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President Donald Trump’s favorite success indicator says it all today. The stock market leaped on the blue wave that swept over the U.S. on expectations a new and revitalized Democratic Congress will rein in the worst of the Trump administration excesses, particularly on debt, unauthorized military acts and energy policies.
Despite a massive repudiation of the AI data center buildout in red states such as Texas, South Carolina, and Georgia — but also swing states such as Ohio and Pennsylvania — threatening to pause up to half of the 1,500 proposed data centers in the country, AI stocks such as Meta META 0.00%↑ , Google GOOGL 0.00%↑ and Amazon AMZN 0.00%↑ rose along with the market as oil prices fell on hopes for a quicker end to the Iran War.
First-day market reactions after elections don’t really mean much, except as an indicator of voter relief after the uncertainty of campaign season is removed. But it’s instructive to see investors begin to lay their chips where they think political focus will be in coming months.
Chief among those in the past few days have been the solar stocks, such as Enphase ENPH 0.00%↑, First Solar FSLR 0.00%↑ and the Invesco Solar ETF TAN 0.00%↑. Other renewable energy stocks also rose on expectations the Democrats will at least pull back on the administration’s reckless authority over the Environmental Protection Agency. Senseless attacks on wind turbine projects will also likely be looked at, helping wind energy shares.
In coming days, investors will get a clearer preview of how this remaining half of Trump’s term will go. Specifically, whether Democrats will follow through on their mandate to work to lower energy prices or whether they just plan on a series of revenge acts such as impeachment hearings and special investigations.
Early indications aren’t promising. Sen. Edward Markey (D-Mass.) said this morning that new forests will have to be planted to handle all the papers the Dems will need to issue subpoenas to the administration. Rep. Robert Garcia (D-Calif.), who has been elected to lead the House Oversight Committee next term, put it even more succinctly to Republican leaders: “Lawyer up.”
David Callaway explains why this column is called Zeus in The coming battle with the climate gods: How mortal innovators and investors will save the planet.
The first test of whether the Democrats can overcome their internal divides and focus on energy will be the permitting bill currently in Congress. While flawed, and favorable to fossil fuel companies, it represents the best chance yet for Congress to speed up the permitting process that acts as a bottleneck to all energy projects getting electricity to the nation’s grids.
If the existing Democrats on Capitol Hill can join the Republicans in a bipartisan effort to pass the permitting bill before the end of the year, it would be a strong indication that they do indeed tend to work across party lines to help reduce energy prices and broader inflation.
If they instead try to dramatically change the bill or delay until the New Year when the new Congress takes over — likely killing the bill — that will send a message that the next two years are going to be more about political infighting than anything else.
Data centers are the other story, particularly in Texas, where incoming Gov. Gina Hinojosa has promised a moratorium on new data center construction. Texas, which current Gov. Greg Abbott had once hoped to turn into an epicenter of data center construction, is home to about 25% of all proposed U.S. data centers right now.
Halting or slowing down the growth of the AI data centers resulted largely from a grassroots public response to concerns about environmental damage and surging electricity prices. Politicians such as Hinojosa now become major players at the table with AI leaders from the big tech companies, who have largely enjoyed unprecedented freedom to build what they want under Trump.
Whether this impacts the growth of AI share prices remains to be seen. But it’s a clear sign that the ability of billionaires such as Elon Musk to wreak havoc on government policy is over. Indeed, Musk and others who participated in Trump’s activities in the past two years are now front and center for Democratic Congressional investigations into corruption on a grand scale.
What this all means for the market and climate investors is that there will indeed be a more contentious political atmosphere in Washington in the next two years, which historically favors the bulls. That is good news for renewable energy stocks as well.
And President Trump may now finally learn that the market really doesn’t care about one person’s success, especially his. It just goes where the money is.
Read more Zeus columns from David Callaway: