chinese Retail Sales disappointed in September (+2.5% YoY vs +3.0% YoY exp), as did Fixed Asset Investment (+5.9% YoU vs +6.0% exp) as Property Investment continued to plunge (-8.0% YoY).

Finally, the Surveyed Jobless Rate rose to 54.5% in September (youth unemployment ticked lower in the month, which is interesting given the increase in broader unemployment. Perhaps there are seasonal issues at play such as the new academic year).

And all of this in the face of major rolling lockdowns as Zero-COVID policies remain in place.

Additionally, in dollar terms, China imports and exports were better than expected:

• China Sept. Exports Rise 5.7% Y/Y in Dollar Terms; Est. 4.0%

• China Sept. Imports Rise 0.3% Y/Y in Dollar Terms; Est. 0.0%

Meanwhile real estate blues persist. New-home prices in 70 cities, excluding state-subsidized housing, dropped 0.28% last month from August as September residential property sales tumbled 15.3% YoY.

Offshore Yuan is falling on the news, despite yet another strong RMB Fix…

The data (and the Yuan slide) comes after significant changes at the top in China, which were not necessarily good for those hoping for a market-friendly government that’s keen on opening to the world.

Authored by Zachary Stieber via The Epoch Times,

Any state that requires COVID-19 vaccination to attend school will face a lawsuit, lawyers said this week.

The Informed Consent Action Network (ICAN), run by TV host Del Bigtree, has pledged to finance up to 50 lawsuits, Aaron Siri, who frequently represents the group, said.

“ICAN has told us it will financially support a challenge against any state. So, if all 50 states require it to attend school, ICAN will support challenging the mandate in every single one of those states,” Siri told The Epoch Times.

The process would require finding parents or others who want to challenge any mandate that arises, but the funding and legal representation for such suits are in place.

The pledge comes after the Centers for Disease Control and Prevention’s (CDC) advisory panel on Oct. 20 recommended adding COVID-19 vaccines to the child and adolescent immunization schedules.

The CDC still has to accept the recommendation, but is expected to do so given its stance on vaccines throughout the pandemic. The agency did not respond to a request for comment.

Some states require most vaccines on the immunization schedules for school and daycare attendance, including Virginia, though none require annual influenza vaccines for school attendance, according to Immunize.org.

Some governors and gubernatorial hopefuls have vowed to block COVID-19 vaccine mandates for children, including the governors of Florida, Colorado, Tennessee, and Virginia.

Other states are expected to mandate the vaccines, including California.

Authorities there were preparing to require the vaccines for schoolchildren but have delayed the statewide mandate until at least July 2023. Some local governments started to mandate the shots, but at least one mandate was blocked due to a legal challenge—from Siri.

The updated CDC schedules won’t take effect until 2023, and Siri expects any mandates would not take effect until the start of the 2023–2024 school year.

But the mandates would be announced well before they take effect, to give parents time to vaccinate their children.

Siri declined to speak about the basis for any challenges.

“I don’t discuss litigation strategy for potential matters,” he said.

The basis for the San Diego case was separation of powers. Plaintiffs said the mandate, which lacked religious exemptions, violated state law. Only the state legislature can impose such mandates, San Diego Superior Court Judge John Meyer ruled.

“In a long-awaited victory by those seeking to retain the right to informed consent and medical decision-making free from coercion, the Court found that it was ‘compelled’ to invalidate the mandate as the school district had no authority to implement or enforce such a requirement,” Siri wrote on his blog at the time. “The basis for this decision, that school boards in California do not have the authority to require a COVID-19 vaccine, would apply to all school boards across California that are seeking to mandate a COVID-19 vaccine.”

Investors may have been ok with banks reporting a jump in bad loan provisions, but when it comes to credit card companies, they are in full-blown “Death Con 3” mode.

On Friday, American Express – which traditionally targets the upper classes of US society – tumbled the most in four months after the credit card processing giant set aside much more for bad loans than analysts expected, suggesting the fastest ever surge in interest rates is adversely impacting customers’ ability to pay their bills.

