Betting on defeat or playing against Trump

XTI/USD

Key zone: 94.50 - 97.50

Buy: 97.50 (on a decisive break above 96.50); target 101.50; StopLoss 96.80

Sell: 93.50 (on strong negative fundamentals); target 90.00; StopLoss 94.20

The U.S. midterm elections could change the balance of political risks for global markets. If Republicans lose control of Congress, it will be harder for Donnie to carry out his economic agenda and his political performances. However, a change in the majority alone will stop neither the tariff confrontation nor actual military conflicts.

A reminder:

The U.S. midterm elections could change the balance of political risks for global markets. If Republicans lose control of Congress, it will be harder for Donnie to carry out his economic agenda and his political performances. However, a change in the majority alone will stop neither the tariff confrontation nor actual military conflicts.

Before the vote, Republicans retain majorities in both chambers. In the House of Representatives, they hold 218 seats versus 214 for Democrats; one additional seat belongs to an independent member, and two seats remain vacant. In the Senate, the balance is 53 to 47, including independent senators who vote with Democrats.

To take control of Congress, Democrats need a net gain of at least four seats in each chamber.

For the economy, the question is not only whether the president will be able to advance tax changes, increase military spending, and pursue deregulation. Also at stake are the future of American protectionism, budget restrictions, and the cost of financing government debt.

Losing the Majority Does Not Mean Losing Presidential Powers

Even if Democrats gain majorities in both chambers, Trump will retain his veto power, significant executive authority, and the ability to impose tariffs under existing trade legislation. Overriding a presidential veto will require a two-thirds majority in both chambers.

Therefore, a shift of the majority to Democrats will not lead to the automatic removal of tariffs. What will change first are the mechanisms of political oversight and the negotiating positions of the parties.

For markets, the main question is how far the new Congress will be able to restrict further increases in import tariffs.

As Reuters reported on November 1, Democrats are considering revising some of the president's tariff powers, including provisions of Section 122 of the Trade Act of 1974 and Section 338 of the Tariff Act of 1930. Options under discussion include repealing certain tariffs, refunding payments already collected, and strengthening congressional oversight of the granting of tariff exemptions.

Three Channels of Market Impact

• Inflation. Lower trade barriers could reduce costs for U.S. companies and price pressure on consumers. But political statements alone do not change existing tariffs. Sustained disinflation will require actual legislative, administrative, or judicial changes.
• Corporate earnings. Companies dependent on imported components, international supply chains, and foreign markets are particularly sensitive to trade restrictions. The prospect of tariff easing could support their valuations, while a new escalation of the trade conflict would increase uncertainty in earnings forecasts.
• Budget. Confrontation between the president and Congress could complicate negotiations over spending, tax measures, and raising the government debt ceiling. For the bond market, this means the risk of renewed political crises over government funding.

And What Was the Result?

The elections could change market conditions, but they do not eliminate the fundamental factors that determine asset movements.

Restricting Trump's trade agenda will not necessarily lead to a weaker dollar or a rising stock market. For stocks, the consequences for corporate earnings, the cost of capital, and government spending are more important.

In the oil market, the key factor remains the development of the conflict with Iran. For gold, it is real interest rates, the dollar, and the geopolitical premium. For BTC, it is global liquidity and expectations regarding regulation. The elections may affect these variables, but they will not replace them.

Regardless of the voting outcome, the main medium-term risks are associated with the coming year. Budget negotiations, government debt, the president's powers over trade policy, and the financing of defense programs could trigger an asset repricing that lasts much longer than the electoral event itself.

Our task is to monitor changes in fundamental expectations and the reaction of DXY, real U.S. Treasury yields, gold, oil, and the S&P 500.

So we act wisely and avoid unnecessary risks.

Profits to y’all!