Trump's midterm elections, crude oil, US stocks, and Bitcoin Trump has five weeks left end the war Lower the oil price Knock down the yield of US 10-year treasury bond bonds If he can't do any of the three things, he will lose the midterm elections, the market, and his political legacy These three things are a chain The war started at the end of February, and it is now in its seventh month. At the beginning of the war, Iran actually blocked ships in the Strait of Hormuz, and Brent crude oil surged from pre war $72 to nearly $120, rising 51% in March alone. Received at 104.32 on September 25th, 44% higher than before the war Oil price is the most direct item in CPI. If oil price doesn't come down, inflation expectations won't come down Next is the Federal Reserve, which is the most ruthless. The market originally expected three to four interest rate cuts in 2026, but on September 16th, the Federal Reserve not only did not lower, but also raised interest rates by 25 basis points to 3.75% to 4.00%. The market is now pricing the probability of another increase in October at 66% At the beginning of the ten-year period, it was 4.19%, and on September 24th, it surged to 5.23%, the highest since 2007. This is not entirely due to oil prices, as the short-term inflation expectation for US Treasury bonds is only 2.4%, and the real interest rate over a ten-year period is 2.62%. The real driving force is supply. The Ministry of Finance issued 739 billion yuan in bonds in the third quarter and another 628 billion yuan in the fourth quarter. The capital expenditure of AI companies relies on issuing bonds, and the deficit accounts for 6% of GDP The ten-year term is the pricing anchor for mortgages, with mortgage interest rates rising from 5.98% in February to 7.50% on September 28th. American consumers are burdened with a debt of $19 trillion Finally enter the ballot. Trump's approval rating, with Reuters and Ipsos at 32%, is the lowest in history, NBC's average is 39% in favor and 59% against, and the Democratic Party leads by 6 to 7 points on the general vote in Congress Voting on November 3rd will take 35 days from today onwards. The Republican Party in the Senate won 53-47, while the Democratic Party won a net of 4 seats and turned the tables. The Republican Party in the House of Representatives won 222-213, while the Democratic Party won a net of 5 seats and turned the tables. The gambling market gave the Democratic Party a 50% victory, while the Democratic Party won the House of Representatives and the Republican Party defended the Senate by 36% Let's talk about the US stock market first The midterm elections themselves are not the main variable. Since 1931, the mid-term average annual growth rate has been 4.7%, while in other years it has been 9.5%, making it the weakest year in the four-year cycle. But the 12 months after the midterm elections were the strongest period in four years, with an average increase of 15.4% since 1950, and all 18 times were positive. The low point of the mid-term year historically falls on average between mid August and the end of September, and we are now standing at this window What really weighs on the US stock market is the ten-year period. The forward profit yield of S&P is 3.892%, with a 10-year term of 4.77% and a risk premium of negative 0.88%. It means that the return given by treasury bond is higher than the profit yield of stocks. This is the reading of the extremely overvalued area, which directly suppresses the expansion of valuation So there is only one line to keep an eye on, 5.25% over a ten-year period. After crossing this line, the correlation between stocks and bonds has reversed, and both are losing together. Currently, it is 5.23%, just touched What mid-term elections can change is finances. The House of Representatives has turned blue, new spending cannot pass, and the pressure to issue bonds has decreased, but there is a downward trend in the ten-year period. Historical statistics also support this, with Republican presidents and split Congress, the S&P average is 13.7%, and one party dominance is only 6.7% But there is a counterexample on Blackstone's side, where one side lost its monopoly of three powers and became even weaker six months after the midterm elections, with 10.4% against 16.1%. In addition, the current structure of 2026 is the same as that of 2018 and 2022. The Federal Reserve raised interest rates before the mid-term elections. In those two years, S&P had negative returns The risk of the US stock market is not on November 3rd, but on the October interest rate and ten-year period. Adding another round in October, standing at 5.25% over the ten-year period and holding steady, the S&P will first fall for one round before the seasonal rebound after the midterm elections. If the ten-year period returns less than 5%, there is a chance for the historical pattern of 15% to repeat itself in the 12 months after the midterm elections Speaking of Bitcoin Bitcoin withstood three challenges this week in September: the CLARITY bill was rejected 49-50 in the Senate on September 15th, the Federal Reserve raised interest rates on September 16th, and the Bank of Japan raised interest rates to a 31 year high. The result increased from 74888 to 87402, an increase of 16.7% But the composition of this surge needs to be seen clearly. One reason is that the short position has been squeezed, with approximately $750 million of short positions being forcefully liquidated. The second is the net inflow of ETFs for seven consecutive days, reaching $2.39 billion per week, the strongest week since October 2025 The key is rhythm. The daily inflow dropped from 999 million on Monday to 134.5 million on Friday, a decrease of 87%. This is a pulse, not continuous buying The most important number now is 86000. This is the average holding cost of a US spot Bitcoin ETF, with BTC currently priced at 84000 and the entire ETF group underwater at 2.3%. At this position, they either increase their position or leave. If they cannot reach 86000, the ETF will switch from buying to selling Interest rates are hard constraints, non interest bearing assets, and opportunity costs are increasing The most heart wrenching point of this year: Bitcoin is still 33% away from its peak in October 2025, while gold is at a historical high during the same period. Geopolitical conflicts, a deficit of 6% of GDP, and persistent inflation - this whole set was supposed to be the home ground of Bitcoin, but as a hedge tool, gold was used, and Bitcoin became a shadow of high beta technology stocks The policy line is basically dead for this session of the CLARITY Act, and it will have to be raised from scratch for the next session. But the SEC and CFTC are filling in the blanks with rule making, and Coinbase's CEO said that alternative rules may be more lenient than the bill. The failure of the bill does not mean the negative impact on the industry Bitcoin is sandwiched between the range of 76000 to 87000, with ETF cost lines and macro indicators above and ETF inflows and institutional holdings below. The midterm elections are a secondary variable for it, and the real switch is still the one in the Federal Reserve in October and the ten-year period. In October, there will be another interest rate hike and the 10-year benchmark will reach 5.25%. Bitcoin will go back to test 76000. The road to further decline in oil prices, a 10-year return of less than 5%, and a return of over 95000 is open, and November to December is already the strongest period in history after the midterm elections The eight point consensus between China and the United States has partially suppressed the greatest geopolitical uncertainty, which is now almost priced out in the market