Provisions for souring loans were $778 million in the quarter, worse than the $573 million analysts in a Bloomberg survey were expecting, and the most since Q2 2022 when the US economy was still in lockdown due to covid. The move should probably not have come as a surprise after AmEx warned investors for months that charge-offs would rise as consumers begin borrowing more in the wake of the pandemic. The net write-off rate jumped to 1.1% from 0.8% a year ago.

“They’re just reverting to somewhat higher levels, exactly as we would have expected,” Chief Financial Officer Jeff Campbell said in an interview.

The unexpected surge in bad loans came even as the company reported another quarter of year-over-year spending growth and strong credit performance, not to mention an impressive 24% increase in year-over-year revenue growth: the net write-off rate on card-member loans was unchanged from the second quarter, and the rate of card-member loan payments 30-plus-days past due was up to 0.9% from 0.7%. They remain better than many other card-lenders’ metrics, even at big banks that also tend toward an affluent customer base.

There was more good news: while additional provisions crimped profits, earnings per share still topped estimates. AmEx said it added a record number of Platinum customers in the third quarter, pushing revenue up 24% to an all-time high and prompting executives to boost their profit forecast. The credit-card giant said it now expects per-share profit will be above the $9.25 to $9.65 range it previously expected.

AmEx also said spending on travel – which generates more lucrative transactions – jumped 57% during the third quarter. But overall volume on the firm’s network increased 19% to $394.4 billion, missing the $401.7 billion average estimate.

According to the company, Millennial and Gen Z-aged consumers were more than 60% of new proprietary card acquisitions in the quarter. It said that without giving them the option of using revolving debt, that group may have started out with a competitor’s card before later turning to a higher-fee, higher-reward Amex charge card. And these are good customers: Millennial and Gen-Z U.S. consumer spending grew nearly 40% year-over-year in the third quarter, almost twice the rate of Gen X and more than triple the rate of baby boomers.

For now, AmEx and its rivals are benefiting from historically high prices. That’s because the firm takes a slice of the purchase price each time a consumer uses one of its cards at checkout. But investors are concerned that the Federal Reserve’s efforts to raise interest rates and tamp down inflation may spark a recession and lead to higher card losses even as overall card volumes crater.

So far though, as the WSJ notes, credit is the dog that has not yet barked, especially for higher-income consumers. But when even the premium spender-targeting AmEx warns that the dam is starting to crack, not even the NBER will be able to avoid the reality of US recession.

Authored by Matt Taibbi via TK News,

About a month ago, on September 26th, explosions rocked the undersea “Nord Stream” natural gas pipelines connecting Russia to Germany, sending boiling methane rushing to the surface in masses big enough to be seen from space.

We’ve all seen the video of Joe Biden promising last February, “There will no longer be a Nord Stream 2” and “We will bring an end to it.”

The history of America’s bellicose threats with regard to Nord Stream were far more expansive than just a clip or two.

Stopping Nord Stream was a central goal of American foreign policy for nearly a decade, with politicians from both parties pounding the table to stop it, and all that history was disappeared the moment the blasts took place.

We can’t say yet who blew up the pipelines.

Matt Orfalea’s video captures three troubling things we already know about the Nord Stream blasts:

TK News subscribers can read more here…

Authored by Daniel Lacalle via The Mises Institute,

Governments and central banks have become the lender of first resort instead of the last resort, and this is immensely dangerous. Global debt soars, inflation creeps in, and many of the so-called supply chain disruptions are the result of zombification after years of subsidizing low productivity and penalizing high productivity with increased taxes.

There are many reasons why nations should not “spend now and deal with the consequences later.”

• First, the spending is made by politicians that will not be held accountable for the malinvestment and unwise outlay decisions. Furthermore, the cost will always be paid by taxpayers and businesses. Think about the irony of promoting an “Inflation Reduction Act” that means spending more and monetizing more debt. But it is even more ironic to launch an “inflation reduction act” after creating massive inflation with multitrillion-dollar stimulus plans and central bank balance sheet expansion. Government presents itself as the solution to the problems it creates and passes the bill twice to taxpayers.

