Favorite 15

Summary

• Democrats are projected to retake the House with a roughly 90% probability while Republicans are expected to narrowly retain the Senate, resulting in a divided government.
• Meaningful legislation is unlikely due to the need for large majorities to withstand defections, though headline noise and sector-specific events are expected.
• Government funding expires in December, creating a shutdown risk that is more likely under divided government but expected to have limited economic impact.
• The $41.1 trillion debt limit set in July 2025 is projected to come into focus in 2027 or early 2028.
• Voter anxiety over energy costs has placed the Ratepayer Protection Act on the House agenda, with enactment this year considered less than 50/50.
• Permitting reform for energy and infrastructure remains stuck in Congress despite the need for faster approvals.
• Five hyperscalers accounted for about a third of S&P 500 capital spending in 2026, with a share expected to reach half by 2027.
• The price of the same quality of AI answer is falling about 92% per year, a rate faster than any other transformative technology in history.
• Earnings, not multiples, are driving returns across AI-related industries, with profits keeping pace with promises so far.
• Early signs of a productivity payoff are appearing first in industries most exposed to AI, growing at roughly twice the pre-pandemic pace.
• Business spending on software and IT equipment drove roughly a third of U.S. GDP growth over the past four quarters.
• The AI build-out is increasingly funded with debt, competing with the Treasury for long-term capital.
• U.S. investment-grade bond sales hit an all-time annual record of about $1.76 trillion on October 26, 2026.
• Data center construction is climbing while office construction softens, making data centers a political issue regarding power bills.
• New York paused permits for new hyperscale data centers, and a growing number of states have imposed moratoriums on large new facilities.
• AI adoption is outpacing PCs and the internet, with 62% of working-age adults using generative AI.
• Federal Reserve officials lean toward tightening further after the September hike, though the timing remains open ahead of the October 27-28 meeting.
• Fed funds futures are now pricing in three hikes through 2027, shifting from a previous expectation of three cuts.
• Analysts now expect S&P 500 earnings growth of about 33% for 2026, more than double the roughly 15% expected at the start of the year.
• Risks center on bad actors, the pace of change, and who pays, with federal AI legislation considered highly unlikely in 2026.