View from America’s Largest Bank: Republicans are Abandoning Ship

GOP House members are abandoning ship at a record pace. The midterm challenges for the GOP include declining blue-collar employment, soaring ACA premiums, a surge in commodity prices, and rising inflation.

This is not the view of a pollster or politician. It’s from America’s largest bank in the latest Eye on The Market article, by Michael Cembalest, Chairman of Market and Investment Strategy for J.P. Morgan.

He continues (text is edited for clarity):

Thirty-six GOP House members have opted not to run in 2026, the highest figure since 1930, when the data series begins. Can we infer anything about possible midterm outcomes from this? Whenever more than 20 GOP House members retire, there tend to be, at best, small GOP gains in the next election, and sometimes very large losses.

So, as a starting point, GOP retirements are consistent with betting markets showing only a 15% chance of GOP House control after the midterms. The bottom line: the GOP could net anywhere from -1 to +9 seats in the 2026 midterms due to redistricting efforts, depending on whether the Virginia referendum stands, other State Supreme Court challenges, and possible responses to the Supreme Court’s anti-Voting Rights Decision last week.

Midterm voter sentiment may reflect a decline in blue-collar employment since Trump was inaugurated, a war-related surge in US commodity prices and a modest upturn in inflation expectations. In 2025, US farm bankruptcies rose by ~50% year over year due in part to tariffs raising the cost of steel, equipment and herbicide inputs; tariff retaliation, which reduced export markets; and immigration policy, which reduced the supply of undocumented farm labor.

There are other unorthodoxies hanging over the 2026 midterm elections as well: soaring ACA marketplace healthcare premiums; a surge in measles cases, which began around the time of RFK’s appointment at HHS; an unprecedented pace of firings of four- and five-star generals and admirals as of April; and some very lopsided choices regarding Federal prosecutions by the DOJ.

Criminals run free under DOJ

The Trump 2.0 DOJ has terminated potential criminal cases referred to it by law enforcement and other federal agencies at a record pace, as shown below. Some cases were pending multi-year FBI and DEA investigations. But the magnitude of the shift and its composition are unusual, prompting ~300 ex-DOJ officials to publicly state that the DOJ was taking a sledgehammer to long-standing work designed to protect communities and the rule of law.

While the Trump 2.0 DOJ increased prosecution of immigration cases, it also terminated pending investigations involving organized crime, white collar crime, corruption, labor racketeering, violent crime, healthcare fraud and national security at a record pace.

Even as the Trump administration launched efforts to root out waste and abuse, the DOJ terminated around three times as many major fraud cases as in similar time periods under prior administrations. Terminations also included 300 cases involving charges of providing support to foreign terrorist organizations; 60 union corruption and labor racketeering cases; and 5,000 cases of federal drug law violations, including trafficking and money laundering.

Data center buildout slowdown

Data center construction continues to rise, accompanied by rising spending on power generation capacity. But is there a potential slowdown ahead? The latest analysis based on satellite images shows that over 60% of data center capacity planned for completion in 2027 has not begun construction, with another 7% delayed. The culprits are typically related to permitting issues and delays in obtaining gas turbines, transformers and skilled labor.

Cymbalist goes on to discuss the cyberhacking capabilities of the latest AI models
and the Gulf States’ “pipe dream” of building a new oil pipeline — so put on your green eyeshades and get all the stock market mumbo-jumbo you can handle.