This week on What's at Stake, hosts Penta Partner Bryan DeAngelis and Managing Director Ylan Mui are joined by John Fagan and Brendan Walsh from Markets Policy Partners. In the wake of the March Federal Reserve Open Market Committee meeting, the group dissects the potential for upcoming rate cuts and implications for financial markets. Amidst election year tensions, they also explore the nuanced interplay between monetary policy and politics. Will a June or July rate cut signal the start of an easing cycle? What could this mean for the political landscape? Additionally, Bryan, Ylan, John, and Brendan spotlight the broader implications of governing with a divided Congress.
Beyond U.S. borders, they highlight parallels with international economic scenarios, including the Bank of Japan's surprising interest rate hike and discuss how global economic policies might influence domestic financial markets. Listen now!
This week on What's at Stake, hosts Penta Partner Bryan DeAngelis and Managing Director Ylan Mui are joined by John Fagan and Brendan Walsh from Markets Policy Partners. In the wake of the March Federal Reserve Open Market Committee meeting, the group dissects the potential for upcoming rate cuts and implications for financial markets. Amidst election year tensions, they also explore the nuanced interplay between monetary policy and politics. Will a June or July rate cut signal the start of an easing cycle? What could this mean for the political landscape? Additionally, Bryan, Ylan, John, and Brendan spotlight the broader implications of governing with a divided Congress.
Beyond U.S. borders, they highlight parallels with international economic scenarios, including the Bank of Japan's surprising interest rate hike and discuss how global economic policies might influence domestic financial markets. Listen now!
Welcome to this week's episode of what's at Stake. We're your hosts. Brian D'Angelois, partner here in the Washington office for PENTA.
Speaker 2:And Ilan Moy, managing director at PENTA.
Speaker 1:And today we're bringing back our old friends. We're here to talk about the economy and the Federal Reserve's plan for interest rates, with John Fagan and Brendan Walsh for market policy partners and the macrocast. It's great to have you both back on. Get the gang back together.
Speaker 3:Yep, you got to pay us this time.
Speaker 1:That's right.
Speaker 2:We'll pay you in water and coffee about that. Yeah, talk about inflation Free drinks.
Speaker 3:Yeah, I'm stocking up on my drinks when I leave.
Speaker 2:Well, guys, there is so much to discuss, so let's just start with the Fed leaving interest rates unchanged at its most recent meeting, but signaling that it could still cut rates three times by the end of the year. Clearly, the markets like this news. What did you guys think about it?
Speaker 4:Yeah, it was sort of the way that expectations had played out. This was really in line with the consensus. But the consensus has gotten a little less confident about where the Fed was really going with its rate cuts and if there was a chance that the dots would move into a more hawkish position for 2024, specifically that median dot drifting down from 75 basis points to 50, that was what market participants were kind of waiting and watching for, very in particularly going into this meeting, and as it played out, the 2024 dot stayed steady at 75 basis points, despite the fact that we did get those slightly hotter than expected inflation readings in the past few months and the Fed simply declined to overreact to those. I think is a good way to say it. And I think Chair Powell is getting a lot of and I think properly so a lot of accolades about his performance in the press conference. He was seen calm, in control and confident, expressing uncertainty appropriately, but certainly not being buffeted by the noise in some of the recent data points that we've gotten.
Speaker 3:Yeah, and beyond just this last meeting, I think he's really handled himself and the Fed very well, because when the Fed did that kind of surprise pivot at the end of the year and announced, okay, we're going to start the easing cycle in 2024, the market massively overreacted and they started to price it in six. And Powell and the Fed just stuck to their path and they said well, I think you're probably overreacting, you know we're going to maybe four, maybe three. And now the market has finally come back to what the Fed's been saying all the time. We'll see what happens with the economy and everything and whether we get those three or more or less. But they've stuck to their playbook and I think the market now has settled down and the equity market's kind of fascinatingly took this whole kind of thing in stride and the market's up like 10% on the year.