• Second, governments are extremely bad at picking winners but even worse at picking losers. Policy nudging, subsidies, and grants are often aimed at obsolete or politically favored sectors which in turn leads to the rise in zombie companies. Government spending to “save” businesses tends to support those who are already highly indebted and with relevant challenges to pay their debts. This is bad, but picking losers is even worse. The world would not have a food and energy crisis because of a disruption from countries that mean less than 10 percent of supply if regulation and laws would not have placed enormous burdens on investment in farming, energy, and trade in general.

• Third, the negative impact outweighs the positive. I remember a conversation with Judy Shelton in which she mentioned in 2021 how the US economy would be stronger if the stimulus plan had not been implemented. She was right. The enormous spending plans have created an unsurmountable structural deficit, as many programs are consolidated and increased, and the negative impact on growth, inflation, and real wages only a year and a half later are undeniable.

It is undeniable that economies come out of every crisis with higher debt, lower growth, weaker real wage growth and poorer job creation. Yet, somehow, people think that the next time will be different. They said the same about 2020. And it was different. You had your cheque and paid for it multiple times over with higher inflation and more taxes.

Critics may say that this is easy to say in a recovery, but how do we explain to citizens that governments should do nothing? Herein lies another of the tricks from interventionists. We have grown accustomed to the idea that if the government does no spend massively in a crisis, then it is doing “nothing.” Enormous demand-side policies are essential even when the problem has nothing to do with demand. Even worse, a trillion-dollar plan must be followed by a two trillion one or it will seem too small, no matter what the problem of the outcome is.

Policies should not be judged by their intentions, as Milton Friedman said, but by their results. And when the results are so poor as the ones we have witnessed for almost two decades, we must warn about this constant decision to spend more.

Why is it so dangerous to use central banks and governments as the lender and solution of first resort? Because their main resource to implement those policies is you. Your wealth. Expropriation of wealth is the other side of the “social policy” coin. Taxes and inflation, or both. Some readers might think it is a clever idea to expropriate the wealth of the rich to support the economy, but by now they should know that it is a lie. When you give extraordinary powers to a government based on the idea that stealing from the rich is valid, you are giving power to politicians to steal from you as well. And they do. There is no single example of massive government spending plans financed with higher taxes on the rich that did not end meaning higher taxes for all or more inflation, the tax on the poor.

When you read “spend now, deal with the consequences later” what you are reading is give me your wallet because you will deal with the credit card balance later.

The next time you read the dreaded sentence that titles this article, remember: there is nothing that the government gives “for free” that you do not pay one way or the other.

By Eric Peters, CIO of One River Asset Management

“Investors are beginning to come to terms with the fact that many things they believed to be true are myths,” said Sasquatch, his already enormous market footprint having deepened markedly post-pandemic. “They assumed the 60/40 portfolio was robust, and sometimes it is, but other times it is not,” he said, winding our way through the streets of London, crooked, cracked cobblestones in his footsteps. “They assumed inflation would remain low forever, expectations too. That TIPS hedge inflation. Tech outperforms. It turns out these things are not always true.”

“Real estate, it turns out, is not always a hedge for inflation. Nor is gold. And before this cycle is over, investors will discover things they believed to be true about infrastructure, private equity, and a variety of illiquid investments are also just assumptions,” continued Sasquatch, CEO of one of the world’s largest investment firms, his returns surging. “The portfolio adjustments required are dramatic, and clients need help solving such problems, so it’s unsurprising that our solutions business, like yours, is seeing strong inflows.”  

“Well it’s obvious isn’t it,” he asked, answering rhetorically, dismissive of my question, almost irritated, which made me laugh. We’d spent a couple hours together and had finally gotten onto markets. “Well, isn’t it?” he repeated, louder. I’d asked what he thinks is the most important thing to focus on. He’s one of the greatest CIOs of our generation, and keeps his macro trades liquid, his risk management tight. “There is too much debt in the world, so they must inflate it away, which they can do. They will. That’s the only thing you need to know.”  

