Why Stocks Are Surging After A Historic Democratic Sweep

I think the real question is how much this is a Republican loss versus a Democratic victory. Arithmetically, obviously, they're the same thing. But what that means in terms of the mandate for Democrats going forward looks very different depending on how you interpret it. Trump has been saying that this wasn't about him, essentially. He's saying that, you know, because he wasn't on the ballot, that's why there was such a historic loss. I assume you disagree with that. I mean, all of the polling seem to suggest that this is specifically about Trump. specifically about him. He was on the ballot. I assume that is your view as well.

You can interpret this as nothing other than a wholehearted repudiation of the Trump agenda. Americans are mad that gas prices are high, that grocery prices are high, that mortgages are expensive. They're mad that Donald Trump promised that he was going to lower prices, which we can get into why that was never going to happen. But of course, instead of even letting prices kind of plateau instead of just kicking back and enjoying the relatively strong economy that he inherited, Trump decided to basically push all of the buttons that made the economy worse. Generally, I'm of the view that presidents don't have a lot of levers to pull to affect the economy. They get too much credit when the economy is good, too much blame when the economy is bad, blah, blah, blah.

We have learned in the past year and a half that actually presidents can't do a whole lot to improve the economy, but they can do quite a bit to make it worse. And unlike other kinds of things that presidents might do where it's hard for voters to connect the dots between like an infrastructure project that takes 20 years or whatever to really pay off or some sort of subsidy. The in this particular case, it was really easy for voters to look around them and say, I'm mad about X, Y and Z gas prices, let's say, and connect the dots to a specific thing that Donald Trump did. So, yes, I definitely view this as a rebuke of the Trump agenda.

Yeah, there was almost no nuance. It seems like every election, there's always a blame game. There's always some confusion as to, like, what's actually going on? It feels like this is the only election we've ever had where it's like, oh, no, everyone knows exactly what is happening here. Everyone understands what the problem was, which, to your earlier point, to me, says this was less of a Democratic victory than a Republican loss, which I guess the question then becomes, what are the Democrats supposed to do with that? Are they going to recognize that depending on if it's true? What do you think?

To be fair, I do think that Democrats were strategic in running pretty good candidates in a lot of these races. They were obviously helped by the fact that Americans hate the Trump agenda and hate the war and hate the tariffs, etc. But they did run good candidates in place. like Kansas and in places like Texas. So, you know, they were maybe going to get over the line no matter what in some places. But in those states that looked out of reach not that long ago, I do think that it was helpful that they had good candidates. So I don't want to rob them of all their laurels here. When it comes to what that means that they should do, I think that voters are pretty clear that they want lawmakers to focus on affordability.

Now, there's a bunch that Democrats can do to roll back some of the damaging Trump policies, things like restoring the funding for Medicaid that was cut, SNAP funding as well, or rolling back the tariffs. You know, there are a bunch of things where they can undo Trump policies. When it comes to actually doing new stuff on affordability, that's where it's a lot harder. I think Democrats have been overly simplistic in their messaging about all of this, you know, with some calling for things like a nationwide rent freeze or other kinds of price controls or things like that. Those are not going to work.

I don't know exactly how much political momentum there is behind those kinds of things. And besides, they certainly have more than their work cut out for them in just reversing some of the Trump policies. But I do think that there's going to be a fight over the next couple of years and heading into the 2028 presidential election about what the actual affirmative message of the party should look like and what that policy agenda should look like beyond just, you know, scrubbing the evidence of Trump policy off of the government as it stands now.

Yeah, the markets have reacted positively. I guess that is, we're sort of reducing the amount of risk now that we have a little bit of pushback. I mean, just in terms of what the Democrats should do at this point, it seems like one of the questions has been around prosecuting corruption and crime, or alleged crime, apparent crime, by the president, by his associates. um what do you think they're going to do do you think they're going to go after this stuff do you think they are going to prosecute him are they going to hand him subpoenas what is the next step for the democrats well they do have subpoena power and the places where i think they are more likely to be successful with it are with the people outside of the government outside of the executive branch who have been somehow collaborating with the regime whether reluctantly or gleefully. So you mentioned companies that have been cooperative, shall we say, with him. There are other companies that donated, I'm using scare quotes if you can't see this, donated to the ballroom in some cases for apparent favor trading. We don't know in some cases, but in some cases it certainly looks that way. You have lots of other, at best, unseemly,

At worst, potentially criminal types of arrangements, no-bid contracts, other kinds of contracts, cooperation with the immigration agenda, equity stakes being taken in companies. All of that, I think, is going to be on the table for Congress, a Democratic-majority Congress and Senate to look into. There's lots to dig into. Elon Musk, obviously, a very prime target for them as well. I think the challenge for Democrats as they pursue some of these things is to not look like this is score settling, that this. is the kind of lawfare that Trump has waged upon his own enemies. This isn't about like, oh, these guys didn't vote for us, and therefore we're going to subpoena them up the wazoo and make them spend a lot of money on lawyers and such.

