President-elect Joe Biden said Thursday that he has decided whom he will nominate for treasury secretary and that he will make the announcement in the coming weeks.
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And look who jumped into the lead in the betting markets (but both are still under 50%)
Too many are "misreading" the polls, betting markets and investor opinion around the election. They are not the same.
Please read this short thread ….
The poll analyzers were only giving Trump a 10% to 20% chance of winning (shown are FiveThirtyEight and the Economist)
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Betting markets gave Trump a 42% chance of winning yesterday before the announcement of the positive COVID test. His odds were 47% before Tuesday’s debate. Now they give Trump a 39% chance. This marks Biden’s largest lead.
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Investors were more aligned with the betting markets than the polls.
FT – (Sep 25) Investors anticipate Joe Biden election win
UK pollster Survation found that 60 percent of 91 investment professionals polled in Sep, most based in the US, believe Mr Biden will win
The survey by UK pollster Survation found that 60 percent of 91 investment professionals polled in September, most based in the US, believe Mr Biden will win the upcoming matchup slated for November 3.
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We have argued investors view the election in the same way the betting market views it.
As highlighted above, 60% of investors think Biden will win. This is nearly identical to what the betting markets have discounted.
These probabilities are not close to how the poll analyzers see it. @FiveThirtyEight gives Biden a 77% chance of winning. The @ECONdailycharts models give Biden an 85% chance of winning.
A thread explaining why the bond market is asleep and what wakes it up.
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The next chart shows the MOVE Index (Merrill Options Volatility Estimate). It is the “VIX of the bond market” and is near its lowest reading in history (which was set on July 30).
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Should interest rates be this low? Consider these 2 charts.
The bond market often moves in tandem with commodities. But as the boxes show, that has not been the case recently.
Commodities are suggesting interest rates should be moving higher, but they are not.
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* Top panel shows the SPX (log)
* Orange bars show the VIX’s close on days the SPX hit an all-time high (ATH).
VIX hit 26.57 when the SPX hit an all-time high on Sep-2. The VIX has never been higher with SPX at ATH.
Stocks are not exhibiting low levels of volatility.
He would be comfortable with inflation around 2.25% or 2.375%. The policy, known as average inflation targeting, would be a shift from the Fed’s current way of keeping prices stable, in which it targets 2% regardless of what happened in the past.
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What Avg?
Below uses YoY chg in core PCE (orange) and the 6-mo Avg of this chg (yellow).
Kaplan's target has only been reached one time in the last 25 yrs, 06/07.
What would the reaction to Kaplan's comments if it was spun as "Fed ok with a 25-year high in inflation"?
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To be fair, the Fed says they target headline. I would argue they really mean core.
The difference is largely gas prices.
Why core? Every time headline inflation surges because of gas prices, they call it a "tax" on the economy and back away from hiking rates.