00:00:02 · Joe Weisenthal, Tracy Alloway, Skanda Amarnath
[00:00:02] S0: Bloomberg Audio Studios. Podcasts. Radio. News. Hello and welcome to another episode of the Odd Lots Podcast. I'm Joe Weisenthal. [00:00:23] S1: And I'm Tracy Alloway. [00:00:24] S0: Well, Tracy, I'm glad we did that episode that came out Tuesday with Nate Silver because he did go on record as like there's going to be a blue wave. And it turns out that was actually just this. It was correct in some sense, depending on how you measure wave. But it was just like, you know, it was a tsunami. Yeah. Maybe like maybe bigger than a tsunami. [00:00:43] S1: It was seismic, for sure. So as everyone knows by now, the Democrats took both the House and the Senate. Going into it, as we discussed with Nate, I think most people thought there was a good chance they were going to take control of Congress, right? [00:00:57] S0: The House was seen as a lock. [00:00:59] S1: The House was seen as a lock. But the big question was the Senate, which was like more of a coin flip. But Nate... Nate thought the Senate was actually looking pretty good. [00:01:08] S0: For the Democrats. [00:01:09] S2: He was right. [00:01:10] S0: He pushed back. I remember you're like, so the Senate is more of a coin flip. He's like, no, it's not. It feels like a coin flip in your head. But he was like, they just say it's on a coin flip. Turned out it was nothing close to. Turned out it was nothing close to a coin flip.
00:01:10 · Joe Weisenthal, Tracy Alloway, Skanda Amarnath
[00:01:10] S0: He pushed back. I remember you're like, so the Senate is more of a coin flip. He's like, no, it's not. It feels like a coin flip in your head. But he was like, they just say it's on a coin flip. Turned out it was nothing close to. Turned out it was nothing close to a coin flip. [00:01:22] S1: So obviously the big question now for both markets and the economy is what changes under Democrat control? What can Trump still do? Of course, he posted that photo of his veto hat on Truth Social. [00:01:35] S2: You saw that, right? [00:01:36] S1: So the implication is that he can veto anything that the Democrats try to push through. He still has a lot of executive order power for things like tariffs. So how much does this really change? The other thing... So the expectation going in to the midterms was that if Democrats actually win, this would be terrible for stocks, right? I know. And you saw Michael Hartnett from Bank of America. He said he thought the S & P 500 could fall 10% if Democrats win. Yeah, apparently, which turned out to be wrong because we saw a Democratic victory. And I think the S & P 500 was up like one and a half percent yesterday. [00:02:10] S0: Yeah, it was. But OK, but now we're recording this November 5th. [00:02:14] S1: Yeah.
00:02:14 · Tracy Alloway, Joe Weisenthal
[00:02:14] S1: Yeah. [00:02:15] S0: And it's 938 and the NASDAQ is getting hammered. So what is true, and it was like isolated in the day after like SpaceX and Tesla, which have as companies put a lot of money, both in Texas and red Texas specifically, they got hit pretty hard. Some of these new clouds that have like dreams of expanding their footprint, et cetera, got hit pretty hard. Now it was kind of a mix. I don't know. Anyway, the other thing, by the way, that is relevant of course, is any future. Fed governors in our world. [00:02:47] S1: Yep. [00:02:47] S0: In our world, you know, if there are any Fed governor appointments coming up. Anyway, to talk about all this, very excited to say, welcoming back to the show, perfect guest, because he knows both worlds. Skanda Amarnath, Executive Director of Employ America. Actually, all three worlds, because in addition to knowing macro and politics, You're also sort of a markets junkie, but you don't really talk about that as much publicly. [00:03:08] S1: We'll get you to do equity recommendations. [00:03:11] S0: We'll get Skanda's five lockpicks for Q4. No, but for real, let's stick just with the politics for a second. We're recording this November 5th, so we all know what happened. But are there any dimensions of the earthquake tidal wave extinction level event for the GOP that stand out for you in some way? I mean, I think people were missing.
00:03:11 · Joe Weisenthal, Skanda Amarnath, Tracy Alloway
[00:03:11] S0: We'll get Skanda's five lockpicks for Q4. No, but for real, let's stick just with the politics for a second. We're recording this November 5th, so we all know what happened. But are there any dimensions of the earthquake tidal wave extinction level event for the GOP that stand out for you in some way? I mean, I think people were missing. [00:03:36] S2: Yeah, I think that the Senate itself, this is more structural, just really matters for the American government. It is sort of the institution that shapes who serves on the Supreme Court. It's the institution that shapes who serves on the Fed board. And for a long time, there's been a pretty structural advantage for the GOP. [00:03:52] S0: In the Senate. [00:03:53] S1: Yes. [00:03:54] S2: And maybe that advantage is still true and this blue tsunami will be a one-off. But I think you at least see for Democrats, there is a path ahead for how they could sustainably Stay competitive in the Senate. That's not reaching to get to 50 to 51 votes. I think that can change a lot of different things. [00:04:11] S0: And the structural advantage for the GOP and the Senate comes down to the fact that if you take a state like Kansas or Iowa or whatever, they haven't seen a lot of population growth. Their share of like is outside. But they still get two votes, just like New York. And if there's ever a time when there's down to like 100 people left in Wyoming, they're probably the assumption is going to be Republicans. And they're going to have infinitely more influence over the rest of the country than New York.
00:04:11 · Joe Weisenthal, Skanda Amarnath, Tracy Alloway
[00:04:11] S0: And the structural advantage for the GOP and the Senate comes down to the fact that if you take a state like Kansas or Iowa or whatever, they haven't seen a lot of population growth. Their share of like is outside. But they still get two votes, just like New York. And if there's ever a time when there's down to like 100 people left in Wyoming, they're probably the assumption is going to be Republicans. And they're going to have infinitely more influence over the rest of the country than New York. [00:04:40] S2: The Senate is about the number of states, not the number of people. [00:04:43] S1: And Corrin doesn't vote, as they say. [00:04:45] S2: Except in the Midwest. I would say what Bob Dole had some quote about basically. way more ag states than there are any other kind of state. And that's going to always count more. I think that has some implications for sort of how kind of power is shaped from here. For Democrats, there's also just a sense of, oh, this was actually possible. I don't think Democrats expected to win in South Carolina unless they were in the Annie Andrews campaign, maybe. I don't think they expected to win in Mississippi. And it looks like at least that's going to be coming really down to the wire. So it just shows that there's different possibilities, which will also kind of shape how they govern, what kind of map they want to optimize towards in subsequent elections, which may just change the agenda to some degree.
00:04:45 · Skanda Amarnath, Tracy Alloway
[00:04:45] S2: Except in the Midwest. I would say what Bob Dole had some quote about basically. way more ag states than there are any other kind of state. And that's going to always count more. I think that has some implications for sort of how kind of power is shaped from here. For Democrats, there's also just a sense of, oh, this was actually possible. I don't think Democrats expected to win in South Carolina unless they were in the Annie Andrews campaign, maybe. I don't think they expected to win in Mississippi. And it looks like at least that's going to be coming really down to the wire. So it just shows that there's different possibilities, which will also kind of shape how they govern, what kind of map they want to optimize towards in subsequent elections, which may just change the agenda to some degree. [00:05:26] S1: Okay. So the Senate is important, but I think the consensus assumption is still there's going to be some form of political gridlock because, for instance, the Democrats don't have the 60 votes they need to push through a Republican filibuster and stuff like that. On the other hand, I think if we learned anything from Tuesday's elections, it's that Trump seems to be politically toxic now on both the Republican and the Democratic side. So maybe there's a potential to come together on like a few.