Wall Street may not be thrilled with Tuesday night’s blue tsunami, but many top executives see a more fundamental problem that’s threatening US business: a two-party system that’s increasingly dominated by extremism on both sides, On The Money has learned.
The Democrats gave the GOP a thumping whose decisiveness surprised many pundits — easily taking control of both the House and Senate with left wingers picking up important seats in both chambers.
Far-left members of the Democratic Socialists of America won key races. James Talarico, known for his belief in six genders, won in Texas. A Democrat took a Senate seat in deep-red South Carolina and a man who campaigned with the noxious Hasan Piker won in Michigan.
These are the types of pols who hate Israel, would love to bring back trans day of visibility on Easter Sunday and would like nothing less than criminalizing making money even if there’s no criminality involved.
Yet, the CEOs I speak to say if the GOP pulled out a semblance of a victory (like keeping the Senate) whatever happened wasn’t going to be good because this should have been a lay-up election for the GOP given the top-line economic numbers. Even worse, they don’t see the GOP pulling away from the intense populism of the Trump agenda, and that goes to the heart of their angst.
For one, they’re not holding their breath for an end to Trump’s bizarre habit of picking candidates that show only obsequiousness to MAGA, despite their unelectability (think Ken Paxton). Nor do they see him backing off tariffs.
That’s despite the damage tariffs did to the GOP in the midterms – not to mention consumers’ wallets. Ditto for immigration enforcement that went beyond sending criminals back to wherever they came from and which now makes it harder to find workers.
The war with Iran won’t be concluded for some time because Trump can’t decide whether to fully embrace the hawks in his administration or those wanting an immediate negotiated peace. That means its impact on gas prices will remain.
Moreover, the GOP won’t be going back to its more corporatist roots, where leaders focused on tax and regulation cuts and supported free trade.
“MAGA is now 40% of Republican primary voters, and the DSA-types 35% of Democratic Party voters,” said Rich Farley, an author and partner at law firm Herbert Smith Freehills Kramer who summed up the executive-suite dread. “In each case they’re too big to purge.”
Top executives simply “think extremism gets worse and will be inflamed by presidential candidates of both parties stalking out the populist ground both on the right and the left,” he added.
MAGA hasn’t been all bad for Wall Street and big business. President Trump can veto lefty stuff that gets to his desk over the next two years. It’s also hard to roll back his tax cuts and ramp up regulation with the White House in charge of regulatory agencies.
But MAGA is a broad coalition. Trump’s veep JD Vance may push for a more anti-business agenda in the wake of Democratic populists taking over in the House. Vance is expected to run for president in 2028, so now may be the time he cuts deals with Dems on certain issues to burnish a populist, anti-establishment rep, my sources say.
They don’t see Trump jettisoning his pro-tariff economic adviser Peter Navarro because Trump believes this stuff really works – even if all the evidence suggests it layered already high prices with a regressive tax and never produced the manufacturing boom he promised. Globalism isn’t making a comeback with this administration.
To be sure, Wall Street knows while Trumpism is a mixed bag, the Dem socialists offer something far worse. True, their obsession with higher taxes and regulation can be thwarted by Trump’s veto pen since the Senate doesn’t have a veto-proof Dem majority. That’s one bright spot.
But nothing the president can do will stop Senate and House investigations into everything, with his various business activities being at the top of the list. You might say the Democratic Socialists, the true lefties, make a small but vocal portion of the new party coalition, but the far left is its activist wing and it is ascendant.
So look for hearings into crypto (given the Trump family’s ties to this business) as well as Wall Street’s biggest money maker in years, AI, and whether the technology will eliminate jobs, carpet the nation with ugly, noisy, water-hogging data centers as it sets the stage for bots to rule the world.
The latter might sound far fetched, but it’s exactly what the AI geeks like Anthropic’s Dario Amodei and OpenAI’s Sam Altman have weirdly been opining about even as they ask investors to finance their businesses (Anthropic has just filed paperwork for an IPO; as we have reported, OpenAI is weighing one in the first quarter of next year).
Shares of AI-related companies, until recently, have been outperforming almost everything. A concerted effort by a Democratic-led Congress, stoked by Democratic Socialism, could put the finishing touches on the lancing of what many believe is a bubble in AI-related stocks, crashing an industry that has helped propel markets to record levels.
“It’s the era of overreach,” is how another C-suite type assesses what’s in store for big business no matter who’s in charge.