“Well, we have gotten the inflation we last discussed,” said the Viking, leading tactical asset allocation for one of the mighty Scandinavian pools of assets. I had last visited pre-pandemic, when we had agreed that whenever the next recession arrived, it would spark an aggressive fiscal stimulus, and catapult us into a new inflationary regime. “But the firms that believed their commercial real estate investments would insulate them from this, have not done too well with that I think,” he continued, a beautiful turn of Swedish understatement.

“If you look at listed commercial real estate companies here on our stock exchange – which is overall down 35% – you find that these names are down 60-80%,” said the same Viking. “Still, you must also consider that inflation has risen by 10% which is a real loss, and the kronor is down 20% against the dollar too.” Stockholm itself was as magnificent as ever, cold but clear, leaves turning. But invisible, its highly leveraged financial architecture sagged, groaned, like everywhere. “And we have not yet seen the private markets marked lower really.”

“We are 200% funded,” said the chief risk officer for one of the largest private pension plans. “What does that mean?” I asked. “We have twice as many assets as liabilities,” he said, patiently. “Ah, apologies. I am just used to US pensions which in some cases are just 40% funded. I haven’t ever heard of 200%. How are you so well-funded?” I asked. “Good investing, I think, perhaps some good luck too,” he said, smiling. “And so you are well-positioned for the coming distressed selling, by your poorly funded and leveraged peers?” I asked. He smiled.

“How do we invest for this new environment?” asked a CIO in Stockholm. “I don’t yet know what you currently own, so that’s hard to answer,” I said. “But in general, I think we should all re-underwrite what has worked for the past couple decades of low inflation, low interest rates, financialization, mean-reversion, leverage, globalization, and peace. Ask how such strategies will perform as these dynamics reverse. Ask how your strategies will fare in a long period of financial repression, where central banks inflate away government debt.”

“Re-underwriting is hard, because we are all anchored to what has been, and the future will look very different,” I continued. “To capitalize on new opportunities and insulate yourself from risks, you’ll need to be quite open-minded. My all-in commitment to digital assets reflects this embrace of change. And systematic trend-following strategies are a highly effective way to capitalize on quantum change in traditional markets. That change has only just started. We combine trend-following with volatility trading. These were unloved strategies for the past decade. I think strategies that struggled then will now work well for years. And vice versa.”

The way New York counts ballots was thrown into chaos on Friday after a judge ruled that several of the state’s recent voting reforms are unconstitutional.

State Supreme Court Justice Dianne Freestone sided with Republicans in a lawsuit brought in late September, which argued against a law which allows people to vote absentee if they fear contracting a disease like Covid-19. Freestone also ruled that the new process for “canvassing,” or ensuring that absentee ballots are inspected and prepared for counting – violates candidates’ rights in several ways, including by making it more difficult to raise a legal challenge when there are questions over a ballot’s validity.

“The framers of the Constitution did not intend to grant (and did not grant) the Legislature carte blanche to enact legislation over absentee voting,” she wrote.

That said, Friday’s 28-page ruling fell just short of invalidating hundreds of thousands of absentee ballots already issued to New York voters, which the Republicans asked the judge to do.

For now, the ruling means local election officials will have to soon pause the inspection of absentee ballots, which were being processed on a rolling basis prior to Election Day for the first time this year. The Democrat-led state Legislature approved the new process in a 2021 law meant to expedite the state’s notoriously slow procedures for counting mail-in ballots.

It also means the more than 427,000 New York voters — including more than 187,000 in New York City — who have already requested and received their absentee ballots will still be able to cast their ballots for the Nov. 8 election, regardless of whether they elected to receive mail-in ballots due to fears of spreading illness. Currently, 108,000 New Yorkers have completed and returned their absentee ballots. -Gothamist

Democratic official immediately responded with a notice that they would appeal the decision.

According to Freestone, the Democrat-controlled Legislature “appears poised to continue the expanded absentee voting provisions of New York State Election Law … in an Orwellian perpetual state of health emergency and cloaked in the veneer of ‘voter enfranchisement.'”

