How the US Midterms May Reshape the Stcok Market

Summary

• The recording took place on November 5, 2026, on the Goldman Sachs trading floor.
• Beta-adjusted net exposure in the prime book is at very low levels versus history.
• Data center stocks are down 36% from their highs earlier in the year.
• Higher beta areas including memory, optical networking, and NeoCloud are down 42%, 46%, and 57% respectively.
• Multiples for the data center trade are approximately half of what they were in June.
• Healthcare is identified as the next leg of the AI trade due to involvement in tools and diagnostics.
• Staples are considered expensive defensives with earnings yields half of high yield bond yields and dividend yields half of the 10-year treasury yield.
• The recommended trade is the S&P 500 excluding AI, which includes approximately 500 stocks.
• Key factors being watched include employment, inflation, geopolitical events, earnings season, equity capital markets, debt capital markets, and the FOMC decision on December 9th.
• A relaxed Santa Rally is anticipated for the end of the year.