[music]

>> Hey, it's Steve Eisman. Welcome to

another episode of the Real Eisman

Playbook. So, we began this whole

project in early April of last year, and

our very, very first guest was Dan

Clifton, and he came on

just as President Trump had recently

announced his tariffs. Dan is the

political analyst at Strategas. It was

an amazing interview. Could not have

been more timely.

We had Dan back on a a Friday episode

talking about the big, beautiful bill,

and we've got him back today

to talk about the midterm elections,

policies, tariffs, the Fed,

the next presidential election. It's

going to be great, and I'll be back

afterwards with some

final thoughts.

Hi, this is Steve Eisman, and this is

another episode of the Real Eisman

Playbook. So, today I'm very pleased to

say that we've got a recurring guest

coming back, Dan Clifton, who was

actually our very, very first guest.

So, Dan is the I guess what you For lack

of a better term, you're the politics

analyst at that Strategas.

>> Well, thank you for having me. It's

great to be here.

>> So, you were here

I was our very first episode. It was I

think it was April 6th of last year.

Every word out of everybody's mouth was

tariffs.

>> Yep.

>> And the market bottomed like 3 days

after our podcast.

>> Yeah, yeah, yeah.

>> And nothing has happened in the world

since.

>> Yeah, right.

>> [laughter]

>> Absolutely nothing. It's very boring.

Thank you all,

and we'll see you next week. So, let's

start with something

I don't know if it's not controversial,

but not too emotional, cuz so much of

what's going on is so emotional.

>> Yeah.

>> Talk Talk to us about the midterm

elections, which are coming up. There's

the Senate, there's the House. Where do

you see things right now?

>> Yeah, I think it all goes back to that

first podcast. April 3rd was the actual

date. Like so Trump did his tariffs at

4:00 in the afternoon and we did your

podcast at 9:00 in the morning the next

day and

>> Was it the 4th?

>> Yeah, oh yeah and and stocks were way

down. I mean it was

>> it was it was a disaster.

>> a disaster and um that was a very

important moment for shaping the midterm

elections because that was the moment

that Donald Trump's approval rating on

the economy went negative for the very

first time.

>> Okay.

>> Think about that, right? In during Trump

1.0 Trump had uh you know, double-digit

unemployment during COVID. He had a 30%

contraction in GDP and voters never

blamed him for the economy during that

time.

>> Okay.

>> And that was his greatest strength.

>> The economy.

>> The economy. Then he gets campaigns in

'24 and he says, "I'm going to end Biden

inflation."

>> Right.

>> Now he proposed tariffs.

But what we began to see after April

2nd, 2025

was that Trump put out all those tariff

proposals and his approval rating on the

economy went negative right after that

and has remained negative. So he turned

his greatest asset, his strength on the

economy into a liability and that's

driven down his overall approval rating.

>> Okay.

>> Okay, so that that's the background of

how we got here.

>> Where is his overall approval rating

now?

>> 38%. Okay. 38% is not a good approval

rating. And and let me let me tell you

why. Midterm elections are referendums

on the incumbent.

>> Right.

>> It's not about this congressman versus

challenger. It's has Donald Trump made

my life better or worse?

>> So the midterms are not really local.

>> They're not local.

>> They're local to a degree.

>> Of course.

>> The Republicans are going to try and

localize it. They're going to make every

Democratic candidate the worst human

being on the face of the planet.

>> Right.

>> Okay? The Democrats are going to try and

nationalize the election and make it a

referendum on Donald Trump. There's a

very strong correlation between a

president's approval rating and the

number of seats they lose in the House

over time.

>> Okay.

>> So, lower your approval rating. But, let

me let me just give the context. Midterm

elections happen in a very systemic way

or systematic way. Basically, a

president comes in, his party's in

complete control, their voters are like,

we are going to solve all the world's

problems, and then they have to start

governing. And governing is messy. It's

ugly. And the opposition voters, which

in this case would be Democrats, are

basically saying, this is so much worse

than what we saw on election day. Like,

Trump is doing a million times things

worse. So, they get very energized.

>> Mhm.

>> And the party in power, their voters are

like, well, we thought you were going to

end the Middle East wars, or we thought

you were going to slow inflation down.

And they start to become divided. Okay.

And that's what happened. So, in 2009,

it was very clear to us after Obama's

great victory that he was going to

suffer a very big midterm election

a loss. And you see a very similar trend

happening right now with Trump. And the

Democrats only need three seats in the

House, and they're probably going to get

those three seats in the House.

>> Okay. So, you think they'll get the

three seats in the House. What about the

Senate?

>> for market participants, what they

really care about is the Senate.

>> Yes. I mean, if the House goes

Democratic and the and the Senate stays

Republican, people say, "Eh."

>> Yep.

>> If the House goes Republican and the

Senate goes Republican,

that's another ballgame.

>> Yeah. So, I I look at it and I say to

myself, Republican Democrats having

complete control of the House and Senate

gives them control of the budget. When

they have control of the budget, then

they have real negotiating leverage with

the president. I'll give you an example.