They have to make clear that this is about actual lawbreaking, and particularly, if they're smart, lawbreaking that actually hurts the general public. So it's not just that, like, these are companies that, I don't know, that got rich somehow. And that was all that was at stake. And maybe there was insider trading, or I don't know, some things where it's a little bit abstract to figure out who the victims are. But to focus on, like, with Elon Musk, let's say, what happened with Starlink? And was, you know, were U.S. interests being compromised? Or Jamie Raskin, who is a congressman from Maryland, Democratic congressman from Maryland, sent a letter recently to the oil companies saying, basically, don't you dare cooperate with Donald Trump's imperative whatever direction to help import oil from Russia because that's still sanctioned. That would still be against the law. We don't care what the executive orders and the deal with Putin say. So I think that there are particular cases where it'll be more fruitful to look at potential law breaking where you can actually show that, like, U.S. national security interests or U.S. economic interests, you know, regular people's economic interests, financial concerns, were potentially

sacrificed in order for these companies to somehow enrich themselves. It's going to be such a thorny issue because at the same time, I would hate for them to be overly cautious about prosecuting actual crime out of fear of being seen as pursuing some form of lawfare. I mean, even that is a form of lawfare, not prosecuting the law for political reasons, essentially because you're scared that you're going to be seen as doing something political. I mean, it's going to be fascinating to watch. It'll be very interesting to see what they actually pursue. I was watching how different networks were covering the results today.

And so I was watching Fox News earlier and Trey Gowdy, who, if his name sounds familiar, he was like Representative Trey, middle name Benghazi Gowdy. He was complaining. about how he anticipated that Democrats were going to use their gavels and their subpoena power to just, like, punish—you know, do these—meet out these political punishments to punish anybody who believed in the Trump agenda as opposed to looking at actual lawbreaking or suspected lawbreaking. And so Republicans are already crafting that narrative around it, Even when they themselves, you might argue, were, again, looking at Benghazi, for example, and made a dog and pony show out of all of that.

But it will be challenging for Democrats to show that they're, like, focused on the American people and their voters, the people who put them there, and not just, like, settling scores. Well, I hope they just provide evidence. And once we see evidence, then we'll know what crime's committed. Just to wrap up, is this the end of MAGA in your view? Is this the end of Trump? Like, this is the most, I think, the most resounding message saying we've had enough of this. It's been, you know, 10, 11 years of Trump being around and the MAGA movement being alive and well. Do you think this is it? I think it depends on how you define MAGA.

I think there will be a power struggle in the next couple of years to sort of inherit that America First MAGA movement in a way that is not focused on Trump, right? Because there's not a whole lot that the Republican Party writ large or MAGA stands for at this point beyond Donald Trump. They kind of like lopped off every limb that they could find. My colleague Andrew Eggert talked about this recently at the Bulwark. But basically they, you know, they cut off the neocons to begin with, the free trade people, even the people who cared about like religious moral issues. They've kind of cut out even the people who cared about low taxes, if you think about tariffs, which are taxes.

So they kind of cut out every principle that they stand for beyond Donald Trump. So what does that movement look like without Donald Trump? And I think that there is a lane for the more isolationist, maybe some of the uglier anti-immigrant stuff to persist even without Donald Trump leading it. Like I could very well see a lane for a Tucker Carlson or someone like. like that. And maybe he won't call it MAGA, but it will be sort of inheriting maybe some of the uglier parts of the agenda, if not necessarily, I don't know, credit for the war, let's say, or the tariffs. His criticism of Trump at this point does seem strategically quite effective.