The ruling was a blow to the State Board of Elections, with Freestone arguing that there are “uncounted reasons for this Court to second-guess the wisdom of the Legislature.”

The decision could hurt Gov. Kathy Huchul (D) who has been losing ground to GOP challenger Lee Zeldin in recent polls.

“The (state) constitution has been on our side and we will continue to fight to uphold the will of the voters and to ensure honest elections in New York,” said plaintiff Nick Langworthy, the state GOP Chairman.

“Just like their illegal Hochulmander and their non-citizen voting scheme, Democrats’ attempt to rig our elections was slapped down by the courts,” he continued, adding “When I took over as chairman of the New York GOP, I promised to usher in a new, fighting era that took on Democrats’ brazen lawlessness and this victory is another win for election integrity.”

Another plaintiff, Conservative Party Chairman Gerald Kassar, said, “This decision helps uphold the integrity of the electoral process, a major victory for New York voters and the rule of law.”

“Absentee-ballot voters have had the right to amend their votes on Election Day for decades, and cynical attempts by Gov. Hochul and the Democrat Party to strip them of those rights were wrong,” he added.

Last year, state voters rejected a proposed constitutional amendment that would have allowed no-excuse absentee voting in New York.

But lawmakers subsequently enacted a measure that allowed people to vote by mail if they feared catching COVID-19 by voting in person. That expansion of absentee voting is set to expire at the end of this year. -NY Post

On Friday, a BOE spokesperson said “Our office is still reviewing the ruling and its impact on the upcoming election.”

In a time of daily market chaos, former SAC PM and founder of DataTrek Research Nick Colas shares a review of his daily market-watching routine. The 3 key events are the open, the trading session itself, and the close. Each has its own dynamics, and collectively they are a conversation between markets and traders/investors. As Colas notes, “even the longest-term “buy and holder” can benefit from a bit of daily market awareness. The year, after all, is 220 trading days strung together. Even if most of them mean nothing to long-run returns, there is always a reason the critical days turn out the way they do.”

* * *

“Nicky … Let’s hold hands and watch the open.”

That odd invitation came from a veteran salesperson just after I started my first sell-side analyst job at the old First Boston in the fall of 1991. He was dead serious. I was, well, confused. Not wanting to offend one of the firm’s top producers, I acceded. Thankfully, the rest of his row on the trading desk joined hands as well. We all stood in line, watching the screens as US markets opened at 9:30am.

As each symbol came to life, the group cheered or groaned. I was still confused.

“What’s so important about the open?” I asked. The salesperson, seemingly happy to teach a rookie, responded “It’s the first tick of the day … We are watching our clients’ biggest positions. Once everything opens, we know if they will be in a good mood when we call them to pitch new ideas.”

I thought this was overly simplistic until, many years later, I started managing a trading book myself. Then I learned that, in fact, not only the open matters a lot. Every trader knows that three things happen every day: stocks open, they trade, and they close. The dynamics of each slice of the day are quite different, and there is money/knowledge to be made/gained in each of them.

Basically, I think of the trading day as a conversation between the market and investors/traders. There is a beginning, middle, and end of that interaction. It can be a happy interaction, or confusing, or just downright nasty. And every day brings a new conversation based on new information and refreshed market expectations.

Here are some of the key datapoints I look at every day going into the open, then through the session, and finally at the close:

8:00 am – 9:30 am

• The first thing I look at when I wake up is US equity index futures. I also glance at them before I go to bed, and the difference between the two can be instructive in terms of market sentiment when the cash market finally opens.

• Then I move on to overseas stock and non-equity markets: is anything really breaking down/up? The latter category includes currencies, gold, oil, and European sovereign bonds (mostly the German bund). I don’t really bother to track virtual currency prices, but plenty of smart traders I know do monitor them, especially on Sundays before equity index futures open at 6pm.

• If there is any pre-open economic news, I look to see how markets respond as those datapoints are released.