Speaker 1:I have to jump in and ask the political question. I know the Fed and Powell have to be apolitical, but they're obviously aware of what's going on around them.
Speaker 3:Yeah, and that's why I think they did the pivot at the end of last year so that they could tell the market's coming so it wouldn't be perceived as oh, we're cutting to help one candidate over the other.
Speaker 1:But they got to start cutting soon then. Right, because three cuts for the rest of the year, I mean we're getting pretty close to the election. These will be big news and cuts right before we go to the polls.
Speaker 3:Right. So, john, the first one. Now. The market is pricing in for June, correct?
Speaker 4:Yeah, june going into this meeting, june had been kind of a coin flip. It had been sort of drifting lower odds implied in the futures markets that the Fed would begin cutting in June. There was a sense that June is probably politically and optically the best time or the last chance for the Fed to get going on a rate cut cycle. I think that's sort of overplaying the role of politics in Fed decision making. Specifically, as Brendan said, the Fed has really been setting the table for this for a long period of time and if they're going to get dragged into the political mire like so many other institutions in Washington, it's not going to be because they started cutting in June versus July right, Right.
Speaker 1:They may be underplaying the political reaction we'll see from Trump. Whether you want to cut in December or June, he's going to go after you.
Speaker 3:Right, but when they do announce that first cut, it won't be here's this cut, and we'll see what the future is. It'll be here's this cut, and we're planning the next two, and here's the next couple. They'll lay that out for the rest of the year.
Speaker 4:Yeah, there was a sense that June was because you hadn't gotten to the conventions yet and July meeting is like really late July and so when the campaign is really in full swing and so, but the data is, the Fed has really set out their path and I think that July is the fact that June odds didn't spike up to like 80% or 90%.
Speaker 4:They're still relatively, they're higher than they were, but it's not overwhelming like landslide expectations of a June start. I think the Fed has created such a balanced path and written the playbook out for us that they can probably get going in July and still get their three in without tripping any political wires anymore than you know it's hard to avoid sometimes catching flak from on the political front. So we're still kind of thinking that you know, maybe they that July looked like it's a perfectly live meeting and the data might push them in that direction. If we still get some stickiness and I think that they've set the table for that to be, you know, okay, and they can still get their three in, maybe skip the November meeting, right.
Speaker 1:Yeah, I was just going to ask yeah, what are you guys predicting? Is it sort of July, september, november, I think might actually come after election day, if I remember the dates right or do they skip that and go to December? Yeah, it's, if they not, to put you on the spot.
Speaker 4:Yeah, if I had to, if I had to guess it's kind of a close call, it's almost academic I'd say they, yeah, they go July, september, december, yeah.
Speaker 3:I agree.
Speaker 2:Yeah, yeah, that still feels like a I don't know like a pretty aggressive pace to me, considering you know how, how long that they've waited to get this process actually underway. And you know, I guess it's also a signal that they they feel like they can get out of this without a real, a real recession. Right, that they're not going to be. They're not going to be cutting because they're seeing weakness. They're going to be cutting because they feel like your rates are rates are, you know, too high that they can they have a little bit more flexibility.
Speaker 3:Well, that is an interesting insight, because they've held off for so long and now they're saying we're going to give you three at the end of 24, and then four and 25 and four. So if they think that the the rate needs to come down 2% over the next couple of years, what's the difference between starting now and in July? And that's something they're gonna have to message.
Speaker 2:Well, and I think the conviction for three amongst Fed officials was a little bit weaker than it was back in the last time they put out these forecasts, there were still. It was close at this time, right, yeah and a half of members saying that maybe we're only gonna get two or even one, or maybe even none at all.
Speaker 1:Exactly Brendan, you just made a point of when they started. He says he wants greater confidence than inflation is moving down. I mean we're seeing that, but what is your interpretation of what he exactly means there? Like, what does he need to see that he'll finally have that greater confidence All of them have to see?
