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In this video, I'm going to break down my thesis for why I think a Democratic sweep is actually better for Donald Trump versus a split House and Senate. I also want to provide you some updates on what the suits and the institutions are saying because a lot of them think we should be hunkering down for an all-out war that could honestly last until the end of the first quarter of 27 which would basically since welcome to well now the second month in the fourth quarter should basically be another five months of this conflict and the worst part ahead of us.
Not ideal, especially since the Iranians have stepped up their attacks on ships in the Gulf. Attacks on ships in the Gulf hit 15 in September. That was back when we still had the tanker fortanker policy without the tanker for tanker strikes because we're getting so close to the election, just 2 days away for midterms.
We had 28 strikes in October. So, not great. Things are definitely worsening. And that's leading to institutions like Rambo Bank to say, "Hey, base case scenario here, a coalition of the United States, Israel, the Saudis, and others are going to work together to strike Iran very hard." And the Houthies right after midterms, and that conflict would end up lasting until the end of the first quarter of 2027.
So basically, really high oil and gas prices through the holidays. Not great, but there is some hope. And then we're going to get into my thesis on midterms and what historically usually happens with midterms. The hope is actually splashed across the front page of Alazer today. It says that Iran is now waiting for a US response to the latest plan to open the straight of Hormuz.
Now, why is that different or why is that potentially a good thing? Well, it's a good thing because yesterday the Iranians said, "Hey, we got JD Vance's letter. we find that the tone of this style of negotiation has substantially improved. It almost actually seems like the United States wants to do a deal now.
And now we've responded and it's the turn of the United States to respond to our response. In other words, we have gone from stalemate to JD Vance comes through as potentially the deal maker chief or at least the person who's being set up as the dealmaker. It's kind of like good cop, bad cop, right?
Anyway, so they put JD Vance's paper forward and say, "Hey, he'll come meet you in person. He'll negotiate this." Now the Iranians are like, "Wow, this is actually a much better deal." You know, maybe we could talk about doing like a reopen the straight of Hormuz within 2 days. Because historically, we said, you know, look, we'll do a deal, but we want 7 days to reopen the straight of Hormuz.
Now Iran is like, "Huh, you guys have changed your tone. Uh, you know what? will be willing to open up the straight of Hormuz within two days of doing a deal. Which interestingly means if they sign a deal today, the straight of Hormuz would open on election day, which is usually when the Republicans like to go vote.
H interesting. So now it's on Donald Trump's desk, which means watching Truth Social today sadly is even more important. Although the amount of spam notifications I get from there is really exhausting. So anyway, that is the latest on Iran. And once again, it sounds good, but you know, we've heard sounds good for a while now.
Remember my thesis, and I want to get into some data here, and then we're going to talk about midterms. My thesis has been the best case for Trump would be getting a deal before the Fed. The fact that we didn't get a deal before the Fed meeting was a red flag that things were indeed hitting a brick wall in negotiations.
This is a good sign that maybe getting it before midterms still has some hope. But let's forget about that hope for a moment and let's talk about this uh sort of prediction that I have regarding midterms. And let's also talk about positioning. Like what do the institutions think? Uh and not only what do the institutions think, but you know what's positioning out there?
Like how are people actually allocating their cash? Just for good luck, let's finish this nasty espresso out of a beautiful Luigi mug just for some green good luck. It actually beats dyeing my hair green. And I'm all for dyeing my hair green to signal a bull market. But I have to say these days dying your hair makes you seem a little politically aligned.
And my goal is to stay pretty dang neutral. Anyway, take a look at this. Special situations. Big fan of this guy. Uh he says, quote, "If you think everyone is bearish, think again." And he quote tweets Capital Observer here. Capital Observer rips a piece over here from Bank of America's uh allocation document.
And what they say is Bank of America's private client equity holdings as a percentage of assets under management basically sits at the highest level that we have seen since the big bull run that ended in November of 2021. And if you go over here to the cash position for private clients, you're sitting at the lowest going well back to 2004 and beyond.
This chart only goes back to 2004. So there's this idea of like how could you possibly say people are bearish if this is the positioning. But there's something that people forget when they look at these charts. And this is why nuance and and keeping, you know, a little bit of extra IQ involved here is really important.
And this isn't to dish on anyone. And it's to basically say, bro, Bank of America private clients got more money. They are less likely to need to paperhand because they're an overleveraged hedge fund or they're an overleveraged individual who's yoloed into triple leveraged ETFs or margins. Private clients are more likely to be older or retired and have already gone through getting punched in the face and have learned the lesson of don't take on too much debt.
