Using socionomics to explain why Labor will win the election

mickyyyy · 26th Apr, 2019

sash said: ↑

Yassou.....it looks like it will be a close one...this election...might be like the True Believer election where Paul Keating went against the unpopular GST with Hewson and his serial inability to explain the extra tax!

The knuffies (Labor) if they would have kept their mouths shut and not developed such stupid policies for Franking Credits and Neg Gearing.
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Yasou rayyyyyy! Yeh way to many large changes that scares ppl. A small part of me goes I wish they get in a **** UP everything which will create opportunities...

geoffw · 26th Apr, 2019

Lizzie said: ↑

Okay. As we're paying tax on our smsf but not yet retired i wasnt 100% over the tax thing. To much in the brain already today to worry about what happens tomorrow. And I did know that but momentarily forgot.

But of they loud smsf-ers not getting the income from the credits, then surely most would drop down into pension, part pension bracket?
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I don't know how many people are going to be affected. But as Labor were trumpeting big $$ from the budget, I can't see that the numbers affected will be trivial.

I can see a Catch 22 with people close to the income limit on getting a pension. Let's say they are $5,000 below the limit, so they get a pension and are entitled to dividend imputation. They receive $6,000 in imputation refund - which then outs them over the pension limit.

I will be affected. That's because I sold a business to somebody who then declared himself bankrupt, owing me $400k. I have zero chance of getting a single cent. But it takes several years for the receivers to finalise his assets. In the meantime, the $400k is counted as an asset for pension/unemployment benefits, which puts me well over the limit.

2FAST4U · 28th Apr, 2019

The economy grew more slowly in the December 2018 quarter than it has for 15 years. On a per-capita basis our economy actually shrunk over the last half of 2018. Household living standards are lower now than they were not just at the last election, but the one in 2013. The economy is struggling and the major parties needs to start facing up to it.

geoffw · 29th Apr, 2019

Lizzie said: ↑

But of they loud smsf-ers not getting the income from the credits, then surely most would drop down into pension, part pension bracket?
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I've just learnt that the pensioner exemption only applies to existing pensioners. If somebody has a low super balance and becomes of pension age after the cutoff date, they will not get dividedend imputation credit.

Lizzie · 30th Apr, 2019

geoffw said: ↑

I've just learnt that the pensioner exemption only applies to existing pensioners. If somebody has a low super balance and becomes of pension age after the cutoff date, they will not get dividedend imputation credit.
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Cripes - they aren't half making it confusing.

But my thought was more that, if they lose the credits then they possibly qualify for a part pension/pension - rather than regaining the credits which would bob them back up into losing the pension.

balwoges · 1st May, 2019

balwoges said: ↑

Blind Freddy could tell you who is going to win the election without all that data, analysis etc
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I am no longer so sure about the outcome of this election! ...

Morgs · 1st May, 2019

kitdoctor said: ↑

Quick Overview
Galasiewki found that “Long term trends toward positive social mood, as indicated by lengthy bull markets in stocks, tend to coincide with continuity of political leadership – even political dynasties – whereas negative trends tend to accompany more frequent changes of leadership (2013, 2015, 2016). When stock prices churn sideways this is a sign of society being worn down, just as it is when stock prices decline. As such, when markets churn sideways, then this also tends to coincide with political leadership instability. I have previously used these concepts to explain most of the challenges and unseating of incumbent Prime Ministers that have occurred from 2010 onwards.

Although Scott Morrison replaced the sitting or incumbent Prime Minister Malcolm Turnbull, in this study Scott Morrison is still considered to be an incumbent Prime Minister heading into the 2019 election. Even though positive social is expected to improve heading towards May 2019, it is not expected that social mood in Australia as evidenced by stock prices in the ASX 200 will be significantly more positive (≥10% greater) than where it was two years before the date of the election (i.e. May 2017). On this basis Labor is tipped to win the election.

A devastating stock market correction in the ASX 200 is approaching. This will be cycle wave c (C waves being down waves. As it is likely that Labor will be in power during some or all of cycle wave c the extreme negative social mood that will occur during this period will be a factor to take into account when predicting the outcome of the 2022 election.