2010,

the Republicans won the House, but not

the Senate. And we just gridlocked for 2

years till the 2012 election. 2014, the

Republicans took over the House and the

Senate, and got the House and took over

the Senate, and they were getting crude

oil export ban removed from the Obama

administration, which was a climate

change presidency.

>> Right.

>> You could see the power of both

chambers, okay? And what the Democrats

want to do is they want to win both

chambers, and they they're going to

choose accomplishment over ambition. Get

some modest changes on healthcare and

renewable energy and point to those

victories and say, "Hey, give us

complete control in 2028 and we'll be

able to win."

>> Let me just stop you right there. Let me

challenge you on that.

>> Yeah, please.

>> Because it seems to me that

the Democratic Party has moved

much more left

>> Absolutely.

>> than people thought. So, if you're if

you're saying to me that if the

Democrats get both houses, they're going

to have a moderate agenda,

>> Yep.

>> I challenge you on that.

>> Yep. So, let let me say that. Uh

there are really four political parties

in Washington. Two in the Republican,

two in the Democrat.

>> Okay, describe them.

>> Right? So, you have the old

establishment party in the Republican

side and the Democratic side. These are

your traditional politicians. Rahm

Emanuel was a good example on the

Democratic side. Right? Glenn Youngkin

on the Republican side. But what you

have now is these forces of populism

building on the right and the left and

pulling the parties further and further

away. If you're in a House of

Representatives with only a three or

four seat majority, it's really hard to

govern that way. And that's what we've

had the last three cycles. I think

Democrats will have a little bit more

cushion this time around. Okay? But what

will happen is what can actually pass.

And you have to use the budget to get

what's going to pass. So, you got a lot

of cuts coming to Medicaid from the one

big beautiful bill that was scheduled

for 2028. Democrats are going to use

that budget to prevent those cuts from

coming into place.

>> Okay.

>> They're going to prevent the solar and

wind cuts from coming into place. Those

are real achievable victories. That does

not mean that if they have complete

control, that there's not going to be a

subsegment of the population calling for

like universal healthcare,

>> Yes.

>> right? Like and doing a like, you know,

like a major climate change plan.

>> But they won't get that They're not

going to get that.

>> Let's backtrack for a second. Okay, so

you're pretty confident the house is

going to go Democratic. How do you feel

about the Senate?

>> Yeah, so I'm mixed on the Senate.

Trump only lost two Senate seats

in 2018 even though he lost 40 House

seats.

>> Okay.

>> So it's very different to win on a

statewide basis than to win in these

congressional districts. And it's really

hard to beat an incumbent. What we know

because we've had special elections

since 2024, we've had about 85 of them

and 75 of those special elections have

moved more towards the Democrats

relative to the 2024 election and by 11

points. So that's why when you see New

Jersey governor's race or Virginia

governor's race, they move somewhere

around 7 to 8 points to the Democrats.

>> Okay.

>> You apply that and the Democrats won't

take over the Senate.

>> Will not.

>> They'll get close, but they won't take

over the Senate.

>> So let's talk about the seats that are

Just remind us The Senate today is how

many Republicans versus Democrats?

>> Yeah, so it's 53 Republicans, 47

Democrats when you include the

independents who caucus with the

Democrats, Bernie Sanders.

>> Yeah, so of the of all the seats that

are up for election, walk us through the

ones that are the most sure iffy that

could go either way.

>> Yeah.

>> That people are focused on.

>> Right, and so the math here is that the

Democrats need four.

>> They need four.

>> Okay, net four.

>> Right.

>> Okay, and if they pick up three, you

have a 50-50 Senate with J.D. Vance

breaking the tie. So that's the magic

number.

North Carolina is likely to go Democrat.

And and it's a Republican state. You

say,

"They're running a very popular former

Democratic governor. And the state was

only a couple percentage Republican. So

if you get that national shift that's

there, good candidate quality, they're

likely going to win that seat." So

that's the first Okay.

>> The second seat that the Democrats have

their eye on, which again candidate

quality will matter, is Maine. And we

see what's happening with Maine. You now

have an

>> Maine's getting a fear every day.

>> You have an official candidate after

last night's primary, right?

>> Platner. And the Democrats have to make

a choice whether they're going to try

and replace him before the July

deadline. And I think it would be very

hard. He just won with like 70% of the

vote.

>> Right.

>> But they're very worried that Susan

Collins is a great candidate. Remember,

Susan Collins won in 2020 with Trump

losing the state very bad and she being

a Republican. She's an excellent

candidate.

>> So, Susan Collins versus Platner. How do

you feel about that right now?

>> So, right now the market gives it a 60%

chance that the Democrats are going to

win that seat.

>> Really?

>> Yes. Yes.

>> Really?

>> Absolutely. It's a very Democratic

state.

>> Right.

>> Uh Republicans do well. There's a

congressional district there that's a

little bit more blue collar that the

Democrats haven't really been able to

break. They think with Platner on the

ticket, he'll actually do better in that

district. You have to understand, Susan

Collins is a great candidate. She's been

able to win in the in in that state even

with

>> For decades.