Speaker 3:Totally. There has been some quirks in the. The CPA has quirks and we've talked about it in the Metcocast in the past about how the housing measurements are lagged. So he does know that is going to start to show up and if it kind of follows the real time data that we've had for the last six months, you actually could have, you know, core inflation rate below 1% by the end of the year. But that's not. I don't think that's exactly what he's talking about.
Speaker 3:When you look at the latest components, goods prices have started. They came off really hard and that helped drag it down. But they've not only stabilized but they've started to go up a little bit. Part of that is just supply and demand. You know people are we didn't buy anything, then we did everything. The pandemic screwed it up, but also the shipping problems with the Red Sea is kind of starting to seep in. We saw that in the PPI, which producer prices, which leads the CPI by three months. So there are some indications of stickiness in the overall in the last couple of months. January and February are always a little difficult with data because of seasonality issues, so I think that's why it's kind of holding off before he hears that, but there are some indications that you know. Maybe this idea that we're gonna, you know, go back to two and not have to worry about it ever again might not be the case, but they still do have. I think their base case is that inflation is normalizing and will allow them to start to ease in the future.
Speaker 1:We were talking about this right before we started. But this news around real estate real estate commissions changing and this could disrupt a little bit the spring housing market I assume he's looking at that Is that a big factor? That actually is a component.
Speaker 3:Real estate commissions is a component of CPI and PC. So you know, if those come down, that actually does directly feed into the CPI. But it's also an exogenous event. You know. It wasn't because they tightened that really.
Speaker 1:you know A lot of other reasons.
Speaker 2:Well, do you think, though, that we've worked through some of the bumpiness, I guess, in the housing component of inflation, both in the CPI and the PCE? You know we've been kind. Of folks have been talking about the need for super core measures to not look at housing anymore, because it was such an outlier in terms of where we're seeing the growth rate in inflation. So do you feel like we've worked through that, or is it something we see?
Speaker 3:No, I think it's just beginning. So in February was the first time we saw the shelter components start to come down and if that is the case and it follows what we know happened over the last eight months, it's gonna continue. We actually could have some negative readings on a month's amount basis, which obviously that massively drags down, especially the CPI where it's 40% of the core. The PCE uses the same measurements but they weight them different. It's about 20, 23%.
Speaker 2:So we can see the headline numbers start to come down pretty dramatically because the housing number is starting to fall Exactly.
Speaker 3:But we also, everyone knows as far as this is old news, you know. So that's why you've heard so much more talk about the super core, Because that is probably a better indicator of what is actually happening on a month, a month basis. And that is where those goods prices have been kind of showing up and being much more sticky than probably they thought maybe six months ago.
Speaker 2:The other component that has been super sticky has been services inflation. Where do you guys see that right now? Have those prices come down at all?
Speaker 3:So service is always positive. It's just how high they are and those are always difficult. Wages don't necessarily directly impute into you know what the services component of the CPI and PCE is. But we have seen some wage moderation. Most components and measurements are kind of showing it's at 5%, so still above the CPI. So it's great for the worker. So you're actually making real gains on your wages when you adjust for inflation. But not even close to what it was a couple of years ago where it was like 9%, 10%. So I think that the Fed's feeling fairly strong about wages.
Speaker 3:But the labor market remains a lot stronger than probably they would have predicted. We just got their unemployment points today and they went down 2000,. They're just slightly above 200,000, which is kind of indicates full employment. But I did see some research a couple of days ago that showed immigration has actually been a lot stronger than the CBO and everyone kind of predicted, which probably explains a lot of what's going on in the labor market. There actually are more workers to fill jobs than we had assumed, which allows us to keep creating to 300,000 jobs a month, you know.
Speaker 2:Great, let's take a quick break. We'll leave it there for now, and when we come back we'll talk more about how the economy affects the political landscape at home and abroad.
