It is election day, and the argument making the rounds in market circles runs against instinct. For two years Donald Trump has held the White House, the House and the Senate, and the S&P 500 is up more than thirty per cent since his inauguration. The easy reading is that the market rose because of that control and will suffer if he loses it. Bravos Research, a trading newsletter, argues the reverse: the market rose in spite of Washington, and a Democratic Congress may be the best thing that could happen to it.

Start with the setup as they lay it out. Prediction markets put a Democratic sweep of both chambers at 66 per cent, a split Congress at 27 and a Republican hold at 7. Of roughly 30 million early votes, they count 47 per cent leaning Democratic and 35 per cent Republican. A New York Times poll has Trump's approval at 32 per cent, and University of Michigan consumer sentiment sits at levels that have historically lined up with recessions. Voters are angry about prices, gas, housing, tariffs and the war with Iran.

The interesting part is the valuation claim. When Trump took office, the S&P 500 traded at about 22 times earnings; Bravos puts it near 18 today. Earnings are up roughly fifty per cent over that stretch, the index only thirty. Their explanation is economic policy uncertainty — trade, foreign and Treasury policy shifting week to week — which has stayed at levels not seen in thirty years outside the pandemic. Investors kept buying the profits, most of them AI profits, but paid less for every dollar of them.

So the bull case is gridlock. With 51 or 52 Democratic senators, the filibuster still demands 60 votes, and Trump still holds the veto. Nothing radical passes in either direction. Since 1946 the S&P 500 has been higher six to twelve months after every one of the twenty midterms, by around 14 per cent on average, and the usual explanation is exactly this: the opposition gains, policy freezes, uncertainty falls. If the multiple simply went back to 22, that alone would be a rise of about twenty per cent.

What does not change is the deficit. It is running at about 1.7 trillion dollars, the highest since the 1920s outside the pandemic, and the Congressional Budget Office has it at 1.8 trillion in 2027 and 1.9 trillion in 2028. Social Security, Medicare and interest on the debt run on autopilot whichever party wins. That keeps steady pressure on the dollar, and a debased dollar lifts nominal earnings and stock prices with it. Part of any rally, measured in dollars, will just be the dollar losing value.

Some caution is owed. The video ends in a subscription pitch with a deadline of tonight, which is worth remembering when a forecast arrives this confidently. Twenty midterms is a record, not a law, and the valuation numbers are the newsletter's. They are sitting in cash themselves for now, and they name the real risk plainly: how Trump reacts to losing, with some of his supporters already talking about martial law. Still, the core point holds up. Markets do not need a friendly government. They need a predictable one, and the most predictable Washington is one that cannot do very much.