>> For decades. Even with a Republican

president who loses that state.

>> Right.

>> So, I think the race is going to be

extremely close. So, now you got North

Carolina, you got Maine. Okay? Now

you're going out Now you're going out to

the middle of the country. You have

Ohio. Ohio's a 13% Republican state. The

country's moved 8, 9, 10. Be

competitive. Sherrod Brown, former

Democratic senator, on the ticket. And

the Republican gubernatorial candidate,

Vivek Ramaswamy, isn't running that

strong on that ticket. So, there's this

belief that the Democrats can win the

governor's race and then pull that

Senate race above that. So, that's

another seat that's important.

>> Who's running for Senate?

>> Sherrod Brown. And then you have the

existing Republican senator who has a

very low approval rating.

>> that?

>> And so, when you pull that together, you

right you look at it, you say to

yourself, that race is going to be

close. Republicans are could keep that

seat, but they're going to have to spend

a lot of money to keep that seat and a

lot of money to keep the Texas seat as

well. So, that's how the map starts

forming.

>> Texas.

>> Texas, yes.

>> That Texas is up for grabs is shocking.

>> Right. And And And Republicans may win

by 3% in Texas.

>> Right.

>> Okay? But, it's going to be close.

>> Right.

>> And the Republicans are divided, and the

Democrats, you know, their candidate's

not that great. Um but, like, you know,

40% probability the Democrats win.

>> Any other seats that are kind of up for

grabs?

>> Yeah. So, Alaska is the one to watch.

Alaska has weird voting rules, you know,

they have vote rank vote rate rank

choice voting. You got some candidates

in there with the same name. Uh

>> Oh, I heard about this.

>> Right? So,

uh you know, I keep an eye on Alaska.

I'll be in Iowa next week. Uh I keep an

eye on Nebraska Nebraska, Alaska. Um so,

the Democrats have some opportunities,

but I do think that it's going to be

very difficult for them to pull off all

four of them all four. And by the way,

we just talked about where the Democrats

can pick up. The Democrats are on the

verge of making a nomination error in

Michigan. Okay? And you have a very good

Republican candidate with a very

prestigious name running in New

Hampshire. So, you know, there could be

areas where the Republicans actually do

better in some states that

>> Who's the prestigious name in New

Hampshire?

>> Uh former governor.

>> Okay.

>> Former governor.

>> Okay.

>> And And so, you know, you pull all that

together, um and you know, you're

talking about a 50/50 country with a

50/50 Senate.

>> Okay. Got it.

>> Very close.

>> Uh let's move on. Let's go back to our

original thing that we talked about a

year ago, which is tariffs. I've

kind of lost track. Like, where are we

now?

>> So, why don't we take a step back? Um

last year, tariffs were a major headwind

for the economy.

>> Yes.

>> We fortunately had artificial

intelligence just completely

>> through everything.

>> overpowering it that made the tariffs

not look as bad as it is. But, we've

moved from a headwind on tariffs to a

tailwind on tariffs. We have only

collected in the US Treasury $35 billion

of net tariff revenue year to date. Just

just an amazing number. Like it is

>> It's nothing.

>> It's nothing. Okay? And And the reason

is that the effective tariff rate was

11% in October. Today it's 7%.

>> Okay.

>> Okay? So, you've got a 400 bit

reduction. Supply chains are adjusting.

The IAPA tariffs were thrown out by the

court. Um but there's another thing

that's happening. We're giving out

tariff refunds now to companies. We give

out 23 billion dollars of tariff refunds

in the first month. Okay? Now Now,

that's the context of what you're asking

about. You're asking where we are. The

Supreme Court threw out the president's

tariffs in February.

>> Yep.

>> The president's replacement plan, which

is legally sound, will start to come

into effect in July. Okay? And that's

called Section 301. It's pretty, you

know, pretty technical in terms of what

they're doing. But they're basically

going to have the old tariff system

replicated through a new legal

mechanism. What's interesting is as

those tariffs come online, you have the

tariff refunds coming into place. And so

what you're actually seeing here on the

tariff side is that the tariffs are

actually working as a stimulus for the

economy. And one of the main components

of our view of what's cushioning the

Iran conflict right now economically.

>> Is the fact that the tariffs are a

tailwind.

>> Yeah, tailwind. And And I'll give you an

example. We did a podcast you and I in

July right after one big beautiful bill

passed.

>> Okay? And so we talked a lot about these

expensing provisions. 100% expensing of

capital goods and research and

development and property.

>> Right.

>> We've handed out 75 billion dollars of

corporate tax cuts for new investment

and collected just 35 billion dollars of

tariffs. So, you actually have more

corporate tax cuts this year than you

have actually in tariff revenue. So,

it's a very interesting move. So, now

you're getting the boost from AI and

you're getting the tailwind from the

stimulus from tariff reductions and

corporate tax cuts. And last year you

only had the AI, and that's why you're

seeing growth really start to pick up

here, even with the Iran conflict

happening.

>> Is there anything left to Trump's agenda

that he wants to get through, or is he

kind of basically done?