Your boy Kevin's been punched in the face, too, and it ain't ever going to happen again. This is why, just as a side note, I always think it's funny when people are like, "Oh, but Kevin, you know, you did this thing that failed in the past." And it's like, yeah, and I'm grateful for that because it means I ain't going to do that again, right?
Like, if I was as a venture capitalist going to invest money into a founder, like because we have a VC firm. If I'm going to invest into a founder or work with a founder, I'd rather work with a founder who's failed a bunch before because they know what not to do. uh somebody, you know, fresh off the boat, so to speak, they necessarily going to know because they haven't stepped on the landmines yet and lived to tell about it.
All right, so anyway, um that's important to know about this cash allocation. Now, as far as uh Northern Trust, they're an institution. They still think that going into this election, one of the big things is debt. And obviously Donald Trump's $5,000 stimulus plan is really exciting for the odds of potentially pushing for a Republican sweep, although that seems extremely unlikely right now.
The betting markets uh do not agree that we are going anywhere near a Republican sweep. We'll look at that in just a moment. But they say that debt right now is at $4.2 trillion against the 41.1 trillion ceiling. That means we've got about $900 billion of room to spend, which means in the first half of 2027, we are going right back to gridlock and government shutdowns.
Now, government shutdowns, in my opinion, are going to be the absolute worst if we have a Republican and Democratic uh House and Senate. So, in other words, we have a split Congress and then Trump is the Republican. Now, here's why, and this is this is sort of my thesis. Uh it might be somewhat unpopular, but I think it's uh valid.
I think this has I think you'll see the logic in this. Donald Trump, he likes making deals. Whether or not what he's making deals on are coming from a place of bullying or stupid economic policy like I'm very anti- tariffs. That's beside the point. Trump wants to use like gain leverage where he can and then use that to make deals.
Okay? So if you have, you know, let's say, uh, this over here is the House of Congress, right? And then you got two chambers over here. If you end up with Republican and Democrat, you have a very sad house. This is infighting. This is gridlock. This is government shutdown. And then what you're going to have over here in the, you know, Trump ballroom over here.
Okay. It kind of looks like jail, doesn't it? Ah, man. That's offensive. That's not the intention. But anyway, Donald Trump in his ballroom, okay? He, if this is going on, is just going to basically look the other way. He's going to ignore Congress. He's going to work through executive action and, you know, Trump's going to be Trump.
Doesn't freaking matter. Okay? So, expect little progress in this scenario. Now, if you come out and instead have obviously if you have an RR, you know, that's great. Donald Trump's going to be able to do whatever he wants with Congress. That there's a limit to how much they want to spend. Trump wants to spend more, but there are a lot of Republicans who are like, "No, we have spent too much.
We don't have any more money to spend." This just seems unlikely right now. Even if we get a deal with Iran, this seems unlikely right now. So instead, what seems more likely is getting Republican and Democrat. So we have some kind of split, right? Republican and Democrat split in this uh Sorry, that's not what I meant to say.
That does seem likely. That's the bad thing. Uh, but what could also happen, especially if we don't get a deal, is we could get Democrat Democrat. Okay, interestingly, now Donald Trump can actually work with them. I know that sounds crazy. What do you mean Trump's going to work with the Democrats? But this is a two-party negotiation.
This is a three-party negotiation right here. That is a threeparty triangle negotiation. That's like trying to form a coalition government in Germany and getting stuff done. It ain't going to happen. Okay, these are too many desires, you know. Oh, we want lower debt. Oh, we want fewer cuts to Medicare or Medicaid.
What, you know, whatever. Uh and and uh uh benefits for SNAP, right? All those issues create gridlock and sadness. That's really bad. This triangle negotiation bad. You actually get a full Democratic chamber over here. Donald Trump has one party to negotiate with. It's essentially a two-party negotiation.
It's a bilateral negotiation rather than a trilateral negotiation. This is actually a lot easier to get progress done because if Donald Trump throws them a bone, he's going to get what he wants. That's a lot easier than Trump trying to get the Republicans on board who are a lot of them were kind of like anti- more debt spending, right?
And a lot of the Democrats are like, "No, man. I'll spend some more." Donald Trump probably more aligns with, "Yo, let's spend more." So, this is actually easier, less likely to get gridlock in a Dem sweep scenario. And again, the odds, you know, of getting a $5,000 STEMI, I think, are probably less than 5% at this point.
Uh but I mean if you look at Khi over here, which we know is a sponsor of the channel, but if we look at Cali over here, right now we're at 71% leaning Dem uh on the Senate and 93% safe Dem on the House. So it's essentially almost certain right now that uh Democrats are going to uh take the House at least.
But I do think the odds will shift if we get a deal in the next 48 hours. That's where I'm kind of tempted to say like you don't have to hold this until Tuesday, but if we got a deal today or tomorrow, I think there's an opportunity to buy some positions for Republican sweep or Republicans winning the House.