Background
Socionomics provides an approach to predict the outcome of major elections but only when the incumbent is running. Elliott Wave International undertook an extensive study of US presidential elections from 1824 to 2004 and established that the trend/performance in the stock market, as a measure of social mood, is the single best predictor of whether an incumbent president will win or lose a subsequent term as US president. US presidential terms run four years and provided the stock market is up substantially over the last three-year period an incumbent President is almost certain of being returned. The predictor doesn’t work if the incumbent is not running. So, even if the stock market is up and the incumbent is not running voters do not project their feelings to the incumbent’s party by voting for the party’s new candidate.

Australia’s system of government is different to that of the US. For one, the Prime Minister is not elected by the people but by their political party. Secondly, governments do not have to serve out their full term of three years and the Prime Minister can call an election essentially at any time. The latter can actually be used by the elected political party to their advantage by strategically timing an election to occur at a time when social mood is expected to be significantly higher. The Elliott wave principle allows predictions of trends in many types of financial assets including stock prices and stock indexes. In this study I’ll consider the rise/fall of the ASX 200 between election dates but also the two-year period immediately before the election date. I will do this to test whether historical election results from 1983 to 2016 can be predicted by socionomic causality.

Thirdly, a Prime Minister can be replaced whilst serving their term if they lose the support of their political party. For the purposes of this analysis, I’ll consider a Prime Minister to be an incumbent even if they replaced a serving Prime Minister. So, for example, Scott Morrison is an incumbent Prime Minister, even though he wasn’t the Prime Minister that came into office in 2016. The logic for this is voters will unconsciously credit or blame him for their mood as he has been in office in the period preceding the election.

Historical records tell us that only one Prime Minister (Robert Menzies) has been Prime Minister for five or more consecutive terms. In fact, he was Prime Minister for seven consecutive terms and nine times in total. Although I don’t have Australian stock market records going back to the later 1940s, records from the US tell us that post World War II up to 1966 was one of the strongest periods of positive social mood. Indeed, this explains Robert Menzies success and why he is viewed in such a positive light. If we look at election results the longest run of winning consecutive elections is nine for the Coalition (Liberal Party and Country Party) spanning elections from 1949 to 1969.

This tell us that the limit for a single serving Prime Minister is five consecutive election wins or terms in office. In terms of political parties, the nine consecutive wins for the Coalition is an extraordinary result reflective of the times. Post this period the longest run of consecutive election wins is five (1983, 1984, 1987, 1990 and 1993) by Labor. Given their period in government was only about 10 years, one argument is that 3-4 consecutive full or near-full terms by a political party is about the limit for Australian voters before they initiate a change of government.

Attached are four charts of the ASX200. The first is for late 1981 to 2005, the second is for 2007 to 2016, the third is for 2013-2018. A fourth chart focuses on a prediction for where intermediate wave (4) will finish and intermediate wave (5) will start. The finish point shown for intermediate wave (5) is not a forecast. It is just there to show you the direction of intermediate wave (5). The finish point for intermediate wave (5) will be bound by the pink trendline shown.

5 March 1983 Election
I can’t obtain daily stock market data for Friday 17 October 1980 but you can see that the market peaked about four weeks after the election of Malcolm Fraser (Liberal Party) who was elected on 18 October 1981. The market then fell all the way to 8 July 1982 when it recorded a low of 443.1. It fell from a high of about 746, so it fell about 41%. Two years before the 1983 election the ASX 200 was at about 647.1 points on 6 March 1981. On 4 March 1983 its low was 507.7 points, or still 22% down.

These falls were big enough for voters to project their negative mood onto Malcolm Fraser and blame him for their negative mood. The result was Bob Hawke (Australian Labor Party) was elected on 5 March 1983.

1 December 1984 Election
The ASX200’s low on 4 March 1983 was 507.7 points. On 30 November 1984 the ASX200’s high was 749 or about a 48% increase. Two years before the 1984 election takes us back to before the 1983 election, so the rise would even be larger over the two-year period. So with waxing positive social mood occurring over both a two-year period and between election dates the result was Bob Hawke (Australian Labor Party) was elected again on 1 December 1984.

11 July 1987 Election
The ASX200’s low on 3 December 1984 was 739.7 points. On 10 July 1987 the ASX 200’s high was 1915.9 or about a 159% increase. Considering now a two-year period, the ASX 200’S low on 10 July 1985 was 903.2 points. By 10 July 1987 the ASX 200 had still increased by 112%. The result was Bob Hawke (Australian Labor Party) was elected again on 11 July 1987. The ALP timed the election perfectly because on 21 September 1987 the market peaked at 2312.4 points. It then plunged in a waterfall event and recorded a low of 1149.2 points on 11 November 1987 a drop of 50%. The ASX 200 didn’t exceed that high until late January/early February 1994, trending sideways in a fourth wave (intermediate wave (4)).