>> No, I do think that there's probably

going to be more to Trump's agenda,

right? If you look at his trade policy

agenda, it's really three steps. Step

one was the tariffs. Step two was the

business incentives to do more cap

more investment in the United States.

So, we're at the beginning of that

stage. But, the third step is probably a

bigger step, and that is getting the

dollar lower. The dollar's been propped

up by the Iran war. When when you have a

conflict like this, people rush into the

safety of the US dollar. He is probably

trying to get the dollar closer to where

it was 20 years ago, uh and get that

dollar lower so that you then get the

full and

full impact of the investment. So,

that's on the domestic economy. That's

number one. Where Trump has been more

focused in Trump 2.0 than he was in

Trump 1.0, is on foreign affairs. And

his he is nowhere near done what he

wants to do on foreign affairs. And the

best way to think about this is that for

30 years, the US had unipolar

leadership. Now, you have challenges

from China and Russia and all the all

their proxies, and the world's moving

into a multipolar direction. So, Trump's

view is he's got to control the energy

and control the technology so that the

US can be the leader for the next

generation. So, we have the energy, a

lot of countries have energy, but only

two countries have the tech. And and so,

China in October basically started

weaponizing rare earths to the United

States, and Trump is now trying to

realign the world with the US so that he

has some counter to those rare earths.

What do I mean by that? Um Venezuela,

Argentina, uh Panama, kicking the

Chinese out of Panama, shoring up the

Western Hemisphere, getting better

control of the oil resources, which you

see in Venezuela, but also what you see,

even what what he was trying to do in

Iran. Just basically make it more

expensive for China to be able to buy

those Iranian oil by competing with

India and other places that are out

there.

Um and using that as some sort of

counter to China overall. And and for my

this is what's going to consume him for

the next 2 years, even if the Democrats

win the House and Senate.

>> Interesting. Okay. Let's go to the Fed

for a little bit.

>> Oh, yeah.

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>> New man?

>> Yep.

>> New team?

>> Yep.

>> New guy?

>> The The irony is that you know, when you

listen to um the commentary, like if we

were talking 6 months ago, everybody's

going

They're going to cut. How much are they

going to cut? When are they going to

cut? Then it was there's no cutting, and

now you're hearing commentary and they

they may raise. Any thoughts about all

that?

>> lots of thoughts about it. Um but you

got to think about it. We've moved 75

basis points on the Fed funds rate

expectations from 50 basis points to cut

to 25 basis point increase, and stocks

have just shrugged that off. Okay? And

the reason is that the economy is way

stronger

than people anticipated. Like we don't

even need the cuts right now. Okay? Now,

as you start getting deeper into rate

increases, that's going to cause some

anxiety in financial markets. But this

has been a big move. Okay? And I I look

at it and say, okay, that's a good

starting point for for Kevin Warsh. But

when you start to think about where we

are, if you take the 5-year real versus

nominal bond yield, markets think that

the inflation rate's going to be 2 and

1/2%. Now, you could say, hey, I think

it's going to be higher or I think it's

going to be lower, but it's not at that

3% rate, which is the real danger sign

that forces Kevin Warsh to raise, but

it's not at the 2% rate where you

say, hey, we're going to cut. So, I

think from a rate perspective, we're

just going to stay somewhat neutral

until we begin to see how long the Iran

conflict lasts, how long this growth

begins. But I don't think that's the

important issue at the Fed. I think

that's where the consensus is talking

about. But what's happening with a Kevin

Warsh Fed is massively fascinating to

us. He's literally saying after the

financial crisis in 2008, we changed the

entire framework for monetary policy and

the way the banking system works. The

Fed was able to pay interest on

reserves, which was in the TARP bill.

That allowed the Fed balance sheet to

expand and boy did it expand.

And now we've become dependent on the

Fed balance sheet every time the system

gets low on bank reserves. So the Fed

has been increasing its balance sheet

since December. We were running low on

reserves in September, October, and

November and we get these liquidity

crunches every time Americans have to

pay their taxes in April.

>> Right.

>> Okay. What Warsh is literally arguing is

that we're making a policy choice to

have a large balance sheet and high

interest rates. And what I mean by that

is that as you expand the Fed balance

sheet, you're increasing the money

supply and the money supply leads goods

inflation by 15 months.

>> Okay.

>> Okay. So what what Warsh is saying is we

need a new model. We need a lower

balance sheet. And when we get that

lower balance sheet where we're

tightening, then we can actually start

to get rates lower.

Okay. And and it's a very fascinating

but he's not trying to reduce the

balance sheet today. He's sequencing it.

And the Fed is moving forward on

financial deregulation proposals and

they're hoping to get some of this done

by the end of this year.

>> What financial deregulation proposals?

>> Liquidity coverage ratio, right? They've

been doing a whole bunch of stuff just

to try and get banks more liquidity into

the system. What he's basically arguing

is I'm going to privatize

the Fed balance sheet.

>> Now that's to the banks.

>> To the banks. And like Wells Fargo,

their asset cap got lifted. What did

they do? They bought Treasuries right

away.

>> Yes, they did.

