The S&P 500 (Index: SPX) was heading for a good week. The stock market appeared to react well to news of the Democratic party's sweeps of many elections across the U.S. on Wednesday, 3 November 2026. The index was up almost 1.6% on that news, which seemed contrary to what might be expected for the biggest companies in the index, the Big-AI tech giants, because many of the winning candidates opposed building the data centers they need to support the boom in Artificial Intelligence technologies.

Then Thursday, 5 November 2026 came and the crash that seemed like it should have happened on Wednesday arrived like a ton of weights. It was as if investors suddenly realized that yes, the political party that specifically ran against AI technology development had won power at the federal, state, and local levels of government and would follow through on imposing new regulations and other costs on the AI tech giants. The S&P 500 plunged almost 4.6%, led by AI chipmakers like Nvidia (NASDAQ: NVDA), Micron Technology (NASDAQ: MU), and Advanced Micro Devices (NASDAQ: AMD.

Then Friday arrived and the investors who like to pick through the carrion of market carnage to find deals on heavily discounted stocks found enough among the AI tech sector to boost the index by a little over 0.3% on the day. For the trading week as a whole, the S&P 500 closed the week at 7,376.86, down almost 2.7%.

So what happened on Wednesday to delay the expected drop in stock prices by a day?

The answer turns out to be pretty technical, and to give credit where it's due, Zerohedge provided some of the better reporting of what happened on the day it happened, compiling observations from several sell-side analysts for why the market bounced up instead of realizing the expected drop:

1. Clarity - the event is passed and Trump "absolutely willing" to accept the results and a 'medium bad' outcome for Republicans
2. Gridlock - lowers the risk premium. Dem majority plus Trump’s willingness to work with it “should act as a break on extreme policy outcomes and bring down risk premia” - DB Saravelos.
3. Plunging Oil - recognition of Iran War as reason for Dem Sweep, Trump confirmed he wouldn't escalate in Iran any time soon, and "expect Dems to use fiscal deadlines to seek to limit the war with Iran" - GS Hatzius
4. Hopes of Tariff Rollback - "...roll back selected tariffs, and reverse spending cuts enacted last year." - GS Hatzius, and it fits who led today with AAPL/MSFT surging as investors perceived the stock as a winner from the Democratic sweep.
5. Hedges Unwound - deeply in the money protection was sold (driving down vol and sparking the heavy delta/gamma flow-driven rebound)
6. Technicals - NDX bounced off its 200DMA
7. Rotation - Money is moving out of AI CapEx (on worries that Democrats will regulate AI more) and into cash-generating MegaCaps.
8. Seasonality - 6 months after the past 19 midterm elections, SPX higher 100% of the time, with an average gain of 14.18%.

We are sure there are more (obviously aside from the classic 'relief rally' argument), but those all seemed to add up to what we saw today...

It was enough to last for a day. And then the Thursday, 5 November 2026 AI Crash happened, where we're now wondering if stock prices are themselves experiencing a regime change. That possibility is hinted at in the latest update, where we find the trajectory of the S&P 500 has dropped well below the range we would expect to find it when investors are focused on the current quarter of 2026-Q4 in setting current day stock prices.

It's too early to tell using the dividend futures-based model since we have to identify potential changes in market regime from observations. On one hand, we have a Lévy flight event where the trajectory of the index has broken away from all of the alternative trajectories it would be expected to be found in the established market regime that's been in place since 28 April 2025. On the other hand, we see that trajectory is on par with where the model would put it in early December 2026, assuming investors are still focusing on 2026-Q4.

The difference between the model's projections in November 2026 and December 2026 could be attributed to how its projections work. Here, its projections a month into the future are "locked in", while its projections of the more distant future are still dynamic and can adapt and provide accurate predictions assuming the existing market regime still holds.

We'll find out which scenario applies in the weeks ahead as investors absorb the random onset of new information from the newstreams. Like those they absorbed from the market moving headlines of the week that was.