• Watching to see how US Big Tech is trading pre-open is also helpful, since these names make up almost a quarter of the S&P 500. For example, this morning I was very curious to see how Tesla was trading after its earnings call. Specifically, I wanted to see if it would break or hold its 1-year low of $205/share.

What I am looking for is consistency and, separately, any new 52-week highs and lows. For example, if US Treasury yields are making new highs and stock futures are up, that’s an internal inconsistency that makes me suspicious of any pop at the open. The same idea goes for non-US currencies just now given how relentlessly weak they have been all year.

9:30am – 4:00 pm

• Lately I have been watching how the VIX trades intraday. If stocks are selling off and the VIX gets to 32 – 33, I start looking for a reversal higher. If we are not at a +32 VIX, I tend to not trust any intraday rallies.

• I also look at the 5-day intraday S&P 500 chart throughout the session. This is especially important just now, as many traders are looking for a bounce in US equities. They will want to see a consistent uptrend to hold their courage.

• I also keep tabs on 2- and 10-year Treasuries and Fed Funds Futures via the CME FedWatch tool throughout the day, as well as intraday US equity sector performance.

• This may just be an old trader’s superstition, but I tend to discount any large moves between 11:00 am and 2:00 pm unless there is a clear catalyst that explains them.

• The last 40 minutes of the day matter a lot. This is when human and algorithmic traders start evaluating how much they have left of the day’s buy/sell orders and if/how to get them done by the close.

4:00pm and after

• My primary focus is on whether the close is higher or lower than the open as an indicator of how the day really went. If we opened up 2 percent but close only up 0.5 pct, that’s a bad day from a market psychology perspective. If we opened down 2 percent and ended the day up 0.1 pct, that is a very good day. We could use some of those days right now, but they have been thin on the ground.

• There is an old saying that “retail investors open the market, but institutions close it”. The data we look at suggests that is true, and it provides some context for the previous point. It is more important to overall market direction that institutions be net buyers at the close rather than retail bid up stocks at the open.

• I finish the day by looking at how any important stocks with market-moving news traded after hours.

If you are a buy and hold investor, you might rightly ask “why do I need to pay attention to daily moves?”. The short answer is that you don’t. The longer reply is that, in my view, it makes you a better steward of your and (if applicable) your clients’ capital. Over the years I have found that the ability to weather volatility is directly correlated to knowledge about the fundamental drivers of asset prices. A calendar year is 220 consecutive trading days. Even if daily volatility makes most of them irrelevant to annual returns it is still helpful to keep tabs on the issues moving asset prices.

I will close out with a somewhat related story, this time from my B-school days at the University of Chicago. On the very first day of Corporate Finance/Investments class, the professor announced a pop quiz by unveiling a chalkboard with 10 questions. Each was simple: where did the S&P, 10-year Treasury, yen/$, and other major markets close the prior day. When he collected all our answer sheets and looked at them, he let out a long sigh. They were mostly blank.

Then he said “Every answer to these questions is in the Wall Street Journal almost all of you have folded up on your desks. If you can’t be bothered to know them, I’m not sure it’s worth my time to teach you anything.” His point, in case it needs clarification, is that keeping close tabs on asset price movements across a wide range of markets is the prerequisite for being able to contextualize future returns.

I have never forgotten that lesson and, combined with all the years I have spent staring at screens, they all deeply inform everything we write for you each day. Both devils and angels are in the details.

While inflation and the economy are polling as the top concerns among American voters, House Speaker Nancy Pelosi says Democrats need to “change the subject.”

While appearing on CBS’ “Face the Nation” on Sunday, Pelosi said: “When I hear people talk about inflation… we have to change that subject. Inflation is a global phenomenon,” adding “Face the Nation” with Margaret Brennan. “The EU, the European Union, the UK, the British, have higher inflation rate than we do here… The fight is not about inflation. It’s about the cost of living.“

So – should we also ignore murders, rapes and home invasions because other countries have it worse?