>> Okay. So that that may not be the

perfect example but it's a good example

of that you take some of the um

>> Pressure.

>> pressure off the banks that we've been

putting into 2008. There's a private

uh system that can come in and our

estimates, my colleague Chris McGrath

estimates that, you know, the Fed can

probably get the balance sheet down by a

trillion dollars over a couple years.

>> How big is the balance sheet right now?

>> About six six trillion.

>> Okay.

>> So, so one trillion sounds like a lot,

but in the context of six it's not the

biggest thing in the world.

>> Right, but it's a much more efficient

way of doing it and it gets the money

supply down. And when you get the money

supply down, then you could start to

bring rates down. Because right now

those high rates are strangling home

builders and a few interest rate

sensitive sectors. You can actually do

it in a reverse way. So, I think the

regime change that's happening that he

talks about is if he's successful in

doing it, will actually be quite

beneficial. But, it's going to take

years.

>> Let me make one other point about the

Fed, which if you ask me what's the one

thing about the Fed that's not in the

press that investors should know

is that I again, I don't know if if J.

Powell's going to do this or not, but I

believe that J. Powell is also watching

the midterm elections.

>> Powell or Warsh?

>> Powell.

>> Powell.

>> Okay, people want to know when J. Powell

is going to leave the Federal Reserve.

It's the most valuable real estate

>> His seat.

>> His seat is the most valuable real

estate in Washington right now. Because

the Board of Governors is seven members

of the Fed.

Trump has appointed three of them.

That means when he gets that fourth

seat, that Powell seat, that will give

him a majority. With that majority, they

could change the regional Fed

presidents.

Um, they can do all sorts of stuff. They

have a lot more power. Powell

understands that. So, Powell's like,

"Hey, if I stay here until the

uh end of the midterm elections, if the

Democrats win

my seat needs Senate confirmation.

>> Ah.

>> And if I need Senate confirmation then

Trump can't appoint a MAGA person there.

He's got to appoint a more mainstream

establishment economist to win Senate

approval. So, I don't know if the

Democrats are going to win the Senate. I

don't think J. Powell knows, but there's

a chance. The market actually gives it a

50% chance right now.

>> Okay.

>> And he's waiting to hold that seat out.

Very important for what we just

explained because if Trump gets that

seat he can replace the New York Fed and

that's where the balance sheet is run

out of. So, personnel is policy

>> Yes.

>> and it's easier for Warsh to get his

agenda through if he has people aligned

with his policies.

>> Let's move on to

bank regulation for a little bit. I've

been looking for an M&A wave in banks

forever.

>> Yeah.

>> Do you think the regulators are pushing

for it at all or not really?

>> You're you're a better expert on this

than I am, but I think from a bank

perspective now's the time to do it.

Right? Like you don't know what's going

to happen in in the midterm elections.

You don't know what's going to happen in

the presidential elections and your

regulatory structure may be very

different if you waited out. So, if the

banks have a need to merge, now's the

time to go do that. Okay, that's number

one. Number two is I wouldn't be

surprised if the bank regulators are

pushing for more mergers because it

doesn't make sense to have thousands and

thousands and thousands of community

banks and they're probably encouraging

some of that consolidation from

consolidation from happening,

but I do think that your time window for

doing that is is starts to run out

particularly if you get a progressive

president in 2028.

>> Yes.

>> Right?

>> Right?

>> Talking about 2028, yeah, let's first

focus on the Democrats and then we'll

focus on the Republicans.

Who are the most likely candidates right

now on the Democratic side?

>> So, I I saw a quote yesterday from Rahm

Emanuel

which I thought really illuminated the

Democratic primary.

>> Okay.

>> Okay, Rahm Emanuel, Democrat, more

establishment type candidate. He said,

"I don't know what takes longer

building a high-speed rail in California

or counting the votes in California."

>> [laughter]

>> Shots are fired here and it's telling

you that the Democratic presidential

primary is off and running. Okay, so

Gavin Newsom is the frontrunner in the

betting odds right now. People view him

as the as the frontrunner.

Usually frontrunners at this point don't

actually end up being the winner at the

end of the day.

And of course Vice President Harris is

going to put her

hat in the ring or pretend to have her

hat in the ring. You think she's

actually going to run? I'm not sure

she's actually going to run, but why

wouldn't I pretend to be a candidate? It

keeps me more important. And 70 million

people voted for her, right? So she'll

be out there. I would keep a very close

eye on Pete Buttigieg. And what people

don't realize is that Pete Buttigieg won

the Iowa caucus

and came in second very close to Bernie

Sanders in New Hampshire. Now COVID

happened and the field cleared, but he

actually did really well and he's

proving to be what the Democrats want is

a fighter. So that means that you got

Buttigieg there. Then you got a series

of governors like Whitmer, Shapiro,

governor of Maryland, Governor Moore.

You know, they're all going to have, you

know, they're all going to be in the mix

for this as well. And so I would say,

you know, there's like eight or nine

really prominent Democrats who have a

chance to do it. Then you have people

like Ro Khanna coming in.

