Democrats Sweep Congress — And Stocks Explode Higher

Alex Bores · New York State Assembly

Local data center backlash is broad, and AI-branded data centers poll far worse than plain data centers.

Bores says nearly 41 local referenda on data centers were held and only one was won by the pro-building side, which he finds striking given how unanimous the result was. Texas matters because it is one of the largest data center markets: Abbott turned against data centers late in the campaign, and Hinojosa, who ran on a moratorium, won. Polling shows data centers are already underwater with voters, and AI data centers are about 20 points further underwater. Bores argues the backlash is really about AI itself, including who sets the rules and the fact that over 70% of Americans feel AI was forced into their workplace or kids' schools without consultation. Local concerns about water, power prices and noise are real, but the wider frustration is that AI is meeting democracy for the first time through data centers.

“I think there were 41 local referenda on data centers, and some of votes are still being counted. But I think there's only one where the pro building data center side of that initiative won.”at 26:30

Ed Elson · Prof G Media

Investors may be overreacting to how much the newly elected Democrats will disrupt data center buildout.

Ed notes neocloud stocks such as CoreWeave, Oracle and IREN sold off while big tech rose, which he reads as investors expecting Democrats to gut data center construction. He argues that the newly elected Democrats seem reasonable, suggesting only a pause in capacity until a regulatory framework is in place, possibly taking less than twelve months. He therefore wonders whether the Wall Street reaction is too severe, and suggests investors may also think big tech will gain a competitive advantage over neoclouds or stop overspending on data centers, which would derisk its business.

“And I wonder if maybe Wall Street investors are overreacting to the extent to which data centers will be disrupted or the build out will be disrupted.”at 35:48

Alex Bores · New York State Assembly

US data center buildout will continue but under tighter rules; moratoria are temporary pauses.

Bores argues the market is treating the election as the end of data center construction, but he expects it to continue. Even the most aggressive proposals, such as Hinojosa's two-year moratorium, are paired with the condition that specific regulations be put in place before new capacity is approved. That leaves room to keep growing data centers. Some highly levered companies could still be hurt by any delay, but he says this is not the end of building data centers in the US. It is entering a more regulated mode.

“But this is not the end of building data centers in The US. It's just maybe entering a mode where they're a little more regulated.”at 36:42

Catherine Rampell · The Bulwark

Midterm rout was a repudiation of Trump's agenda, driven by prices, the war and tariffs.

Rampell reads the Democratic sweep as a broad rejection of the Trump agenda rather than a Democratic mandate. She cites voter anger at high gas and grocery prices and expensive mortgages, and Trump's broken promise to lower prices. She argues presidents have few levers to improve the economy but can easily make it worse, and that Trump pushed the buttons that did so. Voters could easily connect these policies to their costs, which made the message unusually clear.

“...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.”at 4:46

Catherine Rampell · The Bulwark

MAGA will face a power struggle without Trump; an isolationist, anti-immigrant lane likely persists.

Rampell argues the Republican movement has stripped away its principles beyond Trump. It cut off neocons, free-traders, religious moralists and low-tax advocates, and tariffs are themselves a tax. So there is little left to MAGA without Trump. She expects a succession fight over the next couple of years, and an isolationist, uglier anti-immigrant lane could persist and be inherited by a figure such as Tucker Carlson. That figure might not call it MAGA, but would carry parts of the agenda.

“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.”at 20:52

Catherine Rampell · The Bulwark

Administration is more inclined to wind down the Iran war, but feasibility is doubtful given Hormuz control.

Rampell argues the pressure to end the war comes less from Democrats than from Republicans. Vance publicly blamed the war for the losses, and Don Jr. amplified that view, so she sees more appetite in the administration to wind down the conflict, especially among Republicans eyeing 2028. She doubts it can be executed as markets seem to expect. Iran knows it can control the Strait of Hormuz, and tanker operators and insurers will not forget that. Ultimately the decision rests with the White House and Pentagon, not Congress, even though Democrats can try to withhold Pentagon funding.

“I do think there is reason to believe that this administration is more inclined, I guess, to try to wind down the war.”at 9:32

Ed Elson · Prof G Media

The US should immediately withdraw from Iran as part of fixing the affordability crisis.

Ed lists immediately getting out of Iran alongside repealing tariffs as things Democrats must do to address the affordability crisis. He does not explain the mechanism by which withdrawal would lower prices or cite any evidence, and he admits he doesn't know how it would be accomplished.

“They do have to deal with the affordability crisis. That means immediately repealing the tariffs and immediately getting out of Iran.”at 39:43

Catherine Rampell · The Bulwark

Tariffs raised consumer costs and disrupted companies and markets; Congress may reclaim trade authority.

Rampell notes that even Rust Belt and Midwest Democrats, who once ran on protectionism, did not run on it this cycle, and that figures such as Sherrod Brown criticized the Trump tariff agenda. She argues the tariffs raised downstream costs for consumers and were highly disruptive to companies and markets. She expects greater congressional intervention to reclaim constitutional trade and spending powers, which would reduce uncertainty and erratic policymaking for markets. She admits this may be wishcasting.

“...which besides raising costs, downstream costs for consumers, have also been really, really disruptive to companies and to markets.”at 14:31

Ed Elson · Prof G Media

Democrats should immediately repeal Trump's tariffs to address the affordability crisis.

Ed argues the affordability crisis is the economic problem Democrats must fix after the midterms, and says that means immediately repealing the tariffs. He gives no price data, pass-through estimates or other evidence for how tariff repeal would ease affordability. He presents it as a policy prescription rather than a market forecast, and acknowledges he doesn't know how Democrats would accomplish it.

“They do have to deal with the affordability crisis. That means immediately repealing the tariffs and immediately getting out of Iran.”at 39:43

Alex Bores · New York State Assembly

Proposed AI rules are light-touch and unlikely to dent Big Tech profits, which may be priced in.

Bores says the market is betting that regulation will curb data center capacity but not hit AI and tech profits. He doubts that voter sentiment or politicians' incentives match that, but he notes most AI regulation proposed has been very light touch, with even third-party audits that companies say they already want. The RAISE Act fight shows industry lobbying often overstates the burden. A trade group claimed it would cost Meta, Google and OpenAI one full-time employee each to comply. Investors may therefore be right that regulation will not threaten profits.

“Now, perhaps there's another nuance level of that, which is much of the regulation that's been proposed around AI that isn't data centers, doesn't actually restrict profits all that much. Right? What's being proposed has been tremendously light touch.”at 34:19

Ed Elson · Prof G Media

America has a significant housing supply problem that Democrats must fix through permitting and home building.

Ed says America has a very significant housing supply problem and that addressing the affordability crisis requires significantly increasing permitting and home building nationwide. He presents supply shortfalls as the cause and loosening permitting and construction as the fix. He cites no numbers, such as inventory levels, starts or price data.

“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.”at 40:00