Macro StrategyElection Cycle

The Map and the Terrain: 2026 Midterm History Meets Geopolitical Reality

Historical map, quantified - S&P midterm-year avg +4.7% since 1931 vs +9.5% non-midterm, October vol 19.9% vs 12.3%, post-election 12m avg +15.4% since 1950, 19 consecutive positive cycles
Terrain divergence - Brent above $100 on Hormuz headlines, Fed uncertain on oil-driven inflation, defense and midstream trading at premiums, federal interest expense higher than any of prior six midterms
Risk takeaway - map still informs but terrain raises downside into October and widens post-election outcome dispersion, historical 12m post-midterm returns ranged +1.1% (1986) to +33.2% (1954)
Defensive posture - low-beta quality/dividend screens can fail in macro shocks; 5yr quality basket CAGR +31.2% but -7.9% in 2022, while defense/energy/gold/grid thematic gained +9.3% that year
Practical action - maintain 5% to 10% cash through August for optionality, trim gross exposure into Aug-Oct volatility but stay invested for the post-election rally, size positions for wider dispersion not just the mean

Glenn Ford

May 20, 20261:45 PM1460

The (SPY) has slipped 2.6% from this year's highs, Brent crude has been pushing above $100 a barrel every time a Hormuz tanker incident hits the news, and the Fed is still trying to figure out whether oil-driven inflation in May is the same thing as oil-driven inflation in October. Midterms are six months away. The question I keep getting from people right now is the same one: do the historical patterns still apply this time?

They apply, partially. The partial answer is the one that matters.

Keep Reading

Create a free account to access more content.