24 March 1990 Election
The ASX 200’s high on 23 March 1990 was 1568.3 points. Although it was still well down from its 1987 high it was about 36% up from the November 1987 low. So, essentially over the two and three previous years it was substantially up. The result was Bob Hawke (Australian Labor Party) was elected again on 24 March 1990.

13 March 1993 Election
Paul Keating became Australia’s Prime Minister on 20 December 1991 becoming the first Prime Minister in our study period to replace a sitting Prime Minister. He is therefore considered the “incumbent” heading into the 1993 election. Between 23 March 1990 and 12 March 1993 the market had risen from a low of 1561.0 points to a high of 1671.1 points, or a rise of about 7%. On 12 March 1991 the ASX 200’s low was 1421.9. So, from this date to 12 March 1993 the ASX 200 had risen about 17%. So, by focussing in on the two-year performance of the ASX 200 prior to the election date socionomics explains Paul Keating’s win on 13 March 1993.

2 March 1996 Election
By the time the 1996 election rolled around the Australian Labour Party had won the last five elections. Between 16 March 1993 and 1 March 1996 the ASX 200 had risen from a low of 1626.4 to a high of 2318.7, or a rise of about 43%. So, socionomic causality would suggest another Paul Keating Australia Labor Party win. However, this election was won by the Coalition. Looking more closely at the ASX 200 it closed at a low of 2174.6 points two-years earlier on 1 March 1994. So, over this period it had only gained about 7%, largely trending sideways. Clearly, positive social mood was higher over the two-year period but not by much. The Liberal and National parties formed a coalition government under John Howard. So, it would seem the positive/negative mood recency effect not being strong enough, the time for a political change desire or both led to the 1996 election outcome.

3 October 1998 Election
The ASX 200’s low on 4 March 1996 was 2313.0 points and its high on 2 October 1998 was 2566.0 points. The market was up about 11%. Two years before the 1998 election the ASX 200’s low was 2285.5 points. So, the rise from then was about 12%. Again, the Liberal and National parties formed a coalition government under John Howard.

10 November 2001 Election
The ASX 200’s low on 6 October 1998 was 2490.7 points and its high on 9 November 2001 was 3288.0 points. The market was up about 32%. Two years before the 2001 election the ASX 200’s low was 2893.4 points. So, the rise from then was about 14%. Again, the Liberal and National parties formed a coalition government under John Howard.

9 October 2004 Election
The ASX 200’s low on 12 November 2001 was 3282.1 points and its high on 8 October 2004 was 3700.8 points. The market was up about 13%. Two years before the 2004 election the ASX 200’s low was 2908.8 points. So, the rise from then was about 27%. Again, the Liberal and National parties formed a coalition government under John Howard.

24 November 2007 Election
By the time of the 2007 election the Coalition under John Howard had won four consecutive elections. The stock market peaked on 1 November 2007. Positive social mood was at an extreme. The ASX 200’s low on 11 October 2004 was 3686.8 points and its high on 23 November 2007 was 6344.4 points. The market was up about 72%. Two years before the 2007 election the ASX 200’s low was 4616.6 points. So, the rise from then was about 37%. The Coalition should have won but they were defeated and Labor formed government under Kevin Rudd. In this case, it would seem the population’s desire for a political change determined the outcome of the 2007 election.

21 August 2010 Election
2007 was the start of the GFC. The ASX 200 plunged to a low of 3120.8 points on 10 March 2009 losing 54% of its value. The market recovered from this point and rose to a high on 14 April 2010 (primary wave A (circle)). The market then dropped sharply and during this period Julia Gillard deposed Kevin Rudd and became Prime Minister on 24 June 2010. The low on 20 August 2010 was 4409.5 points, so still down from the 2007 high by 35%. Two years before the 2010 election the ASX 200’s closed at 4875.2 points. So, the market was still down about 10%. If we focus in and only return to 12 months before the election date then the low in ASX 200 on 21 August 2009 was 4260.7 points. The high on 20 August 2010 was 4479.0 points, a rise of about 5%. At the chosen threshold of 10%, socionomic causality should have resulted in a Coalition win but Labor under Julia Gillard won the election. The 2010 election was the first election post the GFC low in the ASX 200 of 3120.8 points that occurred in March 2009. The rise in the ASX 200 from this point to 20 August 2010 was 44%. I think that when there are very significant lows or highs in the ASX 200 within about 12 months of an upcoming election date the rise or fall in the ASX 200 in that 12 month period is probably a better predictor of the election outcome.

