Markets Struggle to Price-In Political Risk: Priya Misra

The transcript discusses the impact of tightening polls on market reactions, comparing it to Brexit. It analyzes the global bond market, attributing trends to ECB taper news and election risks. The discussion highlights how elections can affect economic policies, especially when candidates have differing economic views. Market pricing and volatility are examined, with a focus on the VIX and Treasury index. The transcript concludes with an analysis of market uncertainty due to the upcoming election, considering potential inflation and fiscal policy changes.

What was the market's initial reaction to the tightening polls between Clinton and Trump?

• Increased buying of long-term Treasurys

• Increased investment in technology stocks

• A shift towards emerging markets

• Selling off of global bonds

Why might elections have a more significant impact on the economy today compared to the past?

• Because business cycles are less important

• Due to the constraints on monetary policy

• Because of the candidates' similar economic policies

• Due to the lack of fiscal policy options

How do the two candidates differ in their economic policies?

• They have significantly different approaches to fiscal and Fed policy

• They both prioritize reducing inflation

• They both support aggressive monetary policy

• They have similar views on fiscal policy

What is the market's concern regarding the potential presidency of Donald Trump?

• Increased deflation

• Higher inflation and fiscal spending

• Lower interest rates

• Reduced government spending

What is expected to happen to market volatility as the election approaches?

• It will decrease significantly

• It will become unpredictable

• It will remain stable

• It will increase