Yesterday’s -6% NDX decline caused by the Dems’ sweep of the House and Senate in the midterms seemed like short-term thi…

Yesterday’s -6% NDX decline caused by the Dems’ sweep of the House and Senate in the midterms seemed like short-term thinking yesterday and seems even more so today. The decline was based on the thesis that Dems will slow the buildout of AI data centers - a thesis not provable with numbers. Concepts not provable with numbers almost always have short shelf lives and I expect by next week we won’t hear about Dems slowing the data center buildout again.

Meanwhile, S&P 500 2026 earnings remain robust at $369 +33% y/y (with no degradation since Tues night) and implies a 2026 P/E of 19.9x, which translates to a 5.0% earnings yield — above the 4.88% 10-yr treasury yield, which has not happened in months (relationship has been inverted). I expect the equity premium to be restored at its normal 50-100bp premium as the Iran war winds down - which the blue wave from the midterms likely accelerates.