Many Happy Returns Trump 2.0: Political Risk and Complacent Markets, with Economist Larry Hatheway
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Nov 20, 2024 Larry Hatheway, co-founder of Jackson Hole Economics, discusses the significant impact of political risks on investing. He argues that markets are underestimating the potential dangers of a second Trump presidency. The conversation also explores the complexities of trade deficits, the psychological biases affecting decision-making during geopolitical events, and potential investment strategies amidst market volatility. Hatheway highlights the implications of U.S. foreign trade policies and the relationship between budget deficits and economic confidence.
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Politics and Fundamentals
- Politics influences economic fundamentals like taxation and regulation.
- These fundamentals drive market returns, making political analysis crucial for investors.
Markets and Discontinuous Events
- Markets sometimes miss discontinuous events like World War I, as noted by historian Niall Ferguson.
- Even well-developed markets struggle to anticipate major shifts, similar to human psychology.
Brexit and Unanticipated Events
- Ramin Nakisa recalls Brexit's underestimation in markets, seen as an economic own goal by London's elite.
- Larry Hatheway counters with Leicester City's unexpected Premier League win, highlighting occasional unanticipated events.