Last week I predicted:
the midterm wipeout is coming.
I predicted a ‘moderate red wave’ here in 2022. I predict a blue wave for 2026 that is bigger than the red wave of 2022, though not a ‘mega tsunami‘
That post looks good now with the exception of those last five words- it was in fact a blue ‘mega tsunami’ by Kalshi’s definition (Democrats hold 240+ House and 54+ Senate seats).
Polling from the WSJ backs up my assessment that this was mainly about the economy and prices:
This comes after a longtime WSJ editorial writer hoped for a big Republican loss, something I’ve never seen from the WSJ before. But if they speak for the markets, it makes sense- US stocks opened up 2% the day after the election.
Crypto and gold prices are also up, an odd combination. Oil prices are down, perhaps seeing an end to the Iran war as more likely. Polymarket shows the odds of a US invasion of Iran this year down 5%. John Ossoff and Ron Desantis saw their odds of becoming President in 2028 rise at the expense of JD Vance and Gavin Newsom.
What will we see change on economic policy? Congress may lower tariffs and take back some of the tariff power they have long delegated to presidents. The Federal Reserve board will feel more free to raise interest rates if they think it is warranted. Many state-level results mean data centers will get harder to build, which will hurt the ‘picks and shovels’ companies literally building them but not necessarily the frontier labs who won’t be able to spend as much on racing ahead. NVDA and Micron stock is down while Google, Meta, Anthropic and OpenAI are up.
But the fact that President Trump still has veto power will limit how many big changes we’ll see over the next two years for anything that would require a new bill. Welcome back to divided government, to gridlock, and to checks and balances.