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Speaker 1:Welcome back to what's At Stake. Let's dive back in. We'll talk a little bit more about the economy and kind of the election year dynamics. So this was the third topic, or maybe even less, that Biden brought up during his State of the Union and part of the conversation we had in the first segment of. We're getting close to the election now and some of these rate cuts how important do you guys think the issues are? The economic issue is to voters. This year it seems to be dropping back, but I think is where you get more and more news around rate cuts. This could come back on the radar for voters and maybe start to tick back up. How are you guys looking at it?
Speaker 3:I'll let John tick that one.
Speaker 4:Yeah, I mean it's just weird, right. I mean, if you're a political strategist and you're looking at the economy through the lens of polls, right, you're getting all kinds of strange data the dissatisfaction with the Biden's economic record, the preference for Trump's stewardship of the economy that seems to show through in the polls. I'm sure for the Biden team that's very frustrating.
Speaker 1:I'm sure they're pulling their hair out.
Speaker 4:Yeah, but you can't tell people that all as well, just snap out of it. Everything's great. The messaging here just isn't really straightforward. If the economy is doing as well as everyone seems to think from the economics realm, then why isn't that filtering through to the national mood? We've parsed in the past some of these elements that the lingering shock of higher prices, inflation has leveled off to a great extent, but still leveled off at an absolutely much higher level than it was, and everybody's upset and dissatisfied. There are these little factors that are underneath the surface, like increasing credit card debt, and show that the consumer is not getting stronger necessarily, and there's some of the savings that built up in the COVID era have been burned down, and so forth.
Speaker 3:It should be noted that they report those in nominal terms. When you adjust in real terms it's not in dangerous levels. But it's also kind of ironic for the Biden administration because two of their big bills the chips and the infrastructure they kind of stole directly from Trump and did it and they get blamed for it instead of getting any credit.
Speaker 2:Yeah, I saw that today it actually was announced. Intel got some grant through the chips act, so they're trying to take the victory laps on that right before the election. One thing that I think has kind of stuck with me that we used to talk about on the macro cast and I'll give credit where credit is due. This is from our friend John Dick at Civic Science, and he said that increasingly he felt like the economic outlook, people's economic outlook was really a reflection of their political positions, as opposed to the economy swaying people or influencing people to vote Republican or Democrat or for this candidate or the other. It really was the opposite, depending on which candidate you supported. That was the lens to which you view the economy.
Speaker 5:I feel, like.
Speaker 2:That's what we're really seeing right now with some of the poll numbers and the struggle the Biden campaign has just had to try to put it, but even more troubling for the Democrats.
Speaker 3:we actually had John on last week and they break it out by Republican and independent Democrat and the Democrat view on the economy is starting to soften.
Speaker 1:Yeah, I could see that because, to your point, alon, it's also the Democrats positioning on a lot of issues is about helping people who are under hard times, is about more childcare relief, it's about more economic stimulus to others. So it's a messaging exercise where it's inadvertently also suggesting things aren't great.
Speaker 2:It's presuming that you're still having the hard times, exactly, and it's also the kind of audiences that you're talking to.
Speaker 4:right, it wouldn't necessarily comes naturally to President Biden to say, like what President Trump always said look at the stock market, it's it right Right, right Right.
Speaker 4:The luxurious stock market, ever, right, he could be saying these exact same things, but that's not really. You know meeting the swing voters with where he needs to meet them, and you know things like touting the but touting things like. You know, us energy production is also, you know, not necessarily jiving with the narrative that, the sort of clean energy narrative that the Biden administration wants to tout when we're pumping record amounts of oil.
Speaker 1:Yeah, Even the chips and kind of AI investments, like people are just not understanding that. Yet at a living room kitchen table kind of level, this is not building cars. This is not, you know, big manufacturing. It's great jobs, it's great investments, but it hasn't trickled through, I think, all the way where touting those accomplishments are great but I don't think people are really registering it.
Speaker 3:Yeah, and it's the way that, also the way the two of them dealt with China. Biden hasn't changed any policies from the Trump administration. We're still, you know, fairly, you know, confrontational with China, but Biden isn't outwardly confrontational.
