Latest / Trend Watch / Episode 109: The Fourth Turning Midterms

Transcript

Episode 109: The Fourth Turning Midterms · Trend Watch

• 0:04
  SPEAKER_01: Ready to take a deeper look at where history, politics, and economics all intersect?
• 0:10
  SPEAKER_01: Well then, you've come to the right place.
• 0:13
  SPEAKER_01: Each week, here's where we pull back the headlines and focus on the big trends,
• 0:18
  SPEAKER_01: the stuff that actually shapes our future.
• 0:21
  SPEAKER_01: Through the noise, we focus on the signal.
• 0:24
  SPEAKER_01: I'm your host, Neil Howe, and this is Trend Watch.
• 0:30
  SPEAKER_01: Today is November 5th, 2026, and this is Trend Watch.
• 0:35
  SPEAKER_01: Welcome back, everybody.
• 0:37
  SPEAKER_01: As usual, I have on my fellow analyst, Christian Ford.
• 0:40
  SPEAKER_01: And so, Christian, the election's over.
• 0:43
  SPEAKER_01: I don't know if there was mass illegal voting going on in where you are down in D.C.
• 0:48
  SPEAKER_01: I shudder to think what might be going down there.
• 0:53
  SPEAKER_01: Well, we didn't vote on much in the city.
• 0:58
  SPEAKER_01: And I don't imagine there was a huge amount of difference of opinion either.
• 1:03
  SPEAKER_01: We all know that the administration lives in Virginia, right?
• 1:07
  SPEAKER_01: Anyway. That's right.
• 1:11
  SPEAKER_01: How was your week other than that?
• 1:15
  SPEAKER_00: Pretty good.
• 1:16
  SPEAKER_00: I got to say, I'm not loving, though, these darker evenings as the, you know,
• 1:21
  SPEAKER_00: as I can looking out the window right now, it's getting darker earlier and earlier.
• 1:25
  SPEAKER_01: But as you know, Trump has legislation out to solve that problem.
• 1:29
  SPEAKER_01: And if it passes, we could switch back even in the middle of winter.
• 1:34
  SPEAKER_01: Right.
• 1:36
  SPEAKER_01: Just mess around with everyone's mind twice, right?
• 1:40
  SPEAKER_01: No, I mean, seriously, the bill is up there.
• 1:42
  SPEAKER_01: He still wants to, and what it would do is actually we'd switch back before the spring.
• 1:46
  SPEAKER_01: So we'd, I guess what, we'd spring forward before the spring.
• 1:52
  SPEAKER_01: Anyway, you understand what I mean.
• 1:54
  SPEAKER_01: Yeah.
• 1:56
  SPEAKER_01: It's beautiful up here.
• 1:58
  SPEAKER_01: This is a, you know, it gets slightly drier, little bit cooler.
• 2:03
  SPEAKER_01: It's when I get the low lying clouds coming in the morning.
• 2:08
  SPEAKER_01: So when I look out from my mountaintop, I just see all the valleys and sort of, uh,
• 2:14
  SPEAKER_01: you Know cottony clouds sort of.
• 2:17
  SPEAKER_01: I feel like I'm in Shangri -La.
• 2:18
  SPEAKER_01: You You know what I mean? I'm sort of above the
• 2:21
  SPEAKER_00: world. Bob
• 2:22
  SPEAKER_01: Ross painting.
• 2:23
  SPEAKER_01: Well, there are actually a number of people who could have painted that.
• 2:31
  SPEAKER_01: But let's move right in.
• 2:32
  SPEAKER_01: I think we're here to talk about the election today.
• 2:36
  SPEAKER_01: There's no reason really to focus on anything else except as it's related
• 2:40
  SPEAKER_01: to the election, the blue wave.
• 2:44
  SPEAKER_01: But I must say, today it's turned in kind of a red wave, right, if you look at the markets.
• 2:48
  SPEAKER_01: Yeah. So this is something that interests me.
• 2:53
  SPEAKER_01: As you know, going back, we always have this period
• 2:57
  SPEAKER_01: of tremendous market uncertainty whenever there's a national election, right?
• 3:03
  SPEAKER_01: And it's interesting because before the election,
• 3:07
  SPEAKER_01: no one really has much of an opinion on exactly how the markets would react one way
• 3:10
  SPEAKER_01: or the other. But when it happens, it's always like crazy.
• 3:14
  SPEAKER_01: People can't decide, well, I don't Does Trump mean the dollar will go down or go up
• 3:19
  SPEAKER_01: and it just careens up and down?
• 3:21
  SPEAKER_01: Or is this good for markets?
