What you’re not hearing about why the markets don’t seem to care about the presidential election

There have been highly volatile days as the presidential election landscape has chaotically emerged. But stocks have been in a less than 14% trading range despite what remains a maximally uncertain outcome poised at 50/50 in the polls, the prediction markets and the models – with both candidates continually improvising ill-considered economic policy proposals. With stocks at all-time highs as Trump’s polling has recently improved, it may be that markets are signaling a slight preference for Trumponomics