Episode summary
Midterm Election Results: The Stock Market’s Winners and Losers
Summary
Dylan Grice argues that the midterm result is broadly constructive for markets because divided government tends to produce gridlock, which he says the founders intended and investors usually reward. He cites historical patterns under a Republican White House and a Democratic Congress: stocks rising over the next six months, on average, and the 10-year yield drifting lower. He frames the election as another reminder that inflation is the main political force shaping outcomes.
He says the losers are crypto and prediction markets, because the election makes passage of a Clarity Act less likely and increases the odds of tougher oversight. He is skeptical of bitcoin and most cryptocurrencies, arguing they do not make transactions faster, cheaper, or better, and calling much of the space gambling rather than useful financial innovation.
Grice also says the election should slow the pace of data center build-outs, which he thinks helps the Mag 7 by easing cash-flow pressure but hurts neo-cloud names such as CoreWeave and Nebius, along with semiconductors priced for a faster expansion cycle. He still believes the broader AI and economic bull case remains intact, and he sees healthcare as another relative winner if Democrats use leverage in upcoming negotiations.
Key takeaways
- Grice says a Republican White House with a Democratic Congress has historically led to a stock rally over the next six months and a roughly 25 basis point drop in the 10-year yield.
- He argues inflation is the key political lesson of the election because it toppled both Biden-era Democrats and Trump-era Republicans.
- Grice thinks crypto and prediction markets are losers because the election reduces the odds of a Clarity Act and could mean tighter CFTC oversight.
- He says slower data center build-outs could support the Mag 7’s cash flow while hurting CoreWeave, Nebius, and some semiconductor stocks.
- Grice sees healthcare as a relative winner and says the broader AI and market trend remains intact under divided government.
Notable quotes
“Inflation toppled Biden and the Dems. Inflation toppled Trump and the Republicans”
“I would not want to be crypto or prediction markets”
“I think bye-bye Clarity Act”
“the broader economic outlook remains intact”
How the episode opens
Good morning. This is Dylan Giovine with Behind the Markets. Happy Friday.
Today is Friday, November 6th, TGIF. Do you remember Andy Rooney from 60 minutes? That grumpy what I thought was a grumpy old man when I first started watching him when I was a kid growing up cuz that was watched in my house.
And look at that grumpy old man. Now I am his age when I first started watching him. How crazy is that?
Well, today I'd like to be a little bit Andy Rooney and go over some impact that I think I'd like to editorialize a little bit and share some thoughts I have with how the election will impact the markets over the next 12 months. First of all, as I discussed last month, you know, midterm elections tend to be very good for the economy uh for the stock market and gridlock is even the best always the best outcome. It's an outcome I personally like.
It's the outcome our founding fathers really built into the system. They designed the system where you wouldn't have too much movement unless there was a real break left or right either way. So what can we expect?
I've discussed this before, but I'll just go over it again. When you have a Republican White House and a Democratic Congress, the net result is stock rally, yields fall, interest rates fall. So bottom line here, over the next 6 months, 100% of the time, it's kind of crazy when you have a Republican Congress, a president, and a Democratic Congress, the market has been up an average of 15.7% goes up 100% of the time.
So look, again, does this guarantee it's going to go up in the future? No, but that's what the history says.
From the episode’s captions: roughly the first two minutes, lightly cleaned. Keep watching on YouTube →
Topics
- midterm election
- gridlock and markets
- inflation and political power
- data centers and neo-cloud
- ai investment outlook
Companies and tickers mentioned
- CoreWeave
- Nebius
Watch the episode
Watch “Midterm Election Results: The Stock Market’s Winners and Losers” on YouTube
Summary, takeaways and quote selection by Octagon. Quotes are short excerpts; the full conversation is in the episode.
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