But you know, you got to think about

what happens in '26 and how that frames

2028 and who wins in these elections and

how people frame it. Right? Let's just

say the candidate in Maine wins over

Susan Collins 60-40.

She's been able to win in that state for

decades. Okay? And then she loses to

somebody with all of these skeletons in

his closet. All these things and still

wins. Okay? That's authenticity. That's

Donald Trump saying John McCain was a

traitor and his poll numbers go up.

Right? Right? Like that that that's what

the Democrats think that they might have

here.

With Platter. Yeah. So those are like

'26 will shape how the '28 debate goes.

It won't be the all be all of

everything, but I do think it's it's

important that if uh know, the

Republicans have a surprise win, the

Democrats are going to have a cleaning

of the house of the old guard. They're

going to have to figure out something

else that needs to get done.

>> Elaborate on that for a second. So,

you're saying if the Republicans keep

the the Senate.

>> Yep.

>> What how do what happens to the

Democrats?

>> Imagine if the Republicans keep the

house in these kind of conditions,

right? And the Senate is a is a good

example as well though. You look at it

and you go back to your earlier comment

that the Democrats have gone far left.

>> Right.

>> Right? Now they've lost to Trump in '24

and they didn't produce in '28.

>> Uh '26.

>> '26.

>> Okay? At that point they're going to be

looking for a more moderate candidate

and saying we got to drop this one. We

got to adopt

>> disagree. I think it goes the other way.

I think it goes the other way.

>> It it could go the other way.

It could go the other

>> It's just a prediction of mine. I I

think the the party would even move even

more left saying we want to be more

authentic. We want to be more

on the left wing. That's what's going to

attract people.

>> I I think your point's a good one.

Because when the Republicans lost in

2012 with Mitt Romney, the idea was that

they had to go more populist. And that's

And that's what happened with Donald

Trump. I just think that there's

internal forces at the Democratic Party

that are much stronger than the

Republican side and they said, "Well, we

won with Biden in 2020 by going in this

direction. We got to go back to that

direction. We've lost our way over the

last 8 years." And that that's where my

comment is coming from. But your your

thesis is exactly what happened in the

Republican Party.

>> Vance versus Rubio.

What do you think?

>> Neither.

>> Neither?

>> Neither.

>> Woo!

Cool.

>> [laughter]

>> Woo! That's a head headline, ladies and

gentlemen.

>> Neither.

>> Dan Clifton says neither. Wait, wait.

Let's Let's just do that again.

Vance versus Rubio, Dan.

>> Neither.

>> Wow. Okay. Talk to me.

>> But but first I want to say if a vice

president wants to run for president,

that vice president's going to have a

lane.

>> Okay.

>> It's very hard to be the vice president.

It's even harder to be this vice

president because he does not have the

shackles that other vice presidents

have. Explain that. Okay. What does that

mean? The president is not worried about

J.D. Vance taking his job in a way that

Bill Clinton worried about Al Gore or

Ronald Reagan worried about George

Herbert Walker Bush. So,

J.D. Vance can go out and raise as much

money as he wants. He can do all of his

political activities and Trump is not

reining him in in any way possible.

>> What do you mean Reagan was worried

about Bush and Clinton was worried about

Gore?

>> You're my vice president. Right. Our job

is to serve the country. Right. I don't

need you in Iowa every week in New

Hampshire, you know, going to rubber

chicken events to build for your

presidency. Right. Okay. And they're

very forceful of it. This is why George

W. Bush chose Cheney cuz he knew Cheney

wasn't running for president. He didn't

have to worry about [clears throat] it.

Okay.

J.D. Vance, Trump is encouraging him.

Before the Iran

>> Trump doesn't care.

>> care. He's like, "Go. Do what you got to

do." Before the Iran war

>> Why do you think that is?

>> Cuz he's confident in himself.

>> in himself.

>> he knows he's out of office and he's

like, "Okay, you know, do what you

want." As long as you're doing what I

need you to do, you go do what you want.

>> Okay.

>> Okay.

>> So, okay.

>> That gives J.D. Vance an enormous level

of head start that other vice presidents

don't have. And it's already tough to

beat a vice president.

>> But think about J.D. Vance.

J.D. Vance is vice president. Busy job.

J.D. Vance is going to run for president

while he's

vice president. Vice president. Really

hard to do both. And he's about to have

his fourth child. Okay. So, like he's

trying to raise a family, be vice

president, and run for president at the

same time.

There is a chance that a lot of people

you see on stage, Republican and

Democrat right now, don't actually run

for office. And some of it's going to be

over family concerns with young

families.

>> Huh.

>> Okay. So, so I'm not sure he's actually

going to run for president. But he's

creating the optionality for him to run

for president.

>> Personal opinion?

>> No doubt in my mind he's running for

president.

>> Great.

>> Right? And that's possible and he's

doing everything he can to get there.

>> Okay.

>> Remember though,

he is going to adopt every single word

of President Trump running for office.

>> going to hang that around his neck.

>> Right.

>> No question.