7 September 2013 Election
Another leadership change saw Kevin Rudd become Prime Minister in 2013 on 27 June 2013. This was almost exactly three-years to the day he was deposed as Prime Minister and coincided almost to the day of the end of minor wave 2 (2 waves being periods during which negative social mood intensifies while the trend at one degree larger is still up). By the time of the 2013 election the market had been rising and reached a high on 6 September 2013 of 5156.9 points. The low on 23 August 2010 was 4418.2 points, so it was up by about 17%. Two years before the 2013 election the ASX 200’s low was 4072.2 points. So, the rise from this point was about 27%. Socionomic causality should have resulted in a Labor win but the Coalition under Tony Abbott won the election.

2 July 2016 Election
Yet another leadership change saw Malcolm Turnbull become Prime Minister on 14 September 2015. Notice again how this occurred when the ASX 200 had undergone a significant fall, this time in intermediate wave (2). As the election approached the market was recovering after the low of intermediate wave (2) and had reached a high of 5278.9 points on 1 July 2016. It was only slightly up from the low on 9 September 2013 of 5145.0 points, a gain of about 3%. Social mood, therefore, had only increased very slightly. Two years before the 2016 election the ASX 200’s high was 5414.9 points. So, from this point the market was down about 3%. Social mood, therefore, had only decreased very slightly. This is a set of mixed results reflecting the sideways movement of the ASX 200. If, however, the rise from the low of intermediate wave (2) is examined the rise in the ASX 200 to 1 July 2018 is about 12%. The result in the election was that the Coalition under Malcolm Turnbull won. Perhaps this suggests that when markets are trending sideways it is necessary to focus in on the period of time, say 6-12 months before the election to establish whether social mood has become more positive or negative.

Summary
From the 1983 election to the 2007 election socionomic causality explains the results of eight out of 10 elections. During this period the ASX 200 completed primary wave 3 (circle), primary wave 4 (circle) and primary wave 5 (circle). The end of primary wave 5 (circle) completed cycle wave V and supercycle wave (III). The ASX 200 was truly in a bull market phase with generally increasing positive mood. Two election results can be explained by the desire to change political parties that had been in government for four or more consecutive terms.

Post the GFC Australia has entered a period of political uncertainly with five different and six changes in Prime Ministers (Kevin Rudd was Prime Minister twice). This is actually consistent with being in a fourth wave (4 waves being periods during which negative social mood intensifies while the trend at one degree larger is still up) at such a significant wave degree (supercyle). Three sitting Prime Ministers have been unseated during strong downward movements in the ASX 200. The exception to this was Malcolm Turnbull who was unseated close to the end of intermediate wave (3). This turnover or churn in leaders can still be considered consistent with being in a significant fourth wave (supercycle wave (IV)) where at a significant wave degree social mode is negative.

2019 Election
Post the GFC picking the outcome of election using changes in the ASX 200 has become more difficult. Social mood plunged post Scott Morrison’s appointment but don’t think that this caused it to do so The ASX 200 is currently down for 2018 and is back at late 2016 levels. It has further to fall before completing intermediate wave (4) and then starting intermediate wave (5). The assumed date for the next election is 11 or 18 May 2019. Back in May 2017 the ASX 200 low on 18 May 2017 was 5967.6 points. Assuming Scott Morrison needs at least a 10% increase in positive social mood from where our sociometer (ASX 200) was in May 2017 that would require the ASX 200 to reach about 6560 which would be a new post GFC high. The high on 30 August 2018 was 6373.5. The ASX 200 has been falling since then and has further to fall yet before completing intermediate wave (4) and then starting intermediate wave (5). In the last chart you can see the area between the two pink horizontal lines where I forecast intermediate wave (4) will finish. You can see just how far this is from 6560 points. I think Scott Morrison will run out of time and the ASX 200 will fall well short of reaching this target which may forecast a Labor win under Bill Shorten. I expect the ASX 200 to still be in the low 5000s by May 2019. Even if the rise in the ASX 200 from its expected low in intermediate wave (4) is assessed, I still don’t think this would show ≥5% increase.