• 3:23
  SPEAKER_01: Are people going to meet more money?
• 3:27
  SPEAKER_01: And the uncertainty itself, actually, about what's going to happen now,
• 3:32
  SPEAKER_01: people kind of got used to the Trump administration policies.
• 3:38
  SPEAKER_01: But now you don't know.
• 3:39
  SPEAKER_01: Is Trump just going to soldier on the same way?
• 3:42
  SPEAKER_01: Or is he going to do some huge deal, you know what I mean, with the incoming Democratic Party?
• 3:48
  SPEAKER_01: Well, we don't know that.
• 3:50
  SPEAKER_01: I have my own theories about it,
• 3:52
  SPEAKER_01: but why don't you just start in and say a little bit about the markets,
• 3:56
  SPEAKER_01: and we'll take it from there.
• 3:58
  SPEAKER_00: All right, Neil, the S&P 500 closed down today 4.30%,
• 4:04
  SPEAKER_00: and over the last five trading days is down 4.57%.
• 4:08
  SPEAKER_00: The global Dow actually didn't look as bad.
• 4:11
  SPEAKER_00: You know, today it only fell 1 .69%,
• 4:14
  SPEAKER_00: and over the last five trading days is only down 0 .76%.
• 4:18
  SPEAKER_00: The VIX closed today at 28 .18%.
• 4:24
  SPEAKER_00: That is the highest we've seen for a long time.
• 4:26
  SPEAKER_00: I believe yesterday was only 16.
• 4:28
  SPEAKER_00: As for the 10 -year Treasury,
• 4:30
  SPEAKER_00: that is at 4 .836 % down 10 .2 basis points
• 4:35
  SPEAKER_01: over the past five days.
• 4:36
  SPEAKER_01: Yeah, well, it's certainly Not a great time to be shorting duration.
• 4:41
  SPEAKER_01: You know what I mean?
• 4:42
  SPEAKER_01: And that was a great trade for a while.
• 4:46
  SPEAKER_01: I think long term, it's not a bad trade,
• 4:48
  SPEAKER_01: but this is the time where you want to pare that back a little bit.
• 4:53
  SPEAKER_01: And the real question is whether or not
• 4:57
  SPEAKER_01: the midterms may congeal A sort of peaking
• 5:03
  SPEAKER_01: of the market in general, because let's not put too fine a point on it, right?
• 5:10
  SPEAKER_01: What's been going down is the weakest and most extended part of the whole AI ecosystem.
• 5:17
  SPEAKER_01: And I'm talking about storage, memory, and chips, right?
• 5:20
  SPEAKER_01: I mean, you just look at it, right?
• 5:22
  SPEAKER_01: And even on the up day, which was the election day,
• 5:26
  SPEAKER_01: that was the one set of companies that didn't go up much at all, right?
• 5:32
  SPEAKER_01: And well, I should just say, you know, for us at our fund, as you know, Christian,
• 5:38
  SPEAKER_01: we took that as a sign that just tighten up, you know, press those shorts,
• 5:45
  SPEAKER_01: so to speak. You know what I mean?
• 5:48
  SPEAKER_01: And that right now is a successful strategy.
• 5:51
  SPEAKER_01: So my question for you is, as our You know,
• 5:56
  SPEAKER_01: as Keith McCullough at Hedges Management likes to say,
• 6:00
  SPEAKER_01: is this our initial entry into what we call quad four?
• 6:05
  SPEAKER_01: That is to say, declining inflation, a declining rate of inflation,
• 6:11
  SPEAKER_01: declining rate of real growth, and possibly a really big quad four.
• 6:17
  SPEAKER_01: That is to say, you know, the backside of the bubble.
• 6:20
  SPEAKER_01: I don't know.
• 6:22
  SPEAKER_01: I keep very agnostic about this, and I'm prepared for anything.
• 6:26
  SPEAKER_01: You know what I mean? I think it's nonsense to time the peak.
• 6:33
  SPEAKER_01: Neil, do you think? Yeah.
• 6:35
  SPEAKER_01: Well, but you have to be prepared, and it certainly changes how you have to allocate.
• 6:42
  SPEAKER_00: Do you think any of this decline in this kind of AI chip stocks has to do
• 6:47
  SPEAKER_00: with this anti-data center, anti-AI sentiment we saw in the midterms?
• 6:54
  SPEAKER_01: It could, although keep in mind
• 6:57
  SPEAKER_01: that you can go outside the U.S. to build these things. You know what I mean? True.
• 7:05
  SPEAKER_01: It is a global market out there.
• 7:06
  SPEAKER_01: And also, right now, it's sort of a state thing.
• 7:12
  SPEAKER_01: It's a state and local thing.