>> So, now if you're at the if you're at

the White House and you're in a meeting

with Trump, he says, "Hey Steve, who do

you think

>> Is it going to be Rubio or Vance?" The

same question that you asked.

>> Right. Right? Like cuz it's interesting.

>> Right.

>> Marco Rubio is the superstar in the

Republican Party right now.

>> He is.

>> Oh, absolutely. No doubt about it.

>> Why is that?

>> Because he's very eloquent in explaining

Trump

>> Right.

>> and what Trump's trying to do on foreign

policy in a way that Trump could never

do.

>> Right.

>> Okay? But he also has support from the

establishment cuz he's an establishment,

but he's also plays in Trump land.

>> Okay.

>> But you're starting to see that support

begin to erode as the Iran conflict goes

south.

>> Right.

>> Okay? So, now his star's starting to go

down a little bit. Okay? Remember, he

will adopt all the warts of the Trump

administration as well cuz he's likely

going to be very unpopular again.

>> So, both of them have all the warts.

>> Okay? So, they have the warts. So, Ted

Cruz, I'm not saying Ted Cruz is going

to be the nominee, but Ted Cruz sees

exactly what I just said. And he's

creating the optionality for him to run

for president.

>> Okay.

>> Okay? And then Governor DeSantis. Look

at Governor DeSantis. It's amazing when

you look at Governor DeSantis. This is a

guy who knows every town in Florida.

He's an excellent governor of Florida.

>> He certainly is.

>> He ran for president and just didn't

care what was going on in the Des Moines

economy or didn't

>> Right.

>> wasn't that. Now when you go read his

Twitter feed, he is he is involved in

every single national issue. He's

involved in all the state issues. And

think about what he is talking about.

Restricting data centers.

Playing into the affordability issue.

>> Uh

>> That's amazing to me, Steve. Okay? So, I

get the sense that he's creating the

optionality to run for president as

well. Right? So, I look at all that and

I say to myself, there's going to be

more to the Republican primary than

Vance and Rubio. And there are going to

be surprise factors that come in.

>> Interesting.

>> If you want the tail event, which again

10%, 15% probability is that the

populist right and the populist left be

able to establish a candidate

and Rahm Emanuel and Glenn Youngkin

stand up together and run together as a

joint ticket to try and cut off the

progressive populism down the road.

That's the thing that I would look for.

By the way, I again, I want to stress

it's a low probability event.

>> I It's a very low

>> But you're starting to see the

establishment begin to not fight over

tax cuts and abortion anymore. But over

this growing populism that's happening.

More Democrats aligning with

Republicans, more Republicans aligning

with Democrats.

>> So, to finish up, what else what else

should we talk about?

>> Well, I think, you know, there there's

an enormous amount of fiscal policy

that's out there right now that I think

is under appreciated. And it's not just,

you know, the tax cuts from OBB. The Fed

balance sheet's been expanding since

December. We have $700 billion of new

bank deposits that's out there. I talked

about the tariff refunds previously,

right? So, there's just a lot of

stimulus out there and I do believe that

the 10-year yield is moving with these

higher growth expectations and less on

the inflation expectation. So, very

different than what you read in the

mainstream financial press. The biggest

domestic policy issue that's out there

is AI and data centers. It is the most

important issue. I think the Democrats

are going to make a big case for

restricting AI and data centers in this

campaign. And the stocks aren't

reflected on it. Like, we can look at we

can look at the odds of the Democrats

taking the Senate and bank stocks move

with it.

>> Right.

>> Right? Or pharmaceutical stocks move

with it. The AI stocks are not moving.

And then it's going to just sneak up on

us as we get into the summer time.

>> People do not want this in their

backyard.

>> No.

>> They really don't.

>> No. Because look, it's happening where

there's large amounts of land. They tend

to be more rural, more Republican type

voters.

>> Yep.

>> Okay? And their their electricity prices

are going up and they may lose their

job. Directionally, this is a political

loser.

>> their water.

>> And their water.

>> And their water.

>> right? And this is the brilliance of

Elon Musk, where he's like, "Okay, well,

we're just going to build them in outer

space cuz we have unlimited sun and we

don't need the water to cool it." And he

understands the politics of it.

>> How you get the electricity back, I

don't know.

>> Right? Right?

He thinks he's got all the solar to be

able to do it, right? But but I look at

it and I say to myself, "How is this

going to play out?" And I think the

technology industry is just behind the

ball. And it reminds us a lot of the

fracking debate 15 years ago. So, our

big thesis is data centers are the new

fracking. By the way, it's the same

environmental money that's being used to

oppose the data centers, okay? And they

got to get out in front. And so, we just

did an analysis of local property taxes

in Virginia, which has a large amount of

data centers. Those counties with the

data centers have decreasing property

tax rates. They have increasing home

prices because the data centers in

Loudoun County are paying 40%

of the education bill in Loudoun County.

>> Wow.

>> amazing?

>> That's amazing.

>> So, the savings on your property tax are

$2,500 a year. Your electricity bill

might be going up $20.

>> Okay.

>> Okay? So, like the scale of it is much

more beneficial. And the technology

industry is just starting to figure this

out. Like, what is the public good

that's coming from these data centers

rather than just focusing on what the

bad is.