Monday, 2 November 2026

• Signs and portents for the U.S. economy:
• Manufacturing solid but strain of energy costs, supply disruptions starts to show
• Oil drops over 4% on hopes of progress in talks on ending US-Iran war
• Trump says US, Canada have 'concept' of a new trade deal
• China's slow buying of US farm goods tests $17 billion trade pledge
• Fed minions fear inflationary impact of El Nino:
• El Nino poses 'meaningful risk' of higher inflation in 2027, SF Fed paper says
• Bigger trouble developing in China:
• Beijing To Convene Stock Market Rescue Meeting As Plunge Protection Goes Into Overdrive
• China's top three airlines head for full-year losses as fuel costs weigh
• Bigger trouble developing in Japan, South Korea:
• Japan's October factory growth slows as costs pick up, PMI shows
• South Korea factory activity growth slows to 8-month low, PMI shows
• EU minions dismayed by EU trade with US and value of AI companies. Also getting excited to hike Eurozone interest rates in December:
• Euro zone countries are integrating faster with US than with each other, ECB says
• ECB flags AI valuations, bond stress and fund losses as main risks
• AI-related debt binge may pressure European bond markets
• ECB will have to raise rates again, extent uncertain, Kazimir says
• Nasdaq, S&P 500 fall behind ahead of U.S. midterms, key earnings results
• S&P 500 ends down; Apple dips ahead of quarterly report
• October delivers S&P 500 equal-weight stocks' biggest outperformance since 2009

Tuesday, 3 November 2026

• Signs and portents for the U.S. economy:
• US job openings jump in September; layoffs lowest in 1-1/2 years
• US manufacturing strengthens in October, input prices stay high
• US factory orders beat expectations in September amid broad strength
• Trump says US close to trade deal with Canada, Carney says work remains
• Oil prices ease to settle near 4-week low on hopes peace talks will end wars
• Bigger trouble, stimulus developing in China:
• China regulator tells banks to pause IPOs, FT reports
• China halts listings in bid to bolster struggling markets
• Beijing's Stock Rescue Turns More Desperate: Regulators Reportedly Halt IPOs
• AI investment is becoming overly concentrated, Chinese official says
• BOJ minions getting excited to hike Japan's interest rates again in December:
• BOJ locks in December hike, but neutral-rate uncertainty muddies outlook
• ECB minions lining up behind December interest rate hike in Eurozone:
• Bundesbank's Nagel joins ECB chorus backing December rate hike
• S&P 500, Nasdaq end higher as markets weigh on U.S. midterms
• Nasdaq ends higher as AI heavyweights rebound ahead of midterm results
• AMD forecast eases AI spending fears as data-center sales surge

Wednesday, 4 November 2026

• Signs and portents for the U.S. economy:
• Mortgage rates drop for the third straight week, but homebuyers are still leaving the market
• McDonald's US sales decline for first time in six quarters despite value push
• Oil rises on Iran war uncertainty after Trump's Republicans face election rout
• US to loan about a third of heating oil reserve in bid to tame prices
• Bigger trouble, stimulus developing in China:
• China's services growth slows to three-month low as confidence weakens
• ECB minions getting excited again to hike Eurozone interest rates, predict wages in Eurozone will rebound next year
• ECB rate hike looks nearly certain after inflation rises to three-year high
• Euro zone wage growth to rebound slightly next year, ECB says
• Dow has best day in 1.5 years as traders assess a Democrat sweep
• Wall Street ends higher after Democrats win Congress; data center stocks tumble
• Democrats' midterm sweep fuels $750 billion Big Tech rally
• US Democratic win unlikely to ease firms' cost, tariff woes in near term, executives say

Thursday, 5 November 2026

• Signs and portents for the U.S. economy:
• US weekly jobless claims at 57-year lows; worker productivity surges in third quarter
• US worker productivity surges in third quarter
• China says US farm purchases hinge on tariff-cut deal
• Brent crude jumps, settles up over $3 after tanker attacks
• Fed minions want to go slow on U.S. interest rate hikes:
• Fed's Hammack, Barkin favor gradual rate-hike path to lower inflation
• Growth signs developing in Japan:
• Japan services activity expands for fifth month, PMI shows
• ECB minions getting excited again to hike Eurozone interest rates again:
• ECB's Lagarde says data will tell if December rate hike needed
• Nasdaq ends -5.5%, S&P 500 sees worst day since April 2025
• Wall Street fear gauge jumps most since 'Liberation Day' as AI trade stumbles
• Nasdaq posts biggest daily drop in 19 months on fears of AI regulations
• AI storm dooms tech stocks to $2 trillion decline on darkest day since 2025
• NVIDIA drops 9%, now down for 2026