Speaker 1:Screaming about it every day from the so Trump would be with the CHIPS Act.
Speaker 3:Trump would be out there saying this is directly.
Speaker 1:We're winning their losing Fast for national security.
Speaker 3:We're winning in China, where Biden doesn't do that for better or worse.
Speaker 2:Well, I guess this is also part of the challenge of you know, the CHIPS Act and the infrastructure law. Those are all long-term investments, right, that are not really gonna pay off for a generation. Maybe you talked about it that way.
Speaker 3:This is a generational investment, Well, even worse for the infrastructure for the Biden administration is like 90% of them have been in red states. Because of state-level you know, approval process. It's a lot easier to build stuff in red states that isn't blue, so the people that actually have benefited from it were the people that voted against it.
Speaker 2:Right. So this doesn't necessarily help you at the polls, but even if it might improve the nation's long-term fiscal picture right and both of those were bipartisan bills, which we should also point out.
Speaker 3:So the people you know, I don't know say you're in Florida and they're building that building to start, you know, doing something big that's gonna help us 10 years down the road. But it hasn't helped us as a nation yet, but it has helped that little district that now has, you know whatever 10,000 new jobs.
Speaker 1:And to your point, he's not winning Florida.
Speaker 3:And he's not winning Florida. Yeah, yeah, so it doesn't even matter, yeah so the congressional. That's your prediction.
Speaker 2:That's ooh, that's it. I'm gonna go around living there. I can do it.
Speaker 1:I can do it.
Speaker 2:Yeah, bold calls here on what's at stake.
Speaker 1:That's right, that's right.
Speaker 2:So the Congressional Budget Office released its long-term budget outlook over the past week and you know they did show that the economy is predicted to be better than they had expected last time. But one of the key things they pointed out is that interest rate payments, or interest payments, are expected to double over the next what? 30 years or so, because of this higher for longer stand. So even as we talk about, you know, the Fed looking to start its rate cut cycle, it, you know already there's long-term impacts being felt from what they've done so far.
Speaker 3:Luckily we got a treasury guy to talk about it.
Speaker 4:Yeah, well, you know it's certainly possible that the. You know we've just seen the constituency for fiscal rectitude is just essentially evaporating and part of that is, you know, the we've had these sort of it's the boy who cried wolf phenomenon, right, oh, deficits are gonna ruin the country and all that stuff. We ran deficits, and you know, and nothing happened, right, and the bond market is still fine and so forth and so kind of. And we had the low interest rates forever. And you know, when you look out at the Fed's predictions, the expectation for rate cuts and for rates to settle lower and lower, you know, progressively over the next few years, into, you know, not back to zero, but again, you know, to a far, far lower. Almost a half of where we are right now is the kind of mindset that you know really has permeated. And when you get, you know, the next election cycle coming through, it's hard to see, with sort of the populist turn of the Republican party. And you know the Democrats, you know not necessarily being the, you know naturally inclined to cutting entitlements, which would be a major source of, you know, budget. You know budget control potentially over the near term, over the medium term, medium to longer term. You know where is it gonna come from. So that's, I think it's it would be. It would be very out of the money kind of option and we've talked a little bit about this and to our clients with a.
Speaker 4:You know it's hard to see a Trump administration. You know really tightening the purse strings and equally kind of tough to see the Biden administration. But a Biden administration would have that. You know, if Biden wins it's more likely that he would be stuck with a divided Congress. When you're thinking about the things that he can accomplish in a second term with a divided Congress, maybe something, some common sense budget reform is something that he might try would he be successful? But he's the kind of president you know. If you just had, what kind of president can possibly do it? It's like an elder statesman in their second term with a divided Congress. That's pretty much it.
Speaker 1:It's our dream come true. But you know you mentioned something there, john of you know you still have Congress to deal with and I don't see a scenario, regardless of who wins the presidency, where we have like a governable Congress again. You know it's practically ungovernable right now, but the margins, even if Dems win the House or ours win the Senate, I feel like the margins will be so tight that you won't have that ability. You're gonna have to truly go old school.
