Last night turned into a sea of red, not the kind Republicans wanted- washed away only by a giant Blue Tsunami. The midterm results were more decisive than Tyson against Spinks. Democrats flipped both the House and Senate and won multiple gubernatorial races in historically Red and / or “data center” states (TX, IA, GA, OH, PA, MI etc.). A Congressional Blue Sweep wasn’t really out of the, uhhh Blue, as that outcome was trading between 65% - 75% in prediction markets for the last month, but the magnitude was a surprise.

It was a volatile evening/pre-market. S&P futures initially sold off ~1.5% as polls were closing but started to bounce around midnight as President Trump began making comments saying he would accept the outcome and suggested he’d be willing to work with Democrats. He also downplayed the prospects of re-starting military strikes against Iran. The S&P 500 opened up ~1% and has added to that, up well over 1%. The index has regained the 100d and 50d ma after loosing both the past week. A lot of the action is straight from the election playbook though there are nuances. The AI trade is under significant, broad pressure overall on concerns Democratic leadership would slow the data center and AI buildout.

Oil was trading lower and accelerated to the downside after JD Vance took to social media and blamed the Iran War for his party’s losses (as did Trump earlier). House Democratic Leader Jefferies said that Congress will pass a bill to stop tariffs and the war. Brent is currently down ~10%, providing another tailwind for equities. Treasuries are rallying, pushing yields down ~5bp across the curve. A knee-jerk reaction of lower AI capital-raising and election mandate on affordability and disinflation are contributing to the rally.