You don't even necessarily have to hold it through it. It's just right on a deal you buy and you flip out of it. It's just an idea. It's obviously not personalized financial advice. It's just an idea. But if you like that, you know, consider signing up for Cali. Meet Kevin. use code meet Kevin when you sign up and when you make your first trade and you sign up you get a free 25 bucks so you can kind of play with the house's money a little bit uh of course you know just in full transparency their motivation is you fund more and I funded more myself you know kind of this is kind of cool uh but anyway I might do that you know I think that's reasonable but anyway so so that's my I think I'm calling my unpopular opinion because I don't know if people are going to be like what do you mean Trump is going to get along with the Democrats just watch okay I kind of think part of Trump is a little closet Democrat in there.
Okay, I guess he wants to spend some money. You know what I'm saying? But anyway, uh as far as uh what we've got on the calendar, Treasury refunding on Wednesday, Bank of England on Thursday, payrolls on Friday. That's a big deal. Next shut shutdown deadline is December 11th, but you know, Republicans are still going to have control in their lame duck, so that doesn't matter so much.
Uh right now they're, you know, my view is still 70% chance we get a deal before the election. Obviously, every day that goes by, it's slipping, but the the option to do it is in Donald Trump's hands right now. Uh, okay. Iran, uh, we know is waiting to potentially take a deal uh, from or the US to take their deal.
Great. What else do we have? We have to talk about the market. So, in the 6 months after every midterm since 1950 per JP Morgan, the S&P 500 was higher. And if you want an ETF, and this is not sponsored, but if you want an ETF for the S&P 500, I like Spy M. Okay, SPYM, that is the very very lowcost one that they use for the Trump accounts as well.
Uh it's like two bips I think in fees. It's crazy cheap. Big fan of that. Anyway, u on average the S&P 500 has returned 13.8% 8% after midterms in the six months after midterms with a 100% hit rate. So like past results don't guarantee future results, but past results are saying 100% of the time the S&P 500 was 13.8% higher on average since 1950.
100% of the time being up the average was just 13.8. So that could be up 1%, right? Anyway, elections Tuesday. We'll see what happens. What's on the ballot and where do you want to pay attention to things? Obviously, all 435 House seats are on the ballot. They are every two years. 35 Senate seats are up for grabs.
36 governors are up for grabs. That's those are a lot of governor elections, right? Republicans hold the House right now, 219 to 213, which is about a six seat lead right there. And Senate 53 to 47. Democrats need five House seats. Morgan Stanley says the odds of a Democratic seat sit at 65% and Democrats taking the House only at just 29%.
Republicans holding both per Morgan Stanley, in other words, a Republican sweep and a $5,000 stim check, 8% chance. That's the odd that in my opinion, you look at and you say, "Bro, that could potentially double in odds uh if Republicans sweep." So, you'd have to find the uh Republican sweep option for midterm on something like, you know, uh Kelshi Republican sweep.
Yeah, it's listed at 7%. So you could search for it as midterms Congress balance of power 6.8. Oh my gosh, dude. I might put some money on this like right now. I mean, I should do it after, but honestly, I might put like 200 bucks on that. Again, I want to close it out before the election, but I think I might put like 200 bucks on this just for giggles cuz we get a deal over the next few hours, dude.
That's going to double the not not even saying it's going to happen. I'm just saying the odds of it happening are going to double, right? No guarantees. But anyway, I'll do that after this. Okay, so uh the decision desk gives Democrats a 79% chance of getting the House alone. Raymond James says 92% chance of the House alone.
Morgan Stanley says this is all going to come down to at the House to North Carolina 3, Florida 7, Florida 13, and Virginia 5. Uh if those flip, if actually if any one of those flip to Democrats, any four of those seats, the odds of Democrats getting the House go to 97%. So write those down, okay? If you're keeping score, NC3, FL7, FL13, VA5, those are the ones to watch.
Republicans need all of those. Each seat individually has like a 25% chance of flipping. So those are critical races. City City Bank is calling the Senate a true tossup. They have to defend 22 seats. The map does favor them, but history says Democrats win here. Okay. Uh more than 40 million early votes are already in.
44% of those are deemed to be Democrats and 31% of those Republicans. I was actually surprised by that stat. I thought more Republicans would be voting day of, but so, you know, some of these early votes are, you know, already in. I think what the difference is going to be Boy, Kevin's out of coffee.
I think the diff Oh, no, I'm not. I think the difference is going to be if we get a deal, you're gonna get people out to vote who maybe didn't vote or weren't going to vote, right? Like people who were discouraged, who are pissed off, who are like, "This is bull crap. Screw it. We're going to lose anyway." A deal gives them the hope of, "Oh man, I could be part of the winners.
