Will Midterm Election Crash Markets? Economist Reveals Results | Matt Gertken

**Matt Gertken** (0:00)
I think Democrats will pull it off. By the time we get to November 3rd, I think they will outperform and end up controlling the Senate to the surprise of the pundits. His approval ratings are so bad right now, and he can't really get success on Hormuz and lowering oil prices dramatically.
So he's just trying to fire up his base with nationalism so that they turn out for the election, because what he's worried about is Republicans are not even going to turn out.

**David Lin** (0:26)
I'm pleased to welcome back to the show Matt Gertken, Chief Geopolitical Strategist at BCA Research and the author of his new book Swift's Grand Strategy From Foreign Policy to International Thought. We'll be going over how this theme from the book ties into current events. How did Britain maintain supremacy in the 17th and 18th centuries? And what lessons can America learn today? What is likely going to be Trump's grand strategy with foreign policy in the Middle East and domestic policy?
How can the Americans fight inflation? And what can we expect, importantly, from the midterm elections? Right now on prediction markets, Kalshi in particular, there is an 86% chance that the Democrats will win the House at the upcoming midterm election, and a 52% chance that the Republicans will win the Senate. So 50-50 on the Senate, overwhelmingly in favor of the Democrats for the House.
So we'll find out what Matt Gertken thinks if you believe that the Republicans can win the Senate, and you place a 50-dollar trade on Kalshi, your payout could be 91 dollars if you're correct, and the Republicans do take the Senate by November. This video is brought to you by Kalshi, it's the largest prediction market in the United States. Unlike a sports book, you're trading peer-to-peer on real world events from economic data to political outcomes, the price moves based on public opinion, not a house. Go to the link in the description down below or scan the QR code here to get started. New users who use my code LIN can get 25 dollars if you trade 25 dollars. Kalshi is CFTC approved and available in all 50 states, including California and Texas. Matt, welcome back. Good to see you.

**Matt Gertken** (2:01)
You too, David. Thanks for having me back.

**David Lin** (2:03)
Let's just start with the midterm preview. So, trading predictions on prediction markets, which party will win the house? Let's go over the house first and then the Senate. Right now, traders are predicting the Democrats. 86% and 14% Republicans. Let's go over this. What's your thought process here?

**Matt Gertken** (2:21)
I mean, the house is a foregone conclusion. There's the midterm curse. It almost always is an anti-incumbent election. Republicans only have a two seat majority. Democrats are leading by 5 percentage points in the generic polling. And the president has a net negative 16% approval rating. Only 33% of the country thinks that the country is on the right track. And Congress' approval rating is 20% or 25%.
That's 10 points down from when the One Big Beautiful bill was passed. So, basically, we're obviously going to see the house turn. Probably 20 or 40 seats will shift in favor of the Democrats. And then from that position, they can control the purse. That's the power of the purse. And it's pretty significant. But of course, there are conditions where things could even get worse for Republicans.
Either way, Democrats will have a majority in the house. Okay.

**David Lin** (3:11)
Senate. And right now, it's looking pretty even, actually.
Two Republicans, 48 Democrats.

**Matt Gertken** (3:17)
Yeah.
Yeah, the Senate odds are 50-50, if you look there. I mean, I would go, and I have been saying all year, that this is gonna go in favor of Democrats. It's a very tough hill for them to climb, so no one should take it for granted. And that just has to do with the rotation of seats. In 2020, Democrats had a really great year. So that means they're having to defend a lot of seats. And some of them are pretty squishy. So for example, in Maine, they had to replace their candidate who was scandalous. And Susan Collins is a moderate Republican who's been elected four times. So I think they will win Maine, but it is a battle. Michigan, they have elected someone who's, Abdul El-Sayed is a Muslim, and he's also very left-wing. He doesn't claim to be a Democratic Socialist, but he is a populist left-winger and an outsider, although he has a great set of credentials. So he's a very competitive candidate. And there again, I think he can win that Senate seat, but it will be a very tough battle in Michigan. In addition to winning those, they also have to turn some very red states, like Alaska, Ohio has been red recently. They are leading in the polls there, but they have to win that seat. And then they need somewhere like even Iowa or Texas. It's going to be tough.