He's in a better position this week, probably, than he was last week. Catherine Rampell is an economics editor at The Bulwark, anchor at MSNOW, and host of the Receipts podcast, which just launched. I encourage you to go check it out. Catherine, really appreciate your time. Thank you. After the break, what the midterm results mean for AI. And for even more markets insights, you can subscribe to my weekly newsletter, Simply Put, at edwardelson.substack.com. Thank you. moments that changed their thinking. You'll hear in their own words how they built conviction, what happened when certain calls didn't play out as expected, and what they learned from those moments. Watch or listen to Hard Lessons wherever you get your podcasts.

directed keep out of reach of children are you tired of hearing about business tech and finance from the bros we are the tiger sisters a top business podcast with the vox media podcast network tiger sisters releases every monday and we decode money power and love and who doesn't love all those things we are the internet's wall street and silicon valley big sisters tune in every monday for late night sister talk meets boardroom strategy check out tiger sisters on YouTube, Spotify, or wherever you get your podcasts. Welcome to the Tiger Fam. We're back with Prof G Markets. Democrats pulled off a blockbuster sweep Tuesday night, and according to the exit polls, voters were focused on an issue that is somewhat new in America, and that is data centers. Voters approved more than 30 local measures to restrict data centers, while only one measure passed to ease restrictions. 56% of voters called AI and data centers a crucial or major factor in their choice at the polls. As a result, the tech market made some enormous moves. Neoclouds like CoreWeave, Oracle, and IREN all ended the day deep in the red. However, big tech companies like Apple, Alphabet, Amazon, Microsoft, and Meta added nearly a trillion dollars in market value.

So what is next for the AI build-out after the Democrats take over? Here to break this down, And we're speaking with Alex Bores, New York State Assemblymember, author of the RAISE Act and founder of Who Decides? Alex, thank you for joining us on Prof2Markets. So this has been, we knew this was going to be an issue going into this election. AI data centers, this has been your issue. You've written legislation on it. This is really what you're known for. I don't think people expected it would be this big of an issue and also so unanimous. your reactions to what we saw in these midterms, specifically on the data centers.

I myself am blown away by exactly that, how unanimous it was. I think there were 41 local referenda on data centers, and some of the votes are still being counted. But I think there's only one where the pro-building data center side of that initiative won. I mean, from coast to coast, People were expressing that they want there to be more guardrails. They want there to be more restrictions. And of course, no conversation about the impact on data centers and AI from Tuesday is complete without looking at the Texas governor's race, where a long shot bid by Gina Hinojosa, who ran strongly on rolling back data centers and putting a more term on data centers, took out Greg Abbott, who had been the biggest champion of data centers until maybe the last year.

last few months of the campaign where he saw the political winds and turn the other way. And so that by itself, Texas being one of the biggest markets, biggest opportunities for growth in data. centers, that switch could really have national and even international implications. Did that issue define that race? And did it define other races? I mean, look at Sherrod Brown in Ohio. His sort of move was calling Husted, quote, the face of data centers in Ohio. And it seemed like that became like a big issue. But I mean, that was one of the biggest upsets is, you know, Mahosa taking governor in Texas.

No one thought that was going to happen. Is that a data center story? It's a huge part of the story, and it goes beyond just data centers. I think data centers were dominating the conversation three, four months ago. But by Election Day, in most of these places, it had evolved to be a broader conversation about AI itself, about who gets to set the rules, about whether this is something that democracy still can express, if that's local communities on data centers, or if that's states being allowed to pass their own laws on AI, or whether they'll be banned from doing so as industry has tried to pass federally. So the fact that there were people running who were made clear that they were going to stand up to entrench interest, that they were going to try to empower the American people, was a resounding message, whether that was on data centers or broadly on regulation on AI. What do you think voters are most concerned about when it comes to the data centers? I feel like there's a whole swath of things that people have expressed, but I mean, what ranks highest, do you think? It's tough to separate out the different pieces of it, but there's a debate about whether it is AI itself or just the data center. There's

lots of things that are just local concerns with the data center. People express a lot of concern about water usage. So in the U.S., it's pretty highly regulated, and we've seen much better behavior than what we've seen in other countries. But the energy prices that might spike because of it, even when a data center is promising to bring its own energy, if it puts a lot more demand on the components that generate energy, that could raise prices for your local utility that's doing it as well. So whether people will truly get their bills frozen or reduced because of a data center has become a big issue. But there was really interesting polling that showed if you asked people how they felt about a data center versus how they felt about an AI data center, data centers by themselves were still underwater, but an AI data center was another 20 points underwater. Just that it was- tied to AI made a big difference. And so you saw OpenAI saying that they are going to try to rebrand data centers as AI compute campuses. I mean, campus sounds fun, but they're still tying the AI into it in a way that I think won't alleviate the very real concerns and fears that Americans have. You have proposed more stringent regulation on AI and data centers.

