The midterm elections are tomorrow and the stakes could not be higher for the defense industry… or could they be? If the polls are correct, Democrats will take control of the House and Senate with fairly decent margins at a forecasted 241 seats in the House and 52 seats in the Senate. However, there is a growing belief among Republican operatives and officials that the polls are wrong in the Democrats favor - meaning there is a chance that the floor completely falls out from under the GOP on Tuesday night. Pollsters have reported getting results that show an electorate that elected President Trump with the popular vote just two years ago now doing a complete 180 on him and his party. As the year has gone on, pollsters like the New York Times have started adding more weight to Republican responses to their polls to try to reconcile with what they are seeing.
At the beginning of 2026 it was believed that Democrats would likely take control of the house through a slim margin due to a nationwide redistricting fight, but things have changed…. a lot. The biggest fights are now happening now in places like Texas, North Carolina, Ohio, Iowa, Alaska, and Kansas. These are states that Trump has won every time he’s run, often by a landslide.
There is no precedent for this kind of shift. For a party to be performing this well in so many states that are generally safe wins for the other party is practically unheard of. The current polls outpace even those of 2006 and 2008. At the current moment, Democrats look set to flip more solidly Republican Senate seats than it flipped in 2006 and 2008 combined.
In every election, there is always a polling error of around 3.7 points historically. In 2025, the polls underestimated Democrats and were off by 9 points! In 2016, 2020, and 2024 the polls missed by 2.2%, 4.5%, and 2.6% all in Trump’s favor. However, the polls were spot on in the 2018 and 2022 midterms. If the polls are off in the Republican’s favor, then they’ll lose the House but maintain the Senate, and that is entirely possible. Late deciders are breaking for the GOP by 9 points! We will find out soon enough though about what’s real and what’s not.
We hope you had a happy Halloween! I went as a cowboy and Preston went as Preston.
Defense Stocks Rally Into Midterms While Pentagon’s $350 Billion Ask Hangs In The Wind
On the eve of the midterm elections, Wall Street is betting that defense spending will stay high whoever wins, even though the money the Pentagon says it needs is far from secured.
Defense stocks are entering Tuesday with momentum. Lockheed Martin shares rose about 26% in October, Northrop Grumman gained roughly 15%, and General Dynamics climbed about 12%. The rally reversed much of a two-month slump tied to election jitters. It was fueled by strong third-quarter earnings, including Lockheed’s record $292 billion backlog, and by RTX and Northrop raising their 2026 profit forecasts. On Monday, Morgan Stanley upgraded Lockheed to Overweight and lifted its price target to $835 from $690.
The administration wants a record $1.5 trillion defense budget for fiscal 2027, including $350 billion through the reconciliation process. Congress has instead passed a stopgap spending bill through Dec. 11 that holds the Pentagon at roughly $838.5 billion, about 44% below the request.
The reconciliation plan faces long odds. The House and Senate budget resolutions each include only about $60 billion in mandatory defense funding. Several key Senate Republicans, including Susan Collins and Mitch McConnell, have publicly doubted a third reconciliation bill. Defense Secretary Pete Hegseth has said the administration will keep pushing for at least $350 billion regardless of the election results.
Regardless of Tuesday’s results, defense spending is expected to grow. The primary dispute between the parties and branches is the use and volume of that new spending.
That’s all from us today! Preston will be back tomorrow with a new video! Have a great week.