Friday, 6 November 2026

• Signs and portents for the U.S. economy:
• AI rout sets off market alarm signals as traders brace for what's next
• Democrats planning flood of AI bills when they take control of Congress
• US labor market regains ground as job growth surges, unemployment rate falls to 4.1%
• Four things to note from Friday's US jobs report
• VIEW Strong October jobs report sends yields higher
• Brent oil price benchmark set for biggest weekly drop since 2020
• Soaring freight rates give US refiners edge as crude discounts widen
• Fed minions expected to deliver quarter point rate hike in December 2026, say they don't care about AI tech stock crash:
• Fed seen sticking to December rate hike after jobs data
• Daly says Fed rate hike likely, despite 'painful' tech-stock dive
• BOJ minions have a fever, the only prescription is more rate hikes, at least until they hit a two percent yield:
• BOJ to hike in December, seek terminal rate of 2%, says ex-central bank top economist
• S&P 500 reports weekly losses as technology rout weighs on markets
• Nasdaq rebounds 1% following worst session in 18 months as traders snap up tech shares

The CME Group's FedWatch Tool sees just two more increases in the Federal Funds Rate in the weeks ahead. It continues to anticipate the Fed's next rate hike will be a quarter point, coming on 9 December (2026-Q4). The other rate hike the FedWatch tool foresees would be another quarter point increase that would take place on 17 March (2027-Q1).

The Atlanta Fed's GDPNow tool projects the current quarter of 2026-Q4's inflation-adjusted economic growth rate will be +3.4%, up from its initial estimate of 3.2% a week earlier.

Image credit: Microsoft Copilot Designer. Prompt: "An editorial cartoon of a Wall Street bear who has set a balloon labeled 'AI' on the ground and is trying to crush it with several large weights that say 'REGIME CHANGE' and 'NEW REGULATIONS' and 'HIGHER COSTS' and 'LOWER PROFITS'".

A crime has been committed. The cops think they know who did it, but they don't have enough evidence to make the case. Unless they can get the suspect to confess, they're not going to. They've tried almost all the tricks of their trade to get them to admit they did it, but have come up empty. They're down to their last trick.

It's time to turn to the supernatural. They put the suspect in a darkened room and make them wait, alone. After enough time has passed, a panel in the wall quietly opens, revealing a skeleton with glowing red eyes. Blue lights flash and a voice emanates from the surreal inquisitor. It demands the suspect confess. And the suspect, scared out of their wits, does. The police have their confession, which they've filmed and recorded for use in a court of law. Case closed.

Or at least, that's how Helene Adelaide Shelby imagined how a confession might be obtained when she filed a patent for her invention of an Apparatus for Obtaining Criminal Confessions on 16 August 1927. Here's an excerpt from U.S. Patent 1,749,090, which she was finally awarded on 4 March 1930:

The present invention relates to a new and useful apparatus for obtaining confessions from culprits, or those suspected of the commission of crimes, and photographically recording these confessions, in the form of sound waves, in conjunction with their pictures, depicting their every expression and emotion, to be preserved for later reproduction as evidence against them.

The primary object of my invention is the provision of an apparatus for the creation of illusory effects calculated to impress the subject with their being of a supernatural character and to so work upon his imagination as to enable an inquisitor operating in conjunction with-the recording system to obtain confessions and graphically record them by light action under the control of electric impulses governed by varying intensities of sound waves....

My apparatus for obtaining confessions of guilt from criminals undergoing examination comprises a novel combination of well known elements, arranged in such manner and combination as to produce, when operated, a state of mind calculated to cause him, if guilty, to make confession thereof, the apparatus further operating to record photographically his every expression and emotion, while, at the same time, simultaneously recording his examiners questions and the replies thereto.

The illustrations from her patent reveal the secrets of the supernatural character she envisioned, "a figure in the form of a skeleton", with eyes lit by red lightbulbs to emit "an unnatural ghastly glow":

There's a movie camera rigged up to peer through the nose of a skeleton that's been propped up and cinematically lit behind the sliding panel to the suspect interrogation room to be as spooky as possible. A megaphone transmits the police interrogator's voice while a microphone records the verbal communication, fully synchronized with the film of the suspect and permanently recorded to be projected with sound on a screen later.

That recording system may be the most remarkable aspect of the patent. When Helene Adelaide Shelby filed the patent in August 1927, it was the era of silent films. It wasn't until October 1927 that The Jazz Singer would be released to movie theaters to become the first "full-length" movie production to feature fully synchronized dialogue spoken by its actors on screen. It used the Vitaphone system, which played a wax disc recording of the movie's sound in sync with the film's scenes.

Shelby's invention, on the other hand, appears to utilize a system similar to the Movietone sound system, a sound-on-film technology that was just starting to be used in Hollywood at the time the patent was filed.

