Weekend Update: Sunday March 1, 2026
Navigating Geopolitical Shifts, Health Policy Overhauls, and Texas Primaries.
Weekend Update: Sunday March 1, 2026
Topics this week -- market turmoil moving from industry level concerns to geopolitics, HHS working on draconian health insurance rules which would further increase household financial risk and interesting Senate and House primaries in Texas.
Key Results:
· Geopolitical Pivot: Market focus shifts entirely from AI micro-trends to macro risks in the Strait of Hormuz.
· ACA Shift: HHS is building on the lapsed ACA premium tax credits through 2027 rules that expand the use of catastrophic health plans and shift risk to households. Additional Republican health care proposals are stalled in Congress.
· Mediocre Primaries for Texas Senate: Neither the Republican nor Democratic Primary for the Senate inspire confidence in the political process. The outcome will either be more of the same or increased polarization.
· Factors impacting Races for Texas House Seats: Not that many seats will be in play in the general election. The most uncertainty involves competition between MAGA and traditional conservatives in Republican primaries.
Market Shifting from Micro to Macro and Geopolitical Concerns
The market outlook for Monday, March 2, centers entirely on Iran. This marks a sharp pivot from last week’s micro-focus, where the focus was on NVIDIA stalled despite stellar earnings, AI killing various industries, excessive AI spending leading to the end of the bubble, and looming problems in the private credit market.
Recent blog posts at www.economicmemos.com have dealt with two of these issue, the cap on NVIDIA stock price because of investor’s need to diversify and the reasons why contrary views in a heterogeneous market with buyers and sellers with different viewpoints don’t offset, they often lead to big selloffs. I am planning to write a long in-depth piece on potential looming problems in private credit markets next week. Some smart people are beginning to raise concerns.
I, like most investors, will likely be fixated on events in the Strait of Hormuz. It is likely that the market reaction to the war will reset stock prices across the board reducing investor should concerns with micro or industry levels. There may in fact be some buying opportunities due to the market reset, especially for people with liquid assets.
HHS Moves to Reshape the ACA After Enhanced Subsidies Expire
Following the lapse of the enhanced premium tax credits, the Department of Health and Human Services is advancing a set of administrative rule changes that would significantly reshape the ACA marketplaces beginning in 2027. (See the New York Times: New ACA Plans Could Increase Family Deductibles to $31,000.) The core shift is toward expanded access to catastrophic and high-deductible plans for people over 30 at incomes below 100% and above 250% of the federal poverty level. At the same time, HHS would allow new “uncapped” bronze plans with very high out-of-pocket exposure and grant insurers more flexibility in multi-year benefit design. The policy goal appears clear: lower monthly premiums by permitting thinner coverage and shifting more financial risk to households.
Separate Republican proposals to expand Health Savings Accounts move in a similar direction but require legislation and are currently stalled in Congress. Early next week, a more in-depth analysis of the HHS regulatory proposals will be published, examining in greater detail how this Republican approach contrasts with both the Democratic Party’s vision and the Bernstein framework (my framework). The tradeoffs across plans are complex and warrant careful review.
Two Volatile Senate Primaries in Texas
Both the Democratic and Republican Party are holding volatile Senate primaries on Tuesday March 3, 20256 with a runoff on May 26 if no candidate receives more than 50 percent of the vote. Neither primary has reinforced public confidence in the electoral process.
The Republican race among incumbent Sen. John Cornyn, Attorney General Ken Paxton, and Rep. Wesley Hunt appears highly likely to head to a runoff, probably between Cronyn and Paxton. Cornyn the incumbent is a conservative highly respected legislator. Paxton, the MAGA candidate, was impeached on 202 charges, accused of adultery and acquitted by the U.S. Senate. President Trump has not made an endorsement in this race.
The Democratic race is between Congresswoman Jasmine Crockett and James Talarico, Member of the Texas House. Democrats believe they can win in Texas this year even though no Democrat has won statewide since 1994, Ann Richards being the most prominent. Democrats maintain they can win Texas, especially if Paxton is the nominee, but both of the two main candidates are flawed and somewhat inexperienced.