Let's go vote, baby." Anyway, um, as far as the economy, Northern Trust says midterms are unlikely to have much of an impact on the economy. That a lot of the big fiscal policies are kind of already in law and that you would expect for the first two years of an administration. The Democratic majority is too thin to get to 60 votes, and you're definitely not getting to 67% veto override to take control of Donald Trump.
That ain't going to happen. It's just not happening. As far as Republican tax cuts, probably too many Republicans are anti- more spending to actually make it happen. Even if Republicans swept, that actually brings the $5,000 stimulus check into question as to whether or not Republicans would even go for that because it would need the approval of Congress.
They'll probably shut it down and then Trump will just go, "Ah, well, you know, it was that senator's fault." Somehow it'll still be Chuck Schumer's fault. Anyway, a Democratic House does mean uh gridlock obviously if you know the Senate is controlled by Republicans. We touched on that. Uh as far as what Democrats are really wanting right now, they want to reduce SNAP and Medicaid cuts.
And Morgan Stanley actually says if you can reduce those cuts, you could actually help GDP with some extra consumption and therefore the velocity of money by about 20 basis points. So getting those Democrats into one of the chambers actually helps GDP a little bit. Again, it's more spending and more debt, but this isn't, I think, a debt reckoning cycle.
This is a growth cycle that we're in right now. So, yes, the debt is a problem. It's just not today's problem. That's why the can keeps getting kicked down the road. Obviously, a lot of uh you know, these election campaigns are coming down to data centers. My opinion on this, just to be clear, is that Democrats will do whatever they can to block or minimize data centers.
Republicans will rule out the red carpet. I think even if Republicans are like, "Yeah, guys, don't worry. Like, we're gonna fight the data centers." They went, they're going to roll out the red carpet. I'm relatively okay with data centers just as long as they're not sort of in your backyard, right?
I think I would rather have the data centers here than easy access for China to get their hands on them. But uh speeding up the permits to put them into better areas. Big fan of like I if I was, you know, in government, I would probably do something like look, if you build us a new park and a new school and a new police and fire department and you build it just outside the city and you repave pave all our roads, we'll expedite your permits to 90 days.
Like I would leverage how fast I could get your permit approved, but I would just ask for more if I were government, like a negotiation. And in my opinion, a lot of these data centers that, you know, standing up a gigawatt data center, $60 billion, if I'm asking for a little 4% tax on the side here to help out people and put some new roads in or whatever, I don't think that's that big of a deal.
I think if they're like, "Dude, you're telling me instead of two years for permits, we could get it done in 90 days? I'll pay more." that I think is an opportunity actually for local governments to weaponize big budget spends and and that helps local services. So, you know, even though I'm like a free market kind of guy, I prefer shorter permits over longer permits, even if that means paying more.
Like I would rather, most businesses would rather pay more for a permit and give more to the local town and wait less business. What do they say? You hear it in World of Warcraft. Like anytime you talk to one of the freaking goblins, how do the goblins know about this? Time is money, friend. Every time.
Anyway, uh so so that's my take here. Obviously, I'm optimistic about an Iran deal, but you've heard me say that like a broken record. I apologize about that. Uh I just believe it. So, we'll see. Um every minute that goes by just makes me look a little more clownish, though. I will say although you know we get a little bit of hope over there in Al Jazer but then you know people are going to come out in the comments go well you know Al Jazzer is bought out election night you got 3:00 p.m.
uh is when the first polls close Pacific time 4:30 to 5:30 p.m. we'll get some more clues out of Kentucky Ohio 5:00 p.m. matters a lot because that's when Texas closes. So obviously we'll be live streaming between, you know, 3 p.m. California time in the evening. Alaska doesn't close until 10 p.m. along with Pennsylvania, Wu uh Wisconsin, California, they could be even slower.
Uh you've got uh Senate calls potentially around 7 p.m. North Carolina, New Hampshire, Georgia, Texas, Kansas, Ohio, and AMD reports at 2 p.m. that day. So, it's going to be a long day. So, actually, I might have to reschedule my haircut because I think my haircut scheduled for 3 p.m. and I want to be live that day.
So, we're going to have to do a little rescheduling. All right, folks. Thanks so much for being here. Enjoy your Sunday. If you like that video, check this one out. I think you're going to love it. Why not advertise these things that you told us here? I feel like nobody else knows about this. We'll we'll try a little advertising and see how it goes.
Congratulations, man. You have done so much. People love you. People look up to you. Kevin Pra there, financial analyst and YouTuber. Meet Kevin. Always great to get your take.
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