Recent elections demonstrate that a strong stock market doesn't translate to votes. This political reality frees politicians to enact populist policies that may harm market indices but appeal to the electorate, creating a structural headwind for cap-weighted indexes dominated by a few large tech companies.

Despite populist rhetoric, the administration needs the economic stimulus and stock market rally driven by AI capital expenditures. In return, tech CEOs gain political favor and a permissive environment, creating a symbiotic relationship where power politics override public concerns about the technology.

U.S. economic policy is no longer aimed at broad prosperity but at ensuring the S&P 500 index continues to rise. This singular focus creates negative side effects, like suffering for the majority of the population who rely on wage growth rather than asset appreciation.

The massive, AI-driven surge in the stock market creates a perception of economic strength. This provides political leaders with the "cloud cover" to pursue controversial or authoritarian actions that would face intense scrutiny and opposition during an economic downturn.

The robust performance of the AI sector buoys the stock market, creating a positive economic narrative. This economic stability acts as 'cloud cover,' distracting the public and enabling politicians to pursue controversial or anti-democratic actions without immediate economic backlash that would otherwise trigger public outrage.

The current market boom, largely driven by AI enthusiasm, provides critical political cover for the Trump administration. An AI market downturn would severely weaken his political standing. This creates an incentive for the administration to take extraordinary measures, like using government funds to backstop private AI companies, to prevent a collapse.

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.

Traditional protests are ineffective against an administration that prioritizes market performance above public opinion. The most potent form of resistance is to create economic instability, as this is the only language such leadership understands and responds to, forcing a reaction where outrage fails.

Despite expected legislative gridlock, investors should focus on the executive branch. The president's most impactful market tools, such as tariff policy and deregulation via executive agencies, do not require congressional approval. Significant policy shifts can therefore occur even when Congress is divided and inactive.