Odd Lots Live: What to Watch on Election Night and Beyond

Monetary Policy

The trajectory of monetary policy remains a focal point, regardless of the election outcome. Neil Dutta emphasizes that political outcomes won't drastically alter his monetary policy predictions, as he expects continued rate cuts due to slower growth and benign inflation 1. Skanda Amarnath adds that while employment remains high and inflation is falling, the economy is likely to face slower growth in the coming quarters 1.

I think the next few rate cuts are really just baked, I mean, regardless of who wins.

--- Neil Dutta

Both experts agree that any significant policy changes will take time, and the election's immediate impact on markets may not be as pronounced as expected 1.

   

Market Constraints

Post-election, markets face constraints, particularly in fiscal policies and financial markets. Neil Dutta highlights the bond market as a significant constraint, questioning the appetite for funding large deficits 2. Skanda Amarnath notes that legislative politics often limit fiscal policy, even under a unified government 2.

It's easier to pass things under a unified government than under a divided government. But that's probably still the binding constraint.

--- Skanda Amarnath

Brad Setser discusses the impacts of tax reforms, noting mixed changes in corporate tax burdens and the strategic adjustments by companies like Facebook and Google to optimize their tax positions 3.