Crockett has cultivated a sharp-edged national profile, frequently appearing on cable news and leaning into confrontational exchanges. She has also faced backlash for remarks asserting that some Hispanics who voted for Donald Trump exhibit a “slave mentality.”
Talarico is viewed by most as the better match for Texas because of his religious background and his opposition to Ten Commandments in the schools (not the most pressing issue, that is always the economy.). The Democratic race escalated after former Rep. Colin Allred, the party’s 2024 Senate nominee, endorsed Crockett following allegations that Talarico had referred to Allred as a “mediocre Black man” in a private exchange. Talarico disputes the characterization.
Neither Democratic candidate, if elected, is capable of coming up with novel economic solutions that would address the nation’s problems. The most experience and knowledgeable candidate in the race is the Republican incumbent Cornyn, a fiscal conservative who has not made that much progress on addressing core issues.
So, the most likely outcomes of the Texas Senate election are either maintaining the status quo or the elevation of a more polarizing and/or less experienced figure to the United States Senate.
One final thought -- a Crockett-Paxton matchup would be the most polarizing race in the country.
Texas House Primaries and Limited Competition between Parties in the General House Election
Redistricting has limited the number of competitive seats in November. The Republican primaries on Tuesday, March 3, will impact whether the next Republican Congress leans toward populist MAGA energy or traditional conservatism:
Republican primaries:
TX-02 (Dan Crenshaw vs. Steve Toth): Incumbent Dan Crenshaw is facing a fierce challenge from state Rep. Steve Toth. Toth is running as a hardline MAGA populist, attacking Crenshaw for his support of Ukraine aid and his dismissal of 2020 election claims. With endorsements from Ted Cruz and the House Freedom Caucus, Toth is testing whether Crenshaw’s military record and “principled conservatism” can survive a populist wave.
TX-21 (The Race for Chip Roy’s Seat): With Chip Roy vacating this solid-red seat, the primary has become a proxy war. It pits business-oriented traditionalists against multiple candidates vying for the “MAGA mantle.” Because this district is safely Republican, the winner of this primary is virtually guaranteed a seat in the next Congress, setting a clear ideological tone for the delegation.
TX-23 (Tony Gonzales vs. Brandon Herrera): Incumbent Tony Gonzales is fighting to hold off “Gun YouTuber” Brandon Herrera in a race testing whether a traditionalist who bucks party lines on gun safety and immigration can survive. The contest has tightened dramatically following reports of a personal scandal involving Gonzales and a staffer, leading to growing calls for his resignation and making his reelection deeply uncertain.
General House Elections in Texas:
Because of the 2025 mid-decade redistricting, which “reddened” safe seats to protect incumbents, only a few districts remain truly competitive for the general election:
· TX-15: Incumbent Monica De La Cruz defends a Rio Grande Valley seat that was redrawn to favor Republicans but remains a top Democratic priority. 🌵
· TX-34: A high-stakes rematch where Mayra Flores attempts to reclaim her seat in a district redrawn to be a pure toss-up. 🗳️
· TX-23: Democrats view this moderate-leaning district as a prime opportunity to flip a seat in November, if the firebrand Brandon Herrera wins the GOP primary, which is possible because of the Gonzales scandal and because of high-profile conservative endorsements. Democrats might also win against Gonzales because of the scandal.
· TX-28: Henry Cuellar remains in a perennial battleground, though his recent pardon and conservative record make him a unique and formidable incumbent. His district was alerted to probably make him safer from a challenge in the primaries but a bit more vulnerable in the general election.
Authors Note: Just barely got this out in the weekend to avoid the second consecutive Weekend Update issued on a weekday. I want to announce a new benefit for paid subscribers. Paid subscribers will be allowed to submit an article for publication on www.economicmemos.com. The guidelines on how to submit a paper and a road map to the multitopic blog are on the about page at the web site.