Given the unreliability of polling, markets will wait for tangible results before reacting. The composition of congress will be the first concrete signal, with a divided or right-leaning legislature seen as a positive check on executive power. This could trigger currency rallies well before the final presidential outcome is known.

Uncertainty around the 2026 Fed Chair nomination is influencing markets now. The perceived higher likelihood of dovish candidates keeps long-term policy expectations soft, putting upward pressure on the yield curve's slope independent of immediate economic data.

Introducing legislation in Congress isn't always about immediate passage. Bills frequently function as messaging vehicles to build awareness and support for an idea over several congressional terms. This gradual process allows for the evolution of major policy, like the creation of new government agencies, which rarely happens in a single two-year cycle.

The current expectation for legislative stalemate could be completely upended by a significant economic downturn. A recession would make fiscal stimulus more politically appealing to both parties, consistent with historical patterns, creating an environment for policy action that otherwise seems unlikely given the political landscape.

With major US policy variables like tariffs and fiscal stimulus now more defined, investors should shift focus from predicting policy direction to analyzing how businesses and consumers react to these established policies, as this will drive market outcomes.

By publishing an op-ed in a typically oppositional outlet, Senator Sanders is positioning AI-driven job loss as a bipartisan wedge issue. This move suggests a political strategy to make the economic impact of AI a central theme in upcoming elections, potentially starting with the 2026 U.S. midterms.

Even if Democrats win the House, their majority would likely be too slim to significantly change policies that impact market pricing. Similarly, a plausible Republican agenda like more tax cuts would face internal party opposition from fiscal hawks, suggesting a continuation of policy gridlock regardless of the outcome.

The current administration's singular focus on AI has exacerbated a K-shaped recovery, hurting the average voter. To win re-election, politicians will be forced to stimulate other sectors of the economy to lift "Main Street" out of recession, making the concentrated AI/Meg7 trade less attractive moving forward.

The current administration is tolerating economic pain and a market slowdown now, a year before midterm elections. This creates the political capital and justification to aggressively stimulate the economy and boost markets right before voters head to the polls.