Speaker 3:Well, everybody, every day there's a new announcement. Somebody's throwing the hats like this is the way to turn.
Speaker 1:I believe it, yeah yeah, and you know we're dealing with it now, where every couple of weeks we're facing a shutdown. It looks like we'll avoid this current one, but they're kicking the can again this September and we'll see what happens then right before the election, but maybe go in full circle. How much is that weighing on Powell's mind? I know he's brought up deficits in government funding before he did his 60 minutes interview, made a big point of focusing on this, like how much is he worried about where Congress is going with the way they're managing the budget and the deficit?
Speaker 3:Well, I definitely think he's worried. But more importantly, john, I want you to kind of go into more details. Because normally the Treasury borrows at rates that are similar to what the Fed funds rate is, because the Fed makes usually good decisions based on the economy. But in a scenario where, say, trump won and he appoints somebody and they cut it to zero, that doesn't necessarily mean the Treasury gets to borrow at 1%, because the Treasury borrows on supply and demand. You're borrowing money from somebody and they're not forced to loan to you at what rate you set. The Treasury borrows at the rate that the market sets correct.
Speaker 4:Right. Yeah, and you would see this one of an extreme example right was the and we've talked a little bit about this before in previous MACRcast episodes the Liz Truss the short-lived Liz Truss tenure as Prime Minister of the UK, where she had ostensibly, if you just put those policies that she announced in a brown paper wrapper and took out the context, they wouldn't be completely out of control. It was like tax cuts and some energy subsidies, right. But you put it in the context of where she was at the moment in the macro landscape, which was high inflation and interest rates that were rising, bank of England concerned about a wage price spiral or stagflation and all this stuff, and you sort of threw her policies into the mix and it spun the UK sovereign debt, the guilt market, into just a tailspin essentially.
Speaker 4:And you had what they call the term premium, that kind of X factor in the price of longer-term bonds going essentially going parabolic on them for a very short period of time, indicating a lack of a loss or an incremental loss of confidence in the ability for debt service to be paid, to be viable over a longer-term period. It's a scary thing. It's a very emerging markets kind of motif and you seeing it in a big market like Guilts was concerning the can it happen here? Kind of scary question. The bond vigilantes were a thing back in the 90s right when the bond market would reject policies that it found to be unacceptable from an investment standpoint, and policymakers haven't had to be disciplined, they haven't had to suffer that kind of or really be constrained by that kind of discipline for a long period of time, and maybe we're going back to going back to an era where that really is a factor of the way it used to be.
Speaker 2:Well, speaking of countries that may or may not have total control of their currency. What's going on in Japan? It looks like the Bank of Japan is hiking rates, finally, and they brought them all the way to the stunning number of zero, after being negative. For what? 17 years? Forever, forever, basically a lifetime for some people.
Speaker 4:Longer than my kids have been alive. Well, I think it was. They've been, they haven't. I don't think they've raised rates for like 17. Negative, for they haven't been negative for all that long. They went negative, I think, in 2016. So I think it's been eight years of negative interest rates Still older than my kids.
Speaker 4:And there was. You know this is the BOJ is obviously very much marching to a different drummer and that you know the backbeat of the. Everything that the BOJ does is that fear of deflation. Right, this is a central bank that is essentially traumatized by decades of deflation and when they were getting the inflation spike, everybody else was, you know, all other major central banks were hoisting interest rates up and historically steep trajectory. And the Bank of Japan sat there and, you know, made these little adjustments with their yield curve control program, which basically pinned the 10 year Japanese government bond yield at zero. They widened the leeway for it to move a little bit over the over the years, but that was pretty much the only pressure valve and you ended up, of course, in that scenario just getting the yen just just with sand kicked in its face and sliding to these multi decade lows, almost like generational lows against the dollar levels not seen since, like the 80s.