Strong positive, upward trending social mood will not emerge until supercycle wave (IV) finishes and supercyle wave (V) commences. Prior to this a devastating c (down) wave at cycle degree must occur. This will complete the a-b-c correction that started in 2007 that makes up supercyle wave (IV). Let’s assume Labor wins in 2019. Predicting when intermediate wave (5) and primary wave C (circle) finish and hence when cycle wave c starts is difficult. What I do think is that intermediate wave (5) which is still to occur and whose finish will see the start of cycle wave c will be shorter in duration than intermediate wave (3) which was shorter than intermediate wave (1). This is a result of the Elliott wave pattern that intermediate waves (1) – (5) is conforming to being constrained between converging trendlines. Intermediate wave (5) should commence in early 2019 and extend into late 2019, possibly into 2020. On this basis, assuming Labor win the 2019 election then they will be in government when cycle wave c starts. This will be devastating for their chances of a second term in government. My prediction is that Labor will be a one term government.

This will be an interesting study to revisit at some point in the future.

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This is a fantastic read. Thanks for putting it together. Does your outlook change based on the charts given the performance of the ASX in the last 6 months?

kitdoctor · 19th May, 2019

kitdoctor said: ↑

The share market rally since the end of last year has now thrown a spanner in the wheel and justifies a reassessment of the upcoming election's outcome. I believe there is more upside to the rally ahead. The S&P ASX 200 will thus be higher on 17 May 2019 than what it was 12 months, 24 months and 36 months ago. Thus swinging voters will be more likely to vote for the Liberal National Coalition. Based upon this the Liberal National Coalition will win the election. Can't wait to election night!
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@Morgs this is post #10. Move over Anthony Green!

Redwing · 19th May, 2019

kitdoctor said: ↑

The share market rally since the end of last year has now thrown a spanner in the wheel and justifies a reassessment of the upcoming election's outcome. I believe there is more upside to the rally ahead. The S&P ASX 200 will thus be higher on 17 May 2019 than what it was 12 months, 24 months and 36 months ago. Thus swinging voters will be more likely to vote for the Liberal National Coalition. Based upon this the Liberal National Coalition will win the election. Can't wait to election night!
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kitdoctor, 24th Apr, 2019

MTR · 19th May, 2019

2FAST4U said: ↑

The economy grew more slowly in the December 2018 quarter than it has for 15 years. On a per-capita basis our economy actually shrunk over the last half of 2018. Household living standards are lower now than they were not just at the last election, but the one in 2013. The economy is struggling and the major parties needs to start facing up to it.
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....and a reflection of AUD slipping to 68.4

kitdoctor · 19th May, 2019

Stock market indexes are the benchmark sociometers of the current collective social mood that is present in a given society. The stock market is just one area where individuals express their mood (through buying and selling stocks). The benefits of an index are many. For example, 1) lots of data, 2) "clean" data, 3) most immediately reported data, 4) lots of historic data, 5) briefest lag between mood and actions that express this, 6) broad representation of the society under study etc.

Many/most economic measures are not useful in understanding current collective social mood because, for example, the data is sparse, lagging, is confined to selective reporting periods etc.

Exchange rates/currencies (meaning their price movements) adhere to the Elliott wave principle but are not useful as a sociometer of collective social mood.

kierank · 19th May, 2019

MTR said: ↑

....and a reflection of AUD slipping to 68.4
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I understand that a slightly lower $A is good for the economy

Scott No Mates · 19th May, 2019

balwoges said: ↑

I am no longer so sure about the outcome of this election! ...
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Bellwether @balwoges?

Called it how long ago??

wombat777 · 19th May, 2019

kierank said: ↑

I understand that a slightly lower $A is good for the economy
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Low AUD is great for aussie gold stocks and particularly the ones with low production costs.

balwoges · 19th May, 2019

Scott No Mates said: ↑

Bellwether @balwoges?

Called it how long ago??
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About 10 days ago as his list of 'I'm going to' grew longer ...
Australians dont live in fairy land and recognise when they are being being sold a pup.

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Using socionomics to explain why Labor will win the election

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Using socionomics to explain why Labor will win the election

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