>> Well, let's finish it just so quickly

with the war. So, political implications

right now. How unpopular is this war

right now?

>> Well, the war is very unpopular. Like,

Trump Usually presidents get bumps from

geopolitical events. Trump got no bump

from Operation Hammer in June of 2025

when he took out the nuclear sites. he

got no bump from Maduro in Venezuela.

Now you're bogged down in a in a Middle

East war. It's actually hurting him more

than it's helping him, and he's had

higher gasoline prices. What's

interesting is that the US government

has what I call the 5% limit. No 5% on

the 10-year yield, no $5 gallon gas.

>> Right.

>> And they have been able, the US

government has been able to use reserves

in a very plentiful way to be able to

keep oil prices down. And by the way,

it's not just not the US government,

it's China. China's using their reserves

as well. Okay, so it's kept gasoline

prices at $4 gallon, which has hurt them

politically, but it hasn't killed them.

Right. Okay? But that means that there's

not enough pain

for the US to make compromises. There's

not enough pain in Iran for them to make

compromises. And so it's just a waiting

game that's going on with the strait

closed. There is a a belief out on the

street that there's probably about 3

million barrels of oil going through the

strait every day that's not being

counted. That started around the G Trump

meeting, and one of the reasons why oil

prices have been behaving a lot better

>> is cuz that's coming through.

>> is cuz that's coming through. I have no

way to confirm that, but we have seen

oil prices diverge away from that. But

what what it's done politically in the

Republican Party is divide Republican

voters. There's a lot of Republican

voters who voted for Trump thinking he

was going to get us out of Middle East

wars, and now he's started a new one

overall. So, he's got to figure out how

to get that fixed. He's got to figure

out how to get those oil prices down,

and the impact isn't really on the house

races, it's really on keeping those

Senate seats Republican is why I think

he wants to do a deal. The other reason

why he wants to do a deal is that he did

not take out 100% of their rockets, or

100% of their launchers, or 100% of

their minds. And so there's definitely

retaliation risk from Iran. If he hits

them, they're going to hit the US bases

all over the Middle East. They're going

to hit our allies. And so it's not a

cost-free thing just to say, "Okay, I

got to go back in and blow these guys

up." Right? And I think there's a lot of

hawks in the Republican Party who are

pushing for Trump to do that, but

there's a major cost to doing that. And

that's the second idea of re-escalation

overall. I think what's interesting from

an investment perspective is what we've

learned from the Iran war and from the

Ukraine war. And that is that the

technology and this defense

>> tech. Yes, the drone tech.

>> tech is the big winner. And and so

you've seen this dramatic rise of

large-cap defense stocks and now a major

underperformance. You have not seen that

same level of underperformance from the

defense tech companies and that's where

the new model is going to be.

>> is going to be.

>> Yep.

>> Yeah, yeah. Dan, thank you. That's

great.

>> We'll have you back

again and again and again.

>> Great.

>> Thank you.

>> All right, thank you.

>> Bye-bye. And we're back.

So that was really interesting. Let me

give you some thoughts and just some

summations about what Dan had to say.

With respect to the midterm elections,

which is where we started, he thinks the

odds are pretty good that the Democrats

will take the House. He thinks the odds

are pretty not so good that the

Democrats will take the Senate, so we'll

have split government. But he doesn't

have a lot of confidence in it, so it's

a kind of a story that that's evolving.

We also talked about the Fed,

whether the Fed would raise rates or not

do anything. Dan wasn't really so much

focused on that. He thinks Kevin Walsh

is really focused on the Fed's balance

sheet, reducing it over time, which

would be a real sea change in Fed policy

because ever since the great financial

crisis, the Fed balance sheet has

ballooned to 6 trillion.

And he thinks over time Walsh will take

that down by about 1 trillion. We talked

about the presidential election going

forward. On the Democrat side, Newsom

seems to be the frontrunner, but as he

said, typically anyone who's the

frontrunner at this point is not the end

runner at the end of the day. It's going

to be a very messy field. On the

Republican side, he kind of shocked us

with he didn't think either Vance or

Rubio would win, but that was kind of in

jest. Clearly Vance has the lead, but

Rubio is a possibility, but don't count

out

the governor of Florida, DeSantis. And

then finally, we ended up talking a

little bit about the war and how a lot

of people who voted for President Trump

did so because he was keep us out of

wars, and now we're in this war, which

has now become kind of messy. And he

thinks the president really wants to end

this as soon as possible. My view though

is that that's not possible cuz you're

dealing with a country that at the end

of the day doesn't really want to

negotiate. I hope I'm wrong,

but I think this is going to go on for

quite some time.

So, I hope you all enjoyed that

interview. I certainly did, and we'll

see [music] you soon.

>> This podcast is for informational

purposes only and does not constitute

investment advice. The host and guests

may hold positions in stocks discussed.

Opinions expressed are their own and not

recommendations.

>> [music]

>> Please do your own due diligence and

consult a licensed financial advisor

before making any investment decisions.

[music]