Alas, we couldn't find any record of any police department utilizing Shelby's invention. Nor could we find any record of such a system being used to obtain a criminal confession. Not even in the movies.

How affordable is the typical new home sold in the U.S. for the typical American household?

There are three factors that play into the answer to that question: the median price of new homes sold, mortgage rates, and median household income. In September 2026, all three of these factors increased over their revised levels from August 2026.

Here are the three numbers that define how affordable a new home is for a typical American household in September 2026:

• Median new home sale price: $400,400
• Median household income: $88,076
• Average 30-year conventional fixed mortgage rate: 6.86%

Assuming a 0% down payment, a new home sold in September 2026 at the nation's median sale price would have a mortgage payment that consumes 35.8% of the income earned by a household at the exact middle of the U.S. spectrum of income. The following chart reveals the typical new home sold in the U.S. remained provisionally within the affordable reach of the typical American household during September 2026, though it's nearing the threshold that would push it back into the levels of unaffordability that characterized the Biden-Harris era of high inflation in the United States:

The relative affordability thresholds indicated on the chart are defined by the 28/36 rule that mortgage lenders traditionally use to determine whether to extend a mortgage to new home buyers. Here, a monthly mortgage payment that consumes more than 36% of a household's income means that the median new home sold is fully outside the affordable reach of a household earning the median income, even if it has no other debts. At the other end of the rule, a mortgage that does not exceed 28% of a household's income is considered affordable even with average levels of other kinds of debt.

September 2026's relative affordability level falls between these two levels but nearer the upper end, which means it can be considered affordable provided the household has very little other debt or if its other expenses are lower than average.

Perhaps the biggest reason new home prices have remained within the traditional mortgage lender affordability thresholds as mortgages rates have risen is the increased incentives homebuilders are providing to new home buyers to boost their sales. These incentives, including special financing that reduces the interest rates new home buyers will pay for their mortgages, have been offsetting the overall increase in average mortgage rates in the U.S.

Looking forward, the average interest rate for a 30-year conventional fixed rate mortgage in the U.S. rose to 7.33% in October 2026, so there are serious headwinds for new home affordability in the U.S. Which is a shame because they've only been within the affordable reach of a majority of American households in the past twelve months after having been fully out of reach from 2022 through most of 2025. We'll know more after we have October's median household income and median new home sale price data.

References

U.S. Census Bureau. New Residential Sales Historical Data. Houses Sold. [Excel Spreadsheet]. Accessed 27 October 2026.

U.S. Census Bureau. New Residential Sales Historical Data. Median and Average Sale Price of Houses Sold. [Excel Spreadsheet]. Accessed 27 October 2026.

Freddie Mac. 30-Year Fixed Rate Mortgages Since 1971. [Online Database]. Accessed 1 November 2026. Note: Starting from December 2022, the estimated monthly mortgage rate is taken as the average of weekly 30-year conventional mortgage rates recorded during the calendar month.

Image Credit: Microsoft Copilot Designer. Prompt: "An editorial cartoon of a young couple seeking to buy a new home who are talking to a real estate agent who tells them 'NEW HOMES TODAY HAVE BECOME MORE AFFORDABLE THAN EXISTING HOMES' as they stand beside a lot with a house under construction with a yard sign that says 'ASK ABOUT OUR BUILDER INCENTIVES'".

The S&P 500 (Index: SPX) rode its rally above its mean trendline with respect to its trailing year dividends per share for the first few weeks of October 2026. But the index kept dipping below it starting in the last week of the month before breaking more sharply below it on the last day of the month.

The culprit behind the downward move was the drop in several megacap AI tech stocks, which thanks to their outsized concentration within the market capitalization-weighted index, caused it to drop below it when they turned south after reporting disappointing revenues and a diminished earnings outlook.

By contrast, the stocks of S&P 500 companies outside of the megacap AI tech stocks did pretty well during the month, but they didn't gain enough market cap to offset the losses of the most heavily weighted companies in the index.

The following chart visualizes the relationship between the value of the S&P 500 and its underlying trailing year dividends per share from 29 December 2023 through 30 October 2026:

Overall, stock prices behaved in an orderly manner in October 2026, with the index' trajectory keeping within one standard deviation of its mean trendline throughout the month.

Image Credit: We modified a public domain image of a São Paulo highway shield we came across on Wikimedia Commons to make the S&P 500's own highway sign.

