Report Industry Investment Rating No information provided in the report. Core Viewpoints of the Report - The 2026 mid - term elections pose a difficult defensive battle for Trump and the Republican Party. Due to historical trends, Trump's personal poll performance, and potential structural factors, the Republican Party has a relatively high probability of losing control of the House of Representatives, and the Senate election will be more intense with high risks [2]. - If the Republicans win, the double - loose policy will promote economic expansion, which is beneficial to the stock market and commodities, but there are inflation risks. If they lose, Trump's policy implementation will be hindered, market risk - aversion sentiment will rise, and technology and financial stocks will be under pressure [3]. Summary by Relevant Catalogs I. The "Curse" Phenomenon and Historical Review of US Mid - term Elections - **Qualitative Definition of the "Mid - term Election Curse"**: In mid - term elections, the president's party usually loses seats, which is a normal and regular phenomenon, reflecting the political psychology of US voters, the power - balance system design, and the internal laws of the political cycle [6]. - **Historical Data Support**: - On average, the president's party loses 25.7 seats in the House and 3.3 seats in the Senate in mid - term elections. The probability of the president's party retaining the majority in both houses is only about 30% [7]. - Even if a president wins a "sweep" in the previous election, the probability of maintaining the party's majority in both houses in the subsequent mid - term election is only 36.36% [9]. II. Analysis of the Causes of the "Mid - term Election Curse" - **Traditional Theories and Mainstream Explanations**: - **Undulation Theory**: Voters mobilized in the presidential election are less likely to vote in mid - term elections, leading to a natural decline in the ruling party's vote - share [11]. - **Presidential Punishment Effect**: Mid - term elections are a "referendum" on the president's performance. Voters punish the president's party for economic problems, social contradictions, and unpopular policies [12]. - **Mid - term Election Referendum Theory**: Voters base their votes on the current economic situation and satisfaction with the president's leadership [13]. - **Power - Balance Theory**: Voters support the opposition party to strengthen congressional checks on the president and prevent excessive expansion of executive power [14]. - **Balancing Theory**: Voters create a "divided government" to achieve power balance and prevent one - party dominance [15]. - **Pendulum Effect**: Political support swings between the ruling and opposition parties, reflecting voters' resistance to one - party rule [16]. - **Issue Evolution Theory**: Mid - term election issues are more specific and local, and can change suddenly, affecting voter behavior [17]. - **Turnout Differential Theory**: Voter participation rates and structures differ between presidential and mid - term elections, with "core voters" having a greater impact in mid - term elections [18]. - **Backlash against Radical Policies**: Radical policies by the president can lead to a strong voter backlash in mid - term elections [19]. - **Media and Information Flow Theory**: Mid - term election media coverage is more fragmented, and voters rely more on party loyalty or simple anti - ruling - party strategies [20]. - **Reversion to Mean Theory**: The ideological distribution of voters in mid - term elections returns to the average level, causing a decline in the ruling party's support [21]. - **Impact on the 2026 Elections**: The "presidential punishment effect", "backlash against radical policies", "issue evolution theory", and "turnout differential theory" will have a significant impact on the 2026 mid - term elections [24][25]. III. Trump's "Final Battle": In - depth Analysis of the 2026 Mid - term Election Strategy and Market Impact - **Importance of the 2026 Mid - term Elections**: The 2026 mid - term elections are crucial for Trump's political legacy. The results will determine his political influence and policy - implementation space in the remaining term [27]. - **Review of the 2018 Loss**: - **Contrast between Economic Data and Support Rate**: In 2018, the US economic data was good, but Trump's support rate was low because voters' evaluations were affected by personal style, divisive remarks, and the actual impact of policies on daily life [29]. - **Core Reasons for the Loss**: - **Policy Imbalance**: Fiscal, monetary, and trade policies offset each other, causing double - impacts on market confidence and people's livelihoods [32]. - **Shortcomings in Campaign Strategy**: The Republican Party failed to mobilize voters effectively, especially in suburban and female voter groups, and the campaign focus was misaligned with voters' concerns [42]. - **Outburst of Dissatisfaction**: The rise in the cost of living in core areas such as healthcare, education, and housing became the core issue in the election, and negative public opinion led to a decline in Trump's support rate [42]. - **Lessons Learned and 2026 Strategies**: - **Policy Coordination**: Adopt a "loose - money + loose - fiscal + stable - trade" policy system, including nominating a dovish Fed chair, implementing more active fiscal policies, and adjusting trade policies [47][48]. - **Campaign Focus**: Shift the focus from macro - data to tangible benefits for people's livelihoods, and actively set campaign agendas around people's livelihood issues [49]. - **Internal Integration**: Strengthen internal unity within the party and establish a more effective public - opinion feedback mechanism [51]. IV. Market Outlook and Potential Risks - The performance of the US stock market is significantly related to the presidential term cycle. The second year (mid - term election year) is often a testing period for the stock market, with higher volatility and downward pressure [52].