The Times They Are A-Changin’: All Change 

 

 

“And these children that you spit on
As they try to change their worlds
Are immune to your consultations
They’re quite aware of what they’re goin’ through” 

 

Perhaps unintentionally, this is a follow-up to last weeks “Sliding Doors” where I described the increasing popularity for revisiting, and perhaps reversing, 2016’s Brexit vote. 

 

In the US, last weeks midterms offered something similar, with voters turning their back on Trump and his Republican’s. 

Domestically, the loss of Congress will constrain Trump, and we will likely see endless fights, vetoes and deadlocks. However, it does appear likely that the Democrats will seek to rein in Trump and reverse much of what he has done.  

The incoming chair of the House Judiciary Committee Jamie Raskin posted: “House Democrats are in the fight to bring government back from the brink of authoritarianism. We will shine a light on President Trump’s quid pro quo, coin-operated, pay-to-play corruption and renew American government as an instrument for the common good.” 

Raskin’s intention include subpoenaing law firms that struck deals with Trump to learn more about alleged coercion from Trump, investigating Attorney General Todd Blanche for his refusal to produce documents required by the Epstein Files Transparency Act and for the Department of Justice’s persecution of those Trump considers enemies, including James Comey, Letitia James, Adam Schiff, Mark Kelly, Maggie Goodlander, and Jason Crow. 

 

We will shine a light on President Trump’s quid pro quo, coin-operated, pay-to-play corruption and renew American government as an instrument for the common good.

 

Elsewhere, Representative Robert Garcia, who is in line to chair the House Oversight and Reform Committee, plans to focus on “the Trump crime family.” Garcia noted that a Russian oligarch paid for Don Jr.’s wedding party, the Saudis invested $2 billion in Jared Kushner’s business, and Eric Trump is on the board of companies that are getting Pentagon contracts. Trump himself has pocketed billions from crypto schemes. 

The Illinois Gov. JB Pritzker, one of the top-tier 2028 presidential contenders, has published a 75-page plan for the incoming Congress, “with ideas on everything from increasing the federal minimum wage to restoring SNAP and Medicaid cuts.” 

N.B., SNAP stands for the Supplemental Nutrition Assistance Program, which is the largest federal anti-hunger program in the United States. Formerly and still commonly known as “food stamps,” 

However, on foreign policy Trump will retain much greater freedom of action, and it is expected that he will exploit this to the full.  

 

‘on foreign policy Trump will retain much greater freedom of action, and it is expected that he will exploit this to the full’

 

This could lead to a deal with Putin which sacrifices Ukraine, in order that the US can access Russia’s energy resources and rare earths. There could be a big trade deal with China, possible regime change in Cuba. What won’t change is Trump’s lack of concern for the opinions of either Europe or Britain. 

There are numerous opportunities for the Democrats to expose the Republican party’s relationship with Trump. 

They could strengthen sanctions on Russia and restoring aid to Ukraine. Only 3% of the electorate; only supports Russia over Ukraine, rising to 4% amongst Republicans. 

The same can be said for continuing the failed Iran war. 

Domestically examples include ending tariffs, reining in AI and data centres, reversing the “big beautiful” tax bill, ending ICE abuses, the promotion of cost-effective green energy, and eliminating the ability of politicians and their family to benefit financially from their offices. 

Whilst this would put Congress on collision course with the president, it also forces Republican’s to either support Trump, which, in effect, makes them into accomplices, or to show that the party has moved on from Trumpism. 

There is also key economic trends that will play out. 

The first is the Iran war. If inflation and much of the cost-of-living crisis is to be overcome then this has to be ended and Strait of Hormuz reopened.  

The second is the continued roll-out of data centres to support AI. 

 

‘Voters approved nearly every datacenter moratorium that was on the ballot’

 

Voters approved nearly every datacenter moratorium that was on the ballot, dozens in total, with one notable exception: Hardwood, North Dakota. 

Analyst Dan Ives said the results of the midterms are a clear sign that the pace of data centre buildout will start to slow down; “There is no way to sugarcoat that Democrats taking control especially over the Senate will create some major hurdles for AI and tech legislation in the Beltway over the next two years.” 

This uncertainty, along with AI firms insatiable need for funds, is starting to impact the sector, and because, of their size, broader stock indices.  

In the last month the S&P500 has fallen from 7811 to 7376, whilst, last Thursday (5/11), the Nasdaq fell 5.5%, its worst day in 19-months,  

Chip stocks were particularly vulnerable; SanDisk fell 22% and Western Digital by 17%. Wall Street’s “fear index”, the Vix, jumped by more than 60% to its highest levels since the early weeks of the Iran war, in a sign of rising market volatility. 

As a result, the proposed Anthropic IPO price has fallen back to $1trn after rising to $2trn; CoreWeave 5-year Credit Default Swaps are quoted at +1270, a level which indicates impending doom! 

Nvidia are launching an independent investigation following reports that founder and CEO Jensen Huang has been the target of “a foreign intelligence effort”, conducting a romantic relationship with a Chinese woman, Alice Huang, who was recruited to spy for China’s Ministry of State Security intelligence agency. 

 

‘a significant proportion of gen Z is tired of sitting on the sidelines while their political systems fail them’

 

The one thing that discernibly missing for the midterms was genZ protests which had played a key role in shaping the outcomes of elections in Serbia and Brazil, and will likely do so in Spain later this month 

As Erica Chenoweth, a political scientist at Harvard Kennedy School, said: “Gen Z is rising.It is abundantly clear that a significant proportion of gen Z is tired of sitting on the sidelines while their political systems fail them.” 

She noted, the wave of recent youth-led protests may mark the beginning of a “profound generational transformation in world affairs” – one that could be capable of countering the global trend of democratic backsliding. 

 

The last word goes to Bilal Narjissi, a 17-year-old high school student in a suburb north of Paris: “We all agree on one point. That young people are treated like children, far too much, and that they aren’t listened to enough.” 

 

“’Cause it’s gettin’ kind of quiet in my city head 

It takes a teenage riot to get me out of bed right now” 

 

 

As the dust settles on the result of the midterms which can be summarised as a clear repudiation of the Trump administration.

The MAGA voters haven’t gone away, they have simply realised that Trump is all about Trump and they are merely cannon fodder for his ambitions.  

There are differing schools of thought on how this plays out, but it does appear that Congress and the President are on a collision course, both using their veto to frustrate the other. The interesting part will be how Republican members react: vote with Trump and condone a felony and endanger their own political future, or vote against him and return the party to its roots.

What needs to be sorted are the two wars.

Iran is easier, as the US is one of the protagonists, although Iran is likely to drive a hard bargain.

Ukraine is more difficult. Trump doesn’t now have carte blanche to sell out Ukraine to Russia, and Putin has too many body bags to back-off. Perhaps the answer is for the US to resume support for Ukraine which might turn the tide of the war and make Russia more pliable.

Either way this needs to be dealt with if there is to be any let-up in the cost-of-living crisis.

The economic issue is more domestic, and based around AI and datacentres. No one wants datacentres in their area, which presents a problem and inhibits the roll-out.

If tech stocks crash it will take the stockmarket with it, likely tipping the US into recession.

The upside is the tech barons are cut down to size, the downside is when America sneezes….

 Lyrically it’s a treat: we open with “Changes” by David Bowie and end with “Teen Age Riot” by Sonic Youth.

Enjoy!

Philip.

 

@coldwarsteve

 

Philip Gilbert is a city-based corporate financier, and former investment banker.

Philip is a great believer in meritocracy, and in the belief that if you want something enough you can make it happen. These beliefs were formed in his formative years, of the late 1970s and 80s

 

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