Episode summary
Breaking Down the Markets Massive Post-Midterm Moves with Andy Constan
Monetary Matters
· · Hosts: George Noble, Jack Farley, Jack, Max · Guests: Andy Constan
Summary
Andy Constan argues the midterm result mainly reinforces gridlock: it reduces the odds of major fiscal expansion and makes additional government stimulus less likely unless there is a real crisis. He says that should leave fiscal policy as a modest drag on growth rather than a new source of support, with the private sector carrying more of the economy.
On bonds, he says the rally in late October made him more constructive after a long bear market, because yields had risen enough to make Treasuries useful again in a portfolio. But after the election and the Treasury’s quarterly refunding announcement, he thinks the trade has largely run its course. Inflation is still above target, growth has been strong, and supply from the Treasury and corporate issuers remains heavy.
Constan also thinks the AI and semiconductor selloff looks more like a rotation and a growth-expectations reset than a true bubble burst. He says the market is still pricing very high earnings expectations, but not all the companies can win, and investors who keep doubling down on losers risk getting hurt. His broader view is that the market is now more vulnerable to a slowdown in growth than many participants expect.
Key takeaways
- Andy Constan says the midterms reinforce gridlock and make large new fiscal expansion much less likely without a crisis.
- He says the Treasury’s quarterly refunding announcement was a non-event and did not meaningfully change the bond-supply outlook.
- Constan thinks bonds became investable again in October, but he is now flattening that long-bond position as growth expectations cool.
- He sees the AI trade as a rotation and a reset in growth expectations, not a fully popped bubble.
- Constan says the market is still pricing too much earnings growth across many stocks, and not all the expected winners can actually win.
Notable quotes
“we were heading for gridlock and that's where we are”
“bonds have finally become once again suitable for an investment portfolio”
“there has been no bubble popped this is not what a popping bubble looks like not even close”
“The answer is pretty much status quo, pretty much in line with expectations”
How the episode opens
Uh, we're going to start right now. This episode is brought to you by Sarmaya Partners, who manages a return to tangibles ETF, Lens, ticker Lens, the Seraya thematic ETF built for a return to tangibles. Learn more at surmiaetf.com and see the show notes for disclosures.
Let's get into it. Today, we are joined by Andy Conston from Dampspring Adviserss and of course my partner in crime, Max Weey. Wow, guys.
Yesterday we had what's been called a blue tsunami. Democrats winning both the House and the Senate and there are quite interesting and severe consequences of the market. The S&P 500 is ripping but the dispersion is massive between uh there's there's true carnage in I would say a certain part of the AI trade the AI infrastructure buildout.
So stocks like Sterling infrastructure or verdive companies that basically make money literally from data centers being built out are having very challenging days to put it mildly. Seate semiconductors of course are also uh down as well however not not as much and the hyperscalers are ripping um app uh uh Microsoft Google Amazon perhaps because compute will be scarce if there's not that much of a buildout. Um I want to I want to start with you Andy.
What are your what are what are the consequences of yesterday's uh uh election on macro fundamentals and the asset markets that you follow broadly? stocks, stocks, bond, commodities, your start us out.
Sure. So, I think it was a little bit of a surprise, a little bit of surprise in the intensity, but the outcome to me was in a pretty narrow range. And what I mean by that is a pol the policy outcome in that the only way that the combined government in the United States was going to be able to fairly without a lot of politics create fiscal expansion additional fisial fiscal expansion is if the Republicans held both house both chambers and Trump convinced some significant if ly recalcitrant senators on the red side to pull the nuclear option and eliminate the um the filibuster and that was the way that was the only outcome that was going to get major fiscal expansion as a risk factor to the market.
From the episode’s captions: roughly the first two minutes, lightly cleaned. Keep watching on YouTube →
Topics
- midterm elections market reaction
- post-midterm stock moves
- bond market ripple effects
- macro outlook
- etf performance
Companies and tickers mentioned
- Sarmaya Partners
- Damped Spring Advisors
- LENS ETF
- Empowered Funds
- ETF Architect
- PINE Distributors LLC
Watch the episode
Watch “Breaking Down the Markets Massive Post-Midterm Moves with Andy Constan” on YouTube
Summary, takeaways and quote selection by Octagon. Quotes are short excerpts; the full conversation is in the episode.
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Monetary Matters, this episode and its artwork belong to Jack Farley. Octagon is not affiliated with the show; this page is an independent summary.