Speaker 4:And that's kind of where we are right now. The BOJ has normalized, you know, to zero, but still this interest rate gap between the developed world and the BOJ settings are enormous. The idea that this is the start of an interest rate cycle, I think, was something that was propping up the yen, the communications around this hike or more you know sort of our view has been that this was more of like a tactical and opportunistic normalization rather than the start of an actual tightening cycle, and I think that that's kind of the. That realization, I think, is what is is taking the yen on this next leg lower, which is, you know, the BOJ has has gotten them back to zero, but it's not clear that they're going to be going, you know a whole lot further in any time soon. So you know it's.
Speaker 3:John, do you think they would have been better to not kind of prepare the markets for this and kind of surprise them?
Speaker 4:I don't know it's it's you know. The rule of thumb for for monetary policy is, you know, you want to, you want to set, lay the groundwork and all that stuff well in advance. But the BOJ has had a penchant for surprising and maybe under under the previous governor who wrote a, it was more of the sort of pulling rabbits out of hats. In fact, the negative interest rate is a big surprise when he did it and after you know, years of saying he would never do it. This was so the.
Speaker 4:The new, the new governor way to, you know, maybe is trying to be a little bit more transparent. You know, with something like, with something like the interest rate hike, I think projecting it ahead of time is the right thing to do. With yield curve control, I think surprise was, you know of the essence and some of those policymaking because you don't want the market, you know to front run it quite so you know quite so forcefully if, if you're really on the hook for you know keeping that yield tame anyway, don't want to get too far into the weeds and the because they they abolished yield curve control as well. So it's a it's you know they still, when you look at Japanese inflation and price trends and the demographics. You know there's still a lot of disinflationary headwinds that they're facing, so you know you got to feel some sympathy for the BOJ.
Speaker 1:Yeah, no, no, obviously a lot to watch, but we'll, we'll leave it there. I appreciate you guys coming on as our first crossover hopefully one of many crossover episodes Before you guys go. What's, what do you guys have on deck? What else are you watching coming up that we can look for on the macrocast? The?
Speaker 4:NCAA tournament. I love it Definitely, you're watching that very closely.
Speaker 1:By the looks of my bracket, I'm not a good guest for that one.
Speaker 4:I think one of the things that we're going to be watching and this is of great interest to us.
Speaker 4:If you flash back to the previous presidential election in 2020, you got to see kind of if you look at the stock market, you can identify sort of the Trump basket and the Biden basket which stocks are going to be favorable, are going to get a benefit from the election of a particular candidate.
Speaker 4:You could see sort of by the end of the summer, sort of the late July into August period you got to see the polls were showing Biden pulling ahead and you got to see these kind of Biden trades like the solar, the ETF of solar and clean it and all that stuff started to run up and it ran up into the election and then did this kind of last big spike after the Georgia runoffs went down, and so it'll be very interesting to see we don't think it's going to happen until later in the summer when the markets begin, the election is sort of within an investable time horizon and market participants begin to sort of really parse the polls.
Speaker 4:Maybe the polls are a little more meaningful when you get to the end of the summer and past the conventions and so forth that the trades associated and the market trends associated with the competing economic policies of the two presidential candidates will be expressed to some degree in financial markets and they're so divergent. But the polls are also really close, so it's going to be a really interesting exercise to see how the market places its chips on this political table when the stakes are really high and the odds are pretty narrow.
Speaker 1:Well, we'll be tuning in. That sounds like a lot of great insights coming up. So thank you guys again for joining. We'll have you back on soon, no doubt, but, and to all our listeners, thank you for tuning in. Remember to like and subscribe, wherever you listen to your podcasts. Follow us on X at PentaGRP and on LinkedIn at Penta Group. Additionally, as we've mentioned, you can hear more economic insights from John and Brendan on the macrocast, a podcast now from Markets Policy Partners, released every Friday afternoon. As always, thanks for listening to what's At Stake.