Happy Friday, investors. The Financial Times reported last night that OpenAI’s annualized revenue run rate was nearing $50 billion, which was well short of the $70 billion that had been previously reported.

That update catalyzed a negative, knee-jerk reaction on the AI trade, and my guess is that this won’t be the only revenue hiccup out of the AI labs in the coming months.

Now let’s get to the news.

Midterm elections bring plenty of uncertainty to markets but investors who hold through the choppiness are almost always rewarded. 

While the S&P 500 has already far outperformed the typical midterm year, as I wrote Tuesday, the historical track record for what follows once the ballots are cast provides plenty more reason to stay bullish. 

To start, the benchmark index has averaged a 6.6% return in the fourth quarter of a midterm election year dating back to 1950.

That’s nearly double the next-strongest year in the four-year presidential cycle, according to FactSet data compiled by Exhibit A.

And as bullish as the near-term outlook is for asset prices, that tends to extend into the following year, too.

Since 1950, the third year in the presidential cycle — the year after a midterm election — has brought the strongest S&P 500 returns. 

The 17.2% annual return is more than double the post-election year, which is the second-strongest of the cycle, according to a recent report from Silvia Insights.

What’s compelling, too, is that the current bull run may already reflect the seasonal strength.

Over the last seven decades, the S&P 500 has averaged a 31.8% return from the low point of a midterm year.

This year, the S&P 500 touched its weakest level in March at about 6,400.

It’s already gained more than 20% since then, which suggests another 11% could be on the way ahead of the first quarter of 2027.

None of this guarantees higher asset prices, though betting against that outcome does put you on the other side of history. 

📉 OpenAI's annualized revenue hit roughly $50 billion in September, $20 billion below prior estimates. The Financial Times reported investors had modeled closer to $70 billion against the company's own figure near $50 billion. (Yahoo Finance)

🎯 The Trump administration sees a prolonged Iran conflict as its biggest midterm election risk. The political calculus is now hanging over oil prices that are still elevated year-to-date. (CNBC)

🏦 Rapid bond yield moves have preceded nearly every major financial blowup the past five decades. The 10-year Treasury yield at 5.30% is near its highest in more than two decades, and Macquarie strategists pointed to Silicon Valley Bank's 48-hour collapse in 2023 as the most recent example. (Yahoo Finance)

🗓 October 9, 2007: The S&P 500 closed at 1,565.15, its pre-financial-crisis record high. The index would lose 56.8% of its value over the next 17 months.

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