NANCY PELOSI: “When I hear people talk about inflation…we have to change that subject!” pic.twitter.com/Ck1DaPVrCc

— RNC Research (@RNCResearch) October 23, 2022

“If you look at what we [Democrats] have done, to bring down the cost of prescription drugs, to bring down the cost of- of energy and the rest in our legislation, you will see that that has been opposed every step of the way by the Republicans, and they have no plan for lowering the cost of living or helping with inflation,” Pelosi continued.

Tell us more about how Democrats have brought down the cost of energy, Nancy.

Though it was once widely projected as a Democratic Party “hold,” the Arizona Senate seat occupied by Mark Kelly is now in serious jeopardy, as the latest polls show him in a virtual tie with GOP challenger Blake Masters.  

In early September, Kelly led the RealClearPolitics poll average by 6 points. Now, despite being outspent by Democrats– and abandoned by Mitch McConnell’s super PAC — Masters is within just 2.5 points. 

However, given pollsters’ well-established tendency to undercount GOP support, the race is likely even tighter than that. In the 2020 election, the RealClearPolitics average ended up overstating Biden’s support in Arizona by 3.7%.

Applying that adjustment puts Masters ahead by aggregate 1.2%. Note, however, that 2020 Arizona Senate polls were even farther off the mark, overstating Democratic strength by 6.5%. 

The polling trend has some Democratic political operatives sounding anonymous alarms:  

“We believe this is a race that’s within a point in either direction, and there’s still a good chance that we would lose,” a person close to the Kelly campaign tells Politico. “And it’s important people understand that.”

As observed in other tight Senate races — like Nevada’s, where another Democratic-held seat is in great danger of flipping — previously undecided Arizona voters are swinging toward the Republican down the stretch. That’s especially true of a particular demographic, reports Politico: 

One of the biggest shifts seen since this summer is older voters moving to Masters, said Chuck Coughlin, CEO of HighGround. Just after the Aug. 2 primary — a bitter Republican contest — voters 65 and older “were all over the map,” Coughlin said. In the firm’s most recent poll, many of those voters were committed to the GOP, which is consistent with historic precedent.

Over the same period, former NASA astronaut Kelly’s lead among women has been slashed in half, from 20 to 10 points. Men favor Masters by 10. 

“Are you ready for a United States Senator who will be fearless and bold and make Arizona great again, and send Mark Kelly back into outer space in search of his brain? Then you got to vote for Blake Masters!” @KariLake 🔥 pic.twitter.com/Qd3BN7yh4Y

— Blake Masters for U.S. Senate Press (@MastersPress) October 23, 2022

The strength of feisty Republican gubernatorial candidate Kari Lake may also provide a tailwind for Masters. “Between Lake’s rise in popularity and the woeful economic news lately, Blake is seeing his best chance to win just as voting is under way,” Arizona GOP strategist Barrett Marson tells The Wall Street Journal. 

Surging prices are weighing on Democratic candidates everywhere, and perhaps especially so in Arizona: Phoenix had the country’s highest inflation rate in September.  

The Masters comeback is happening despite his being outspent by a two-to-one factor since the start of October. As his chances of victory become more apparent, though, Republican spending is now rising sharply. Over the last week, the GOP bought $3.2 million in ads compared to $2.7 million for the Democrats. 

Back when his prospects looked dim, Senate Majority Leader Mitch McConnell’s Senate Leadership Fund super PAC cancelled $18 million of planned ads in Arizona. However, PACs associated with Donald Trump and with billionaire Peter Thiel have picked up some of the slack. Masters, a venture capitalist, was previously chief operating officer of Thiel’s investment firm and president of the Thiel Foundation.   

The difference in the candidates’ own campaign fundraising is jarring: Incumbent Kelly has a seven-fold lead, having raised more than $73 million, compared to under $10 million raised by Masters. 

Despite that, Democrats find themselves with a vulnerable new front in their defense of their 50-seat-plus-the-vice-president hold on the Senate. As Democratic consultant Roy Herrera tells Politico, “There’s a very narrow path to victory for Democrats in Arizona.” It’s getting narrower by the day.