Prediction markets nail midterms as data center bans trigger AI stock reshuffle

Markets rally as midterms pass without dispute

The hosts note the Wall Street Journal's "Democrats take Congress" cover story coincided with a strong market rally, with the Dow up 3%, the Nasdaq up 1.88%, and the Russell 2000 also gaining. They cite Ron Albahari of multi-family office LNW in the Journal saying "equity investors are breathing some kind of relief that the president is going to accept the results." The hosts frame the orderly transition itself, not just the electoral outcome, as the market-relevant story, pointing to Tyler Cowen's post-election roundup noting tariffs, corruption, and gerrymandering concerns receding while socially moderate Democrats and prediction-market forecasters rose in credibility.

Prediction markets outperform polls, with one notable miss

The hosts credit Polymarket-style prediction markets with high accuracy, citing a figure of 95% accuracy once polls opened, and 81% accuracy three months before the election versus a 77% average from vote-tracking polls.

"Overall, they called almost everything right."

— the host. The exception flagged is the Texas governor race, where prediction markets reportedly flipped in the final two hours before results, which one host calls "always the trick" of low-probability events resolving against the favored outcome. Joe Weisenthal and Nick Carter are both cited agreeing prediction markets performed well on election night.

Data center moratoria reshuffle the AI infrastructure trade

The hosts relay Ben Thompson's ten takeaways on how a wave of roughly 40 state-level data center bills changes the AI buildout. They cite a "43 to 1" state tally on data center moratoria, with North Dakota as the sole state voting against a ban. Thompson argues neoclouds face a "hard scenario" since many sold compute on long contracts and can no longer build new capacity to sell into the spot market, while hyperscalers like Amazon stand to gain share and may please investors by curbing capex. Nvidia is called a "mixed bag" — a likely short-term loser on fewer chip orders, but a potential long-term beneficiary if power becomes the binding constraint, pushing operators toward the most efficient chips per watt ("iso power").

California's Prop 40 wealth tax also failed, which the hosts say would have "destroyed the model for building technology companies in California." Separately, Shopify's Harley is quoted arguing the US data center bans create opportunity for Canada:

"US voters just rejected data centers everywhere they got the chance... Clean hydro, open land, cold winters. That's Canada. This is a massive opportunity for us."

— a guest (Harley, cited via Shopify).

Elliott warns of "FOGO" as hedge fund lags despite caution

The hosts discuss Elliott Investment Management's October letter, reported in the Journal, warning of "FOGO" — fear of getting obliterated — as a reversal of FOMO-driven markets. Elliott, an $80 billion firm, posted flat returns in Q3 and under 2% gains through September, trailing the S&P 500's near 13% return and even short-term treasury bills.

"So many factors have lined up to cause this great boom that it might take disruption in only one or two of them to shift this momentum into reverse, leading to a cascading self-reinforcing unwind of this bull market."

— Elliott's letter, as read by the host. The firm compares current debt-fueled risk-taking and tech hype to the lead-up to the Great Depression, while flagging zero-day options trading and meme-stock betting as signs of gambling over investing. The hosts note Elliott's profitable areas included commodities and credit hedges, while distressed debt and gold/currency hedges lost money.