The 2026 midterm elections are unlikely to cause significant policy shifts due to probable gridlock. Their real value for investors is in providing 'soft signals' about evolving voter preferences that could foreshadow major policy directions after the 2028 general election, creating opportunities if the market misinterprets them.

Economic policies benefiting older, asset-owning generations at the expense of younger ones are reshaping politics. The traditional left-right divide is becoming less relevant than the conflict between classes, which is highly correlated with age, creating unusual political alliances between formerly opposed groups.

A deep distrust of the bipartisan "neoliberal consensus" has made many young people receptive to any counter-narrative, whether from the left or right. This creates a powerful anti-establishment bloc that finds common ground in opposing the status quo, explaining the crossover appeal of populist figures.

Populist figures don't create societal problems; they rise to power because existing economic and social issues create an environment where their message resonates. To solve the problem, you must address the underlying conditions, not just the leader who represents them.

Recent election results reveal two distinct Americas defined by age. Younger voters are overwhelmingly rejecting the political establishment, feeling that policies created by and for older generations have left them with a diminished version of the country. This generational gap now supersedes many traditional political alignments.

Historian Anne Applebaum observes that significant US constitutional amendments often follow profound national traumas like the Revolution or the Civil War. This suggests that without a similar large-scale crisis, mustering the collective will to address deep-seated issues like systemic corruption is historically difficult, as there is no single moment of reckoning.

Figures like Donald Trump don't create populist movements; they rise by capitalizing on pre-existing societal problems like economic despair. Focusing on removing the leader ignores the root causes that allowed them to gain power, ensuring another similar figure will eventually emerge.

The current level of hyper-partisanship is not a recent phenomenon but the culmination of a continuous, 40-year decline in public trust across all major institutions, including government, media, and church. Trust was significantly higher even during past national traumas like the assassinations of the 1960s and Watergate.

The perception of national decline in the US is not limited to one political side. Polling indicates that both left and right-leaning citizens believe the country's constitutional order and institutions are breaking down. The key difference is that each side is simply happy when their faction is temporarily "winning" the process of collapse.