A Carson Investment Research strategist stated that the midterm elections resulted in a “blue tsunami” that signals the “beginning of the end” of the Trump era, adding that the shift toward a divided government is “good for markets.”
The ‘Blue Tsunami’
Barry Gilbert, VP, Asset Allocation Strategist at Carson Investment Research, wrote in a Nov. 4 newsletter that Americans have “resoundingly rejected how President Trump has governed in the first two years of his second term.”
Gilbert described the election results as a “blue tsunami,” noting that Democrats are projected to secure a 56-44 majority in the Senate and a 259-176 majority in the House.
Due to this legislative shift, Gilbert stated that Congress will be less cooperative and will try to “thwart his agenda through greater oversight.” However, Gilbert wrote that Trump is “still president,” granting him broad scope on foreign policy, tariffs, and executive orders.
Gilbert highlighted that Trump has averaged 166 executive orders per year in his second term, which Gilbert noted is “a faster pace than any president since FDR.”
Market Reaction and Spending
Despite the political realignment, Gilbert noted that the results are positive for equities. “Divided government isn’t likely to slow down the spend, and in the near term that’s good for markets,” Gilbert wrote.
Gilbert observed that Nasdaq futures were initially down near 2% overnight but rose over 2% by morning. According to Gilbert, “Markets are largely indifferent to the federal government’s party configuration.”
‘Beginning of the End’
Gilbert described this period as the “beginning of the end,” explicitly referring to Trump as a “lame duck president” in his final two years. Despite this status, Gilbert cautioned that Trump “is not one to fade into the background.”
Additionally, Gilbert stated that Democrats succeeded because voters viewed them as the “best option to control inflation, focus on American prosperity, and strengthen the middle class.” Gilbert cautioned that if Democrats forget this lesson, “the political gains won’t last long.”
How Has the Stock Market Performed?
The S&P 500 index has advanced 10.36% year-to-date. Similarly, the Nasdaq Composite index was up 9.19%, and the Dow Jones gained 7.04% YTD.
On Wednesday, the SPDR S&P 500 ETF Trust (NYSE:SPY) and Invesco QQQ Trust ETF (NASDAQ:QQQ), which track the S&P 500 and Nasdaq-100, respectively, closed higher. SPY rose 1.65% to $766.81, while QQQ advanced 0.97% to $691.95. Meanwhile, the Dow tracker, State Street SPDR Dow Jones Industrial Average ETF Trust (NYSE:DIA), ended 3.10% higher at $533.11.
In premarket trading on Thursday, SPY was up 0.10%, QQQ declined 0.78%, and DIA rose 0.70%.
Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.
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