Motio Research's initial estimate of U.S. median household income for September 2026 is $87,850, an apparent $340 (or 0.4%) decrease from the firm's initial estimate of $88,190 for August 2026.

We're describing the month-over-month change as "apparent" because Motio Research recalibrated its historical monthly median household income estimates. Here's their note of caution against direct comparison with their previous monthly estimates:

The September update incorporates annual Census rebenchmarking of Motio's public dollar estimates, using the official 2025 median household income of $87,460. The recalibration changes published dollar levels but not their growth rates or the separate historical Momentum series. Previously published dollar estimates should not be compared directly with the recalibrated levels.

Motio Research's recalibration of their nominal median household income estimates is substantial, affecting all their estimates extending back to January 2010. From January 2010 through January 2020 and from December 2020 through July 2025, most changes are small, with the recalibrated estimates within one percent of Motio's previously reported figures. The period from February 2020 through November 2020, which covers the period during 2020's Coronavirus Pandemic when the Census Bureau wasn't able to fully survey the income of lower income-earning U.S. households, saw somewhat larger changes though the recalibrated estimates are still skewed upward because of the undercollection of survey data on which they're based.

Motio Research's monthly median household estimates from August 2025 through August 2026 saw large downward adjustments, lowering the estimates anywhere from one to two percent from pre-recalibration reported levels. Previously, we observed Motio Research's estimates during this period were running "hot" with respect our estimates. We had hypothesized that difference might be attributable in part to the Trump administration's program to pay cash awards and also for the travel of millions of illegal aliens who volunteered to return to their home countries as they took advantage of the program, since it would be most attractive to the lowest-income earning households within this category and fit the timing of a surge in Motio Research's median household income data. The recalibrated data suggests the impact of that program has had a much smaller effect on median household income than it had appeared from the previously reported estimates.

The following screenshots of Motio Research's interactive charts visualize the latest trends in the U.S.' median household income. The first chart presents the firm's Household Income Index, which is based on three-month moving average that sets the period of January 2010 through March 2010 at a value of 100 after making adjustments for inflation and seasonality in the data. The second chart presents their monthly median household income estimates in nominal (not adjusted for inflation) terms for the period from January 2010 through September 2026.

Monthly Household Income Index

Median Household Income Estimates

Looking at the recalibrated nominal data, median household income increased by $650 (or 0.75%) from August 2026's recalibrated $87,200 to September 2026's $87,850, which is a significant month-over-month change.

Analyst's Notes

Political Calculations produces monthly median household income estimates using an alternate methodology that complements Motio Research's survey-based estimates. In September 2026, Political Calculations' initial estimate of median household income is $88,076. This estimate is $498 (or 0.56%) lower than our initial estimate of $88,574 for August 2026's median household income.

The following chart presents our latest estimates of U.S. median household income, both adjusted for inflation (blue) and not-adjusted for inflation (red) for each month from January 2000 through September 2026.

Political Calculations' September 2026 estimate is $226 (0.3%) higher than Motio Research's estimate of $87,850. It is also $5,338 higher than our revised non-inflation adjusted estimate of $82,378 for median household income in January 2025, or $320 higher than the inflation-adjusted estimate of $87,757. The increase in inflation since February 2026 has eroded real median household income in the months since, though not so much that the typical American household is still better off than they were at the end of the Biden-Harris administration's tenure in office.

That matters because it plays into how affordable it is for a household at the exact middle of the nation's spectrum of income to live in the U.S. On that count, here's a special bonus preview of a chart we'll discuss later this week that focuses on the biggest single expense most households have and how its relative affordability has changed since January 2000 (and also since January 2025).

References

U.S. Bureau of Economic Analysis. Table 2.6. Personal Income and Its Disposition, Monthly, Personal Income and Outlays, Not Seasonally Adjusted, Monthly, Middle of Month. Population. [Online Database (via Federal Reserve Economic Data)]. Last Updated: 29 October 2026. Accessed: 29 October 2026.

U.S. Bureau of Economic Analysis. Table 2.6. Personal Income and Its Disposition, Monthly, Personal Income and Outlays, Not Seasonally Adjusted, Monthly, Middle of Month. Compensation of Employees, Received: Wage and Salary Disbursements. [Online Database (via Federal Reserve Economic Data)]. Last Updated: 29 October 2026. Accessed: 29 October 2026.

Image credit: U.S. Census Bureau. We modified the public domain image to make it more generally applicable beyond reporting the median household income from 2022.