Before everything completely fell apart in 2008, a co-worker and I went to a capital-raising event some local folks were hosting to start a real estate investment vehicle. In hindsight, the timing couldn’t have been worse. However, at the time, people were still interested in the asset class.
After the prepared remarks, the de facto head of the group asked if there were any questions. Someone in the audience raised their hand and observed: “You didn’t mention anything about an expected rate of return or an IRR or anything. So, what can an investor expect from your fund?”
Obviously, this was a perfectly legitimate question about a somewhat glaring omission in the presentation. His response was nothing short of spectacular: “I don’t know. What do you think? 20%? 25%? Does that sound good? Okay, now let’s hit the bar.”
Clearly, it was the very tippy top of the housing market, even if we didn’t know it for certain at the time. However, I walked away from the place with an extremely weird feeling about the future, one I remember distinctly.
Just throw your money at real estate and make 25%. Why not? Wanna get drunk? If only it were that easy forever.
I am not saying what is happening now is the same as what happened then. I don’t think it is. Back then, the entire economy was complicit in the housing bubble, either directly or indirectly. Consciously or subconsciously. Everyone and everything was “all in.”
This time, perhaps thanks to what happened back then, there seems to be a little more skepticism. Folks are actually wondering how all these firms are going to be able to keep the proverbial ball spinning in the air. How can they keep borrowing billions upon billions to put up data centers and buy or lease chips, servers and the like?
At what point does their money run out? When does other people’s money run out?
Inquiring minds want to know.
In my opinion, and my opinion alone, I suspect more than a few folks used last week’s convincing election results to take “some money off the table.” They were likely already feeling a little uncomfortable with the revenue and earnings projections for the technology sector. Further, they probably didn’t love their overall allocation to tech in their portfolios.
Probably.
So, after what seemed to be an oddly calm trading session on Wednesday, Nov. 4, 2026, someone woke up in a bad mood the next day and started dropping sales tickets. What is the lyric from that song we used to sing in youth group? “It only takes a spark to get a fire going.”
Yeah, that is about it.
Now, as for the elections, what can I tell you? Pollsters predicted a rout, and it was one. I didn’t speak to a single person leading up to last Tuesday who thought the Republicans were going to keep control of both houses of Congress. Maybe they could keep the Senate, but who knew for sure?
Well, now we know, or at least think we know as of my typing at 1:30 p.m. CST on Friday, Nov. 6, 2026. The Democrats likely won’t have enough folks to override presidential vetoes, and Trump will likely veto just about everything that comes out of Capitol Hill. Voila. (1)
Therefore, in all probability, there will be some form of gridlock in Washington. In my opinion, that isn’t all that bad. Keep the politicians twisted in knots in D.C., and leave the private sector alone. No qualms.
Still, the media would have you believe investors are worried Democrats might thwart new data center construction, which could hurt an industry that probably needs continued expansion to maintain its momentum.
This doesn’t concern me all that much. For starters, both parties like economic growth in their constituencies. It is one thing to rail against this or that on the campaign trail. It is quite another to tell a company and/or investors with bags of money to hit the bricks. Secondly, if the officials in state or city X don’t want, say, a data center, the project could move someplace else.
Just because one location doesn’t want a project doesn’t mean it won’t get done. Far from it. It could simply be built someplace else.
Finally, in 1992, Democratic political strategist James Carville became famous for trying to keep the Clinton campaign on message by reiterating: “The economy, stupid.” The implication is voters will cast their ballots based on the strength of the economy. If it is good, they will vote for more of the same. If it isn’t, they will vote for change. (2)
Or so the thought process goes.
If last week’s so-called “blue wave” is any indication of the electorate’s view on the economy, things aren’t so red hot right now. However, the data would suggest otherwise.
On Oct. 29, the Bureau of Economic Analysis (BEA) announced the U.S. economy grew at an impressive 3.4% annualized rate during the third quarter of 2026. (3) Then, on Nov. 6, the Bureau of Labor Statistics (BLS) reported employers added an impressive 165,000 net new jobs during October 2026, and the unemployment rate fell to 4.1%. (4)
In other words, by these objective measures, the economy seems to be fine, even more than fine. If Carville’s “The economy, stupid” holds true, the Republicans should have easily won last week’s elections. As we know, they didn’t, which would suggest one of two things.
Either people don’t vote with their wallets or things aren’t as rosy as the official data would suggest.
Perhaps it is some combination of the two, and it probably is.
Remember my comment about walking away from that presentation in 2008 with a weird feeling? In some ways, last week (Nov. 2-6) sort of made me feel the same way. No, things aren’t broken as you read this. In fact, you might even argue they are okay.
But as awesome as the economic data has recently been, that doesn’t mean something doesn’t feel, what’s the word, off to a lot of Americans.
Thank you for your continued support. As always, I hope this newsletter finds you and your family well. May your blessings outweigh your sorrows on this and every day. Also, please be sure to tune into our podcast, Trading Perspectives, which is available on every platform.
John Norris
Chief Economist
SOURCES:
- NBC News – 2026 House Election Results.
- Wikipedia – It’s the Economy, Stupid.
- U.S. Bureau of Economic Analysis – GDP (Advance Estimate), 3rd Quarter 2026. Oct. 29, 2026.
- U.S. Bureau of Labor Statistics – The Employment Situation — October 2026. Nov. 6, 2026.
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