Follow The Money And The Meter: Our Midterm Playbook For The Tech Trade

Introduction

One of our subscribers recently sent us a great question.

In short: What could a Democratic takeover of the House, the Senate, or both mean for the market, and especially for the tech trade? Is the risk real, or is it being overstated? And which policies or areas of tech should investors watch?

It goes without saying that this is a timely question.

Over the past few weeks, Wall Street has been sounding the alarm. Bank of America's Michael Hartnett warned that a Democratic sweep of Congress (combined with a win in the Texas governor's race) could trigger a 10% decline in U.S. stocks, with the AI complex at the center of the risk. Evercore ISI made a similar point, as they argued that the broadest risk to the market comes from investigations and hearings targeting big tech and AI.

And the odds have moved fast. As of mid-October, Kalshi traders gave Democrats a 90% chance of winning the House and a 63% chance of winning the Senate.

So, the subscriber isn't alone. A lot of investors are asking the same thing.

In this article, we'll do three things.

First, we'll explain what Congress can and cannot do when the other party controls the White House. This is the educational part, and it matters well beyond this election.

Second, we'll walk through the three channels through which politics can actually hurt tech stocks. Spoiler: only one of them gets most of the headlines, and it's the least important one.

Third, we'll give you our scenarios, what our hedge fund contacts are doing, and a concrete playbook.

As always, we have no political horse in this race. Our only goal is to help you protect and grow your portfolio, whatever the outcome.

We tell you what Wall Street and Washington are telling us, and what we make of all of this.

So, let's dive in!