Stock and Bond Shakeout as Trump, Clinton Tighten

The video discusses the bond market's reaction to the policies of presidential candidates Donald Trump and Hillary Clinton. It highlights the market's uncertainty with Trump's wider range of potential outcomes, leading to increased risk premiums. The discussion also covers risk parity, potential stimulus under Trump, and the limited fiscal room for both candidates. Finally, it offers investment strategies to hedge against election uncertainty.

How do Donald Trump's proposed policies differ from Hillary Clinton's in terms of their impact on the bond market?

• Neither candidate has proposed any changes to tax cuts and spending.

• Trump's policies involve significant tax cuts and spending, while Clinton's are more moderate.

• Clinton's policies involve significant tax cuts and spending, while Trump's are more moderate.

• Both candidates have identical policies regarding tax cuts and spending.

What is the effect of risk parity on the market as discussed in the video?

• It leads to stocks and bonds selling off together.

• It stabilizes the market by reducing leverage.

• It causes stocks and bonds to rise together.

• It has no effect on the market.

Why is there more uncertainty associated with Donald Trump's potential presidency according to the video?

• His policies are identical to Clinton's.

• His policies are well-defined and predictable.

• He has a wider range of potential outcomes.

• He has no policies at all.

What is the market's view on the potential fiscal stimulus under Trump?

• The market is skeptical due to inconsistent statements.

• The market has fully repriced for a large stimulus.

• The market expects a stimulus only under Clinton.

• The market believes there will be no stimulus.

What strategy is suggested for investors to hedge against election uncertainty?

• Ignore the election and focus on long-term investments.

• Increase risk in the portfolio regardless of the outcome.

• Be cautious with risk if Trump wins, and expect stability if Clinton wins.

• Sell all stocks and invest in bonds.