PIMCO's Libby Cantrill Talks Money, Markets, and Midterms

Libby Cantrill · PIMCO

Republicans have largely given up on the House, which is likely to flip to Democrats in November.

After speaking in Washington, Cantrill said Republicans seemed resigned and close to capitulating on the House. Democrats need little to win it back, since the Republican majority is only about three seats. She cites old-school economic and polling metrics. The generic ballot has Democrats up by roughly 8 to 9 points, and the enthusiasm gap is around D+11. She says both readings are consistent with the 2006 and 2010 midterm waves. She still thinks Republicans have a chance in the Senate and expects any House majority to be very small.

“I think that they've just almost capitulated, that they are going to likely... The house will flip.”at 1:26

Libby Cantrill · PIMCO

Early-vote turnout is an unreliable midterm signal, with many false positives.

Cantrill says turnout is a major unknown. Early-vote numbers are high in some states, with about half of electors expected to vote before Election Day. She still warns it is easy to read too much into early voting, since there have been many false positives. She uses the generic ballot and the enthusiasm gap as more reliable gauges of the midterm outlook.

“I would just say there have been a lot of sort of false positives, in terms of the the early vote.”at 2:12

Libby Cantrill · PIMCO

Democrats will focus on affordability, health care, housing and data centers, not impeachment.

Cantrill argues Democrats will avoid impeachment of the president because it consumes airtime without delivering results. They will instead focus on two or three issues they could push past the president: affordability, health care, housing and possibly data centers. The House has already passed a data center bill, which the Senate failed to pass. Because most legislation needs 60 Senate votes, Democrats would need reconciliation, which needs only 50, to pass anything if they win both chambers. She says that is still contingent on the election.

“it sounds like they're really gonna try to focus on two or three issues where they're actually... They could actually get over the finish line with the president. Affordability, so health care, housing could be part of this. Data centers could be also.”at 5:34

Libby Cantrill · PIMCO

Trump must pivot to taking affordability seriously before the midterms, since voter sentiment is hardened.

Cantrill says the president must pivot his rhetoric and take affordability seriously, and reassure voters that he will act. She argues this is hard in the time left because many people have already voted and sentiment is 'incredibly calcified'. She ties the voter angst to the period since COVID, which cost Democrats in 2022 and 2024, and suggests Republicans now face the same dynamic.

“I think he has to honestly pivot this rhetoric. I mean, he really needs to take the affordability issue seriously.”at 7:45

Libby Cantrill · PIMCO

Democrats may misread their midterm win as an endorsement of their party, not a protest vote.

Cantrill argues that Democrats could over-interpret a midterm win, reading it as an endorsement of their own party rather than a protest against the Republicans. She notes that the angst behind the vote has been building since COVID and cost Democrats in 2022 and 2024, which suggests the result is partly a protest. She expects voters to be shopping again by 2028.

“Democrats could over interpret their mandate here, think it more as an endorsement of their own party versus a protest vote.”at 8:19

Libby Cantrill · PIMCO

AI policy will stay a state issue rather than federal while Trump avoids regulating AI.

For the foreseeable future, Cantrill expects AI policy to be made by states rather than the federal government, provided President Trump keeps to his stated position of not wanting to regulate AI. She notes this could change. State-level AI policy is on the ballot in the 36 gubernatorial races, which is why she sees the state layer as the active one.

“at least if for the foreseeable future, we think policy will really be a state issue in terms of AI, not a federal one, particularly if President Trump sort of stays consistent with what he's been talking about and how he doesn't want to necessarily regulate.”at 3:26

Libby Cantrill · PIMCO

Data center opposition is bipartisan and will bring more state moratoria and restrictions, potholing the AI buildout.

Cantrill argues data centers have become a bipartisan issue in the midterms. Many gubernatorial candidates in the 36 states voting for governors, on both Democratic and Republican sides, are running on anti-data-center platforms and advocating draconian responses. In Ohio, where a lot of capacity is in the pipeline, both governor candidates are calling for a full statewide moratorium. She expects more friction in 2027: more moratoria and more restrictions. She says 'politics leads policy, policy follows politics' and that the politics are very bad for the sector, though she is not endorsing that view. She thinks this could at least put potholes in the AI buildout story.

“Many governors are running on an anti data center in particular platform.”at 3:59