Hey Influence Traders,

We had an off-cycle election this week, and I gotta tell you – if you’re a Republican insider, you’ve got one hell of an election hangover.

Democrats swept Virginia, New Jersey, and New York City.

California’s Prop 50 passed.

And here’s the big idea I want you to understand: this election just shifted the shutdown calculus completely.

I’m now expecting resolution within days to a week, and that’s going to be very good news for markets.

Let me explain…

The Political Earthquake Nobody Expected

It wasn’t just about local races. Democrat Abigail Spanberger won Virginia’s governor race. Mickey Sherrill took New Jersey. And in New York City, Zohran Mamdani – a declared socialist – just won the largest city in America with 80 percent of women under 30 voting for him.

That last number tells you everything you need to know about whether our education system is working. It’s working exactly as it’s been designed over the last couple decades, achieving all its goals.

Now, I’ve got a lot of personal things to say about this – I’m sitting here in New Jersey looking out over the Hudson River at what was once the great city of New York, feeling like I’m living on the banks of the Seine staring at another once-great city about to collapse.

But let’s keep it on the street and talk about what this means for your money.

The exit polls tell the real story. Top issues were cost of living, healthcare, and shutdown fatigue. Trump got hit hard on his handling of the shutdown, particularly recent comments around SNAP benefits and back pay for furloughed workers.

Whether you agree with his policies or not, voters just handed Democrats a referendum win. And that changes everything in DC.

What I’m Hearing from the Hill

Here’s what’s really happening behind the scenes. We’re on day 37 of this shutdown – that’s a record, folks. The old record was 35 days, and we just knocked that right out of the park. Not a good thing.

Senate GOP leadership is now signaling real urgency. I’m hearing from sources I trust that moderates are going to point to last night’s results and say “we need to make concessions, we need to get this thing moving.” The asymmetric pressure is real now. Democrats just got rewarded for their positions, which means they’re going to hold the line hard on ACA subsidies and worker back pay. They’re not letting those go.

The House conservatives will dig in briefly – that’s what they do. But the momentum has shifted. When you’ve got shutdown fatigue weighing directly on Trump and the party, and you just lost races you shouldn’t have lost, the calculus changes fast.

I would expect a short-term continuing resolution within the next week, maybe even days. They’ll lock in current budgets temporarily while brokering side deals for a more permanent fix. That’s how DC works – face-saving concessions on both sides, text leaks to test the waters, and suddenly everyone’s claiming victory.

The Market Implications Are Clear

Here’s what this means for your positioning. The Congressional Budget Office estimates we’ve lost between seven and 14 billion bucks in GDP from this shutdown. We’ll recoup some when reopening occurs, but not all of it. The longer it drags, the worse that gets.

But if we get a continuing resolution – and I think we will – I expect markets to cheer that. At least in the short term, there’s stability. Markets can predict money flows again.

My base case: Short-term continuing resolution within a week, side deals on various economic aspects, shutdown ends. This is mildly positive for equities, probably keeps the dollar flat. I don’t think it helps Bitcoin much, particularly with the uncertainty being caused in New York City.

Bull case: Swift full reopening with government actually coalescing. If that happens fast, if it looks like DC is coming back together, we could see a nice relief rally. Markets love clarity, and boy would that provide it.

Bear case: Each side continues digging in, stalemate extends, GDP hit gets broader. But after last night? I think this scenario just got a lot less likely.

The New York City Wild Card

Now, there’s a longer-term story here that’s gonna be interesting to watch. Mamdani’s win in New York represents a very emboldened progressive wing of the Democratic Party. They just won the largest city in the world with a declared socialist. That’s gonna put pressure throughout other districts to embrace more radical leftist candidates going into next year’s midterms.

California’s Prop 50 passing means the House maps get redrawn – projected to produce five additional Democratic seats that are basically easy wins. With a close House, that could shift control in the midterms.

For markets, watch Mamdani’s transition announcements over the next hundred days. The more he pushes for a radical administration versus a moderate one, the more you’ll see about regulatory scrutiny, higher credit cap rates, tighter muni spreads. All the companies will be talking about moving vans leaving New York. Whether that actually happens, we’ll wait and see.

I’m hearing from people I trust in the crypto space that this is not a positive move for digital assets. New York City is the hub for financial tech, and a very progressive agenda there creates uncertainty. That’s something to keep an eye on.

What to Watch Next

Over the next 10 days, start looking for the Senate leaking out ideas about a continuing resolution. They always do little text leaks here and there – that way nobody can be blamed, you know, “it was just a text leak.” Keep your eye on those subtle moves in the news.

If you see credible signals about resolution, that’s gonna be a very bullish sign. I’d start looking at stocks that have been beaten down recently – they could see some movement back up when we get that continuing resolution announcement.

My crystal ball isn’t always as clear as it can be, but I think we’re days to a week away from some kind of shutdown resolution. The election yesterday made getting to that resolution much more likely. That’s the trade here.

For all of us at Option Pit, that’s what we’re here to do – help you see these political shifts before the market fully prices them in. Keep watching this space. The next 10 days are going to be very telling.

Take care.

Frank