Talarico Vanishes, Inflation Surges
No doubt, one of the biggest political stories of the week was the reemergence of James Talarico, the Democratic candidate for an open U.S. Senate seat in Texas, after an absence from the campaign trail due to illness.
For a candidate to be absent for more than a week in the midst of one of the most important, most expensive and hardest-fought Senate elections in recent history is highly unusual. The fact that Talarico’s campaign initially offered little explanation deepened the mystery.
The campaign later explained that Talarico had the flu. A flu might sideline you for three or four days, but a more serious case can last longer. Still, there’s no reason why a candidate couldn’t hold a Zoom call or other media availability once he was well enough, just to show he was still in the game. Talarico remained out of public view for nine days.
There are many examples of politicians suffering ill health or physical setbacks and continuing to campaign. Teddy Roosevelt was once shot at point-blank range but continued on his itinerary and gave a speech (with a bloody shirt). Only then did he go to the hospital to have the bullet wound treated.
John F. Kennedy campaigned with intense back pain that was being treated with corticosteroids. John Fetterman continued his Senate campaign in 2022 after suffering a severe stroke.
Home security camera footage of Talarico at his home in Austin was eventually released by his campaign, seeming to confirm that he was in Austin and not at some distant medical facility. Still, the campaign could have addressed the issue sooner, before the rumor mill took over.
The Republican Senate candidate, Ken Paxton, remains close in polling. A recent University of Texas poll shows Talarico ahead by three points, 50% to 47%, within the margin of error. The race remains highly competitive ahead of the November 3 election.
Trump’s Battleground Blitz
In other developments, Trump is now on the campaign trail practically full-time.
He went to Ohio, where there are two close races — one for the Senate and one for governor. While there, he announced that Cleveland had been selected for a major new U.S. submarine component repair center that would generate investment and thousands of high-paying jobs.
Earlier, Trump was in Iowa, site of another close Senate race, where he announced a new $15 billion steel complex, described as the largest steel plant ever built in the United States. The project is expected to create over 1,750 permanent, high-paying jobs in the plant and up to 6,000 construction jobs to build it.
Trump’s next stop was Wasilla, Alaska. I’ve been there; it’s about halfway between Anchorage and Mount McKinley. The former mayor was Sarah Palin. Alaska is the site of another close Senate contest.
Trump announced that Taiwan has agreed to buy 30% of the natural gas coming from a new pipeline project in Alaska. That kind of advance purchase commitment is critical in securing the financing needed to build the project itself.
Inflation Haunts Republicans
The final major political story this week is the inflation report issued on October 14. It shows headline inflation running at 3.7% on a year-over-year basis for September. That’s up from 3.4% in August.
This will be the last CPI report issued before the election and will be the one Democrats use to pound Republicans from now to Election Day. It plays to the affordability issue, which definitely favors Democrats.
Of course, Joe Biden presided over inflation of 9.1% in June 2022, following his administration’s massive spending programs. But that’s a distant memory for most voters. They elected Trump in 2024 to reduce inflation, and it’s higher now than it was when Trump was sworn in.
The impact of inflation is not limited to the grocery store and gas pump. It’s putting upward pressure on interest rates as bond investors try to keep ahead of inflation and preserve their real returns.
This pressure is evident in the yield to maturity on the 10-year U.S. Treasury note, which has recently traded above 5%. In turn, the 10-year note is a benchmark for mortgages, corporate debt, construction loans and other intermediate-term financial instruments. Headline inflation is spilling over into the overall cost of financing investments.
Unfortunately for Republicans, inflation may not come down soon and could even go higher. A major cause of the recent increase is higher prices for oil, gasoline and diesel, driven in part by the continuing war in Iran. The war in Ukraine is also contributing to uncertainty in global food markets and grain exports.
Expect inflation to dominate headlines through Election Day. It’s the best card the Democrats have to play.
All the best,
Jim Rickards
Editor, Strategic Intelligence