you had co-sponsored a bill in New York that would have paused data centers, data center construction for a year. It ended up happening by a different measure that Governor Hochul later implemented. But when I hear that, this idea that like AI data centers are so much worse than data centers, to me, that makes me think that maybe voters are misunderstanding data centers or that that there's there being sort of mischaracterized uh caricatured in some way as ai equals bad so we hate this thing um am i wrong in thinking that is is is there a little bit of i don't know sort of an anti-ai cult that is causing people to maybe irrationally dislike these things or is it all rational and warranted. Well, I think it was Camus who said humans aren't rational, they're rationalizing. So the philosophy of the mind and of the voters we can put off there. But there is a, you know, if a data center, I like to point out there are plenty of data centers that exist in my hometown of New York City. They're just in buildings. They're not these big campuses that impose on land use in lots of ways. So there are legitimate concerns about land use, about power, about noise in some of these places, and all of that's reasonable to talk about.

And then there's the separate fact that data centers are the first time that AI is meeting democracy. And so let's say you're, you know, fine with a data center, but you're really upset about the way AI is being forced into schools, as we saw news with Google this week, or you're worried about the impact of AI on chatbots or even AI automating your job. You haven't gotten a vote on any of those changes. Polling that Who Decides did, that our organization did, found that over 70% of Americans agreed that AI has been forced into their workplace, their kids' school, or... some other part of their daily life without them being consulted.

And so they just feel alienated from being able to make any choice with this technology. And if the first choice you get is whether you could build a local data center, well, I understand people then expressing a broader preference through that vote. Yeah, that's a great point. Just looking at the market's reaction.

Act. Alex, we appreciate your time. Thanks for having me. Well, the blue NAMI has arrived. The Democrats took the House and the Senate in what will go down as one of the most resounding victories in the history of congressional politics.

Across the country, districts swung blue. We saw upsets in Texas, in Kansas, in South Carolina, in Maine, potentially in Mississippi as well. these are states that have not elected Democratic senators literally in decades. This was unlike anything we have seen. Now, we will be digesting and analyzing this over the next few days. But to begin, I would like to take a quick victory lap because I predicted a Democratic landslide back in June when that was not a popular opinion at all. And I doubled down on that prediction last week, and I even said in my newsletter that this would be similar to the 1890 midterm elections and that it would be one of the greatest defeats ever. And that is exactly what happened here.

This was a blowout. It was a bloodbath, a slaughter, whatever you want to call it. This was huge. Now the question is, what's next? Well, there's been some debate as to whether the Democrats should pursue prosecutions and retribution against Trump. Some people think that it's an unnecessary distraction from the real issues. Others think that it is important. I personally am in the others' camp. I think that prosecution is not only important, but essential. Why? Well, because it appears that this person actually committed crimes, whether it be bribery, or insider trading or abuse of office or securities fraud or covering up a child sex abuse scandal, you name it. And so to not pursue accountability for crimes is to let our politics hijack our justice system. This isn't lawfare. This is simply the law. And if we find that Trump did nothing, then OK. But if he did, then he needs to be punished. And that to me is a non-negotiable. And if the Democrats don't pursue that, well, then I think they will be admitting weakness and defeat. At the same time, though, they also have to fix the economic problems.

They do have to deal with the affordability crisis. That means immediately repealing the tariffs and immediately getting out of Iran. How do they accomplish that? I don't know. but they should try. It also means addressing the housing issues. We have a very significant supply problem in America. And if the Democrats don't figure out a way to significantly increase permitting and home building across the country, then they will have failed. It also means addressing the inequality problem, which has been widening for years and that is now reaching a breaking point. That might mean tax reform. It might mean equalizing taxes on income and capital gains. It might mean a lot of things. Again, this is up to the Democrats to figure that out and then go out and execute it. The point is, there is still a lot of work to do. And it's not an either or situation. It's a both and situation. They should be dealing with all of this, from rooting out corruption with prosecutions and with laws such as stock trading bans to targeting the economic problems that put them in office in the first place. Congrats to the Democrats. A lot of really impressive campaigns. Enjoy the champagne. Celebrate the victory. But then, in the morning,

it's time to get to work because this job is not finished and there is a lot more to do. Okay, that's it for today. This episode was produced by Claire Miller and Alison Weiss and engineered by Benjamin Spencer. Our video editor is Brad Williams. Our research team is Dan Chalon, Kristen O'Donoghue and Mia Silverio. And our social producer is Jake McPherson. Thank you for listening to Prof G Markets from Prof G Media.