In this podcast episode, the hosts explore the market's reactions and implications following the surprising "red wave" from the US midterm elections. They discuss how the market may have already priced in expected policy changes under a Trump administration, raising questions about whether trades based on assumptions of increased deficits, tariffs, and tax cuts are reflected in current valuations. The hosts stress the need to analyze new information and consider alternative scenarios instead of just following the consensus. They point out that unexpected shifts could arise from the timing of policy changes and adjustments in market expectations. Additionally, the conversation delves into the dollar smile theory and what it could mean for the future of the US dollar.