• 7:14
  SPEAKER_01: I mean, that's who you have to get permissions from.
• 7:17
  SPEAKER_01: Now, the states are changing even before the election.
• 7:20
  SPEAKER_01: Even Texas started turning against it.
• 7:23
  SPEAKER_01: I think even Governor Abbott, I should say ex-Governor Abbott,
• 7:28
  SPEAKER_01: or I should say the soon-to-be ex-Governor Abbott, was turning against it.
• 7:34
  SPEAKER_01: You know what I mean? So it's not the election itself.
• 7:37
  SPEAKER_01: The election is simply expressed where we all knew that the tide of opinion was going.
• 7:44
  SPEAKER_01: It has been said that if we do tighten up on data center acquisition,
• 7:49
  SPEAKER_01: it's simply going to increase the price of making all this available to people.
• 7:55
  SPEAKER_01: It may actually slow down the price.
• 8:02
  SPEAKER_01: The tide of capital investment and the expansion of the industry.
• 8:07
  SPEAKER_01: What was the expression we used?
• 8:12
  SPEAKER_01: Pacing the pace of progress.
• 8:18
  SPEAKER_00: Yeah.
• 8:19
  SPEAKER_01: I think pacing the frontier or something like that.
• 8:22
  SPEAKER_01: In other words, slowing down.
• 8:24
  SPEAKER_01: Wasn't that what Mario Amadei was talking about, right?
• 8:32
  SPEAKER_01: I think that it's, as everyone has always predicted,
• 8:36
  SPEAKER_01: this is the end of the whip, right?
• 8:40
  SPEAKER_01: It's where the third or fourth derivative of the growth is most accentuated.
• 8:47
  SPEAKER_01: So that when the growth just begins to sort of slow down,
• 8:52
  SPEAKER_01: a lot of these people just go totally negative.
• 8:56
  SPEAKER_01: That's the point.
• 8:57
  SPEAKER_01: And so we've seen the Mag 7 didn't do so badly this today, right?
• 9:02
  SPEAKER_01: I don't know if you looked, but that was my impression.
• 9:06
  SPEAKER_01: Yeah, I'm seeing here, you know, other than NVIDIA, of course, right?
• 9:10
  SPEAKER_01: You know, okay, Apple's down 3.6.
• 9:13
  SPEAKER_01: Well, that doesn't look too good, does it?
• 9:16
  SPEAKER_01: But, excuse me, Microsoft's down 3.6.
• 9:19
  SPEAKER_01: Apple's down 1.5.
• 9:20
  SPEAKER_01: Amazon's down 1, you know, 2.1.
• 9:23
  SPEAKER_01: I mean, these are actually down less in the market.
• 9:26
  SPEAKER_01: Um, So not too bad.
• 9:30
  SPEAKER_01: But obviously, all of these things are connected.
• 9:33
  SPEAKER_01: And for some of these things, I mean, Micron was down 17.5 today, right?
• 9:40
  SPEAKER_01: And AMD down 17 point something.
• 9:44
  SPEAKER_01: I mean, some of these things are terrible today.
• 9:48
  SPEAKER_01: And Marvel, right?
• 9:54
  SPEAKER_01: 16.4.
• 9:56
  SPEAKER_01: One day.
• 9:57
  SPEAKER_01: Yeah, exactly.
• 9:59
  SPEAKER_01: Anyway, any other economic reports, news?
• 10:05
  SPEAKER_00: Yeah, I have one indicator for you.
• 10:07
  SPEAKER_00: We got the official ISM PMIs for October.
• 10:11
  SPEAKER_00: These were very similar to the, you know, we had the S&P Flash last week.
• 10:15
  SPEAKER_00: But the official ISM manufacturing rose from 54.5 to 55.5.
• 10:21
  SPEAKER_00: And services slightly fell from 54.9 to 54.5.
• 10:26
  SPEAKER_00: But both of them looking red hot.
• 10:29
  SPEAKER_00: Yeah, no slowing of those data centers.
• 10:33
  SPEAKER_01: All right.
• 10:37
  SPEAKER_01: Let's dig into the election.
• 10:40
  SPEAKER_01: Why don't you set the stage a little bit,
• 10:42
  SPEAKER_01: and then we can sort of gradually go deeper
• 10:46
  SPEAKER_01: and deeper into what caused it,
• 10:50
  SPEAKER_01: what it means, and then maybe ultimately we can say something about its place
• 10:56
  SPEAKER_01: in the whole process
• 11:01
  SPEAKER_01: Fourth turning evolution, right?
• 11:05
  SPEAKER_01: Right. So why don't you launch us here?