Let’s be honest. We’re not in the business of forecasting political outcomes. Even if we were, you’d simply want to argue about what our data shows, right?
What we can do… is put the historical analysis on paper.
On November 3, the historical data shows Democrats will win 225 seats in the House and Republicans 210. In the Senate, our forecast is 51 Democrats to 49 Republicans.
President Donald Trump would wake up on November 4 facing a Democratic Congress.
There’s a whole cottage industry out there making a living off these forecasts. They are almost as inane as the endless commentary we get every time the Federal Reserve meets.
As of October 28, Decision Desk HQ gives Democrats an 80% chance of winning the House and projects 238 Democratic seats. Its Senate model is much tighter: 58% odds of Democratic control and a projected 51 seats.
The Cook Political Report offers another useful picture. Its latest House ratings put 214 seats in the Democratic solid/likely/lean columns and 200 on the Republican side, leaving the most competitive races to determine control.
Washington could be in for a power shuffle, and investors are already trying to figure out what divided government might mean for taxes, spending, regulation and the broader economy. (Source: The New York Times)
Cook’s Senate ratings currently place 46 seats in the Democratic column, four with independents and 50 with Republicans before the remaining competitive races are decided.
The Senate remains close.
If my forecast proves correct, President Trump gets divided government for the final two years of his term. Democratic committee chairs would control hearings and investigations. Congressional Democrats would have far more influence over appropriations and legislation. The White House would retain executive authority over tariffs, regulation, foreign policy and the federal bureaucracy.
Wall Street calls the resulting arrangement “gridlock.”
Here’s what on one will tell you: Investors do quite well when the politicians are too busy fighting with each other to mess anything else up.
But gridlock should not be confused with fiscal restraint. A divided Congress can make new legislation harder while leaving old spending, interest expense and enormous federal borrowing requirements very much alive. The Treasury will still need capital, whatever happens on Election Day.
The more useful historical fact comes from the broader midterm cycle. J.P. Morgan finds that the S&P 500 has risen during the 12 months following every midterm election since 1950, averaging about 15%.
The current election arrives with considerably more tinder piled around Washington.
Public opposition to AI data centers has become a campaign issue. Reuters reported last week that investors are beginning to treat the backlash as a political risk to the AI trade. Goldman Sachs still expects rapid U.S. data-center growth through 2027, but Reuters/Ipsos polling found only 14% of Americans would support an AI data center in their own community.
Voters can now see the AI boom from their kitchen windows.
For Big Tech, data centers represent the foundation of the future. But for the people living next door, they are more like an industrial-size headache with a very expensive electric bill attached. (Source: Shutterstock)
They see power lines, cooling equipment, construction traffic and utility bills. Local officials see requests for enormous quantities of electricity. Technology executives see the computing capacity they need to justify hundreds of billions of dollars in spending.
Congress will inherit the collision.
And the collision is larger than politics. The AI buildout must compete for electricity, equipment, labor and financing. As those inputs become scarcer and more expensive, projects that looked attractive under yesterday’s assumptions can look considerably less attractive under tomorrow’s costs.
My 225–210 House forecast and 51–49 Senate forecast give us one scenario to trade around. We don’t need every race to land exactly where I’ve placed it. We need to identify the companies whose fortunes depend on capital, power and federal spending that will continue flowing after Nov. 3.
Andrew has already found three.
Now we’ll see whether the voters cooperate.
~ Addison
P.S. One emerging energy technology could change the future of power — and create a massive opportunity for investors along the way.
President Trump’s reported stake in a company tied to this technology, combined with the administration’s energy policies, could help propel a little-known Nasdaq stock trading around $10 toward a much bigger future.
That’s why I recently went on camera to lay out my case for why this could be the#1 stock to own over the next five years in my latest briefing, Trump’s West Wing Windfall. Click here to catch up on the full details.
