Odd Lots Live: What to Watch on Election Night and Beyond
Bloomberg's Odd Lots podcast, hosted by Joe Weisenthal and Tracy Alloway, delves into the intricacies of finance, markets, and economics. In the live episode released on November 5, 2024, the hosts engage with a panel of experts to analyze the impending election's impact on various economic facets. This summary encapsulates the key discussions, insights, and conclusions drawn during the episode.
1. Election Day Dynamics and Live Recording
Timestamp: 00:00 - 02:30
The episode kicks off on Election Day, capturing the palpable tension and anticipation among listeners and participants. Joe Weisenthal introduces the live format, highlighting the swift turnaround time to address timely election-related content. Tracy Alloway and Zvi Moshevitz set the stage for a multifaceted discussion, emphasizing the convergence of politics, markets, and policy.
“Joe, this is very special. This must be our fastest turnaround time on an episode ever.”
— Zvi Moshevitz [00:30]
2. Prediction Markets: Accuracy and Constraints
Timestamp: 07:08 - 09:05
The conversation delves into the reliability of prediction markets like Poly Market and Kelshi. Zvi Moshevitz, an advisor to Poly Market, shares firsthand insights into a live experiment conducted during the recording, illustrating how prediction markets react to real-time information.
“My belief in efficient markets has been completely debunked.”
— Joe Weisenthal [04:30]
Brad Setzer emphasizes the significance of prediction markets as valuable data points, asserting that they incorporate diverse information sources, thereby enhancing market accuracy.
“I take them at least as seriously as any other data point or source of information that we have available.”
— Brad Setzer [08:17]
3. Polling Reliability and the Herding Effect
Timestamp: 09:05 - 14:06
Neil Dutta and Skanda Amarnath discuss the diminishing reliability of polls, attributing it to methodological biases and the increasing prevalence of partisan pollsters. Brad Setzer introduces the concept of herding in polling, where pollsters align their results to avoid criticism for unexpected outcomes.
“Polls are scammier now.”
— Neil Dutta [11:17]
Tracy Alloway elaborates on how procedural adherence in trade policy limits swift responses to economic shifts, further complicating market predictions.
4. Real Markets and Macroeconomic Indicators
Timestamp: 14:06 - 22:36
The panel shifts focus to real markets, examining fixed income trends, regional banking health, and the broader economic landscape. Skanda Amarnath posits that recent economic data suggest a trend toward slower growth and benign inflation, regardless of the election outcome.
“The next few rate cuts are really just baked, I mean, regardless of who wins.”
— Skanda Amarnath [16:21]
Brad Setzer discusses the interplay between prediction markets and financial markets on election night, noting the potential for significant volatility based on incoming results.
“The odds will move dramatically and they will respond very quickly to every piece of news.”
— Brad Setzer [20:40]
5. Monetary Policy Trajectories Under Different Administrations
Timestamp: 15:53 - 19:18
Skanda Amarnath provides an analysis of how monetary policy might evolve under a Trump or Harris administration. He contends that near-term monetary decisions are driven more by economic indicators than political shifts.
“I think the underlying dynamics in the economy are still kind of pointing to slower growth, benign inflation, and probably ongoing monetary policy recalibration.”
— Skanda Amarnath [16:21]
Neil Dutta echoes this sentiment, highlighting that policy changes are unlikely to occur abruptly post-election, regardless of the victor.
“Policy is not going to be changing on a dime.”
— Neil Dutta [17:08]
6. Productivity Growth and Inflation Implications
Timestamp: 35:15 - 38:43
The discussion transitions to productivity growth, with Brad Setzer expressing skepticism about the optimistic projections fueled by advancements in AI.
“The skeptical line on productivity growth is we're talking about percents per year every year over the course of 10 to 20 years.”
— Brad Setzer [35:15]
Neil Dutta offers a nuanced perspective, noting that while productivity has outperformed pre-pandemic levels, the measurement metrics may not fully capture the efficiencies introduced by technologies like AI.
“Productivity growth is actually outperformed post pandemic in a pretty meaningful sense relative to what we were seeing pre pandemic.”
— Neil Dutta [35:57]
Zvi Moshevitz adds that realistic productivity assessments must consider both measurable transactions and the qualitative improvements AI brings to welfare.
7. Globalization: Resilience Amid Claims of Fragmentation
Timestamp: 46:02 - 65:38
Brad Setzer interviews Tracy Alloway about her recent paper on globalization's resilience. Tracy challenges the prevailing narrative of deglobalization, presenting data that underscores continued, albeit "unhealthy," globalization driven by tax incentives and China's export-driven model.
“The world has continued to globalize, but in unhealthy ways.”
— Tracy Alloway [47:59]
She highlights the U.S. pharmaceutical industry's reliance on low-tax jurisdictions like Ireland, illustrating tax-driven globalization's persistence despite political rhetoric.
“These exports are a reflection of deep weaknesses which... make China incapable of growing at the pace it wants without relying more, not less, on exports.”
— Tracy Alloway [50:27]
The conversation further explores U.S.-China trade dynamics, emphasizing that despite tariffs and trade wars initiated by both administrations, globalization remains robust, with continued trade surges from China.
8. US-China Trade Policy and Corporate Taxation
Timestamp: 54:32 - 65:38
Tracy Alloway dissects the impact of the Tax Cuts and Jobs Act, revealing that major U.S. corporations, particularly in the pharmaceutical sector, have leveraged loopholes to minimize U.S. tax liabilities by offshore operations.
“The six biggest pharmaceutical companies clearly pay less to the US government after the Tax Cuts and Jobs act than they did before.”
— Tracy Alloway [55:22]
She critiques the act's effectiveness in encouraging companies to repatriate profits, noting that many have simply shifted intellectual property offshore without substantial tax contributions to the U.S.
9. Policy Recommendations for Addressing Unhealthy Globalization
Timestamp: 74:17 - 78:55
Tracy Alloway proposes strategic policy adjustments to mitigate unhealthy globalization. She advocates for revising the corporate tax code to eliminate incentives for offshoring and harmonizing industrial policies with allies to counterbalance China's economic maneuvers.
“My immediate priority... would be... to address the remaining incentives in the corporate tax code that have clearly encouraged or not discourage the migration of intellectual property and production outside the United States.”
— Tracy Alloway [74:17]
Additionally, she suggests mutual agreements with European allies to recognize each other's goods for subsidy qualifications, thus fostering a more balanced and open market against China's restrictive practices.
10. Final Thoughts and Takeaways
Timestamp: 79:01 - End
As the live recording concludes, the panel reflects on the ongoing election uncertainties and anticipates future discussions. The emphasis remains on understanding the intricate links between political outcomes and their economic repercussions, underscoring the episode's central theme: navigating the complexities of election dynamics within the broader financial and economic landscape.
“Look, Tracy, thanks for really closely reading my paper.”
— Zvi Moshevitz [70:56]
“This has been another episode of the Odd Lots podcast.”
— Tracy Alloway [80:15]
Conclusion
The "Odd Lots Live: What to Watch on Election Night and Beyond" episode provides a comprehensive analysis of the 2024 election's potential impact on markets, monetary policy, productivity, and globalization. Through expert insights and data-driven discussions, hosts Weisenthal and Alloway guide listeners through the multifaceted economic scenarios poised to unfold based on electoral outcomes. This episode serves as a crucial resource for understanding the interplay between politics and economics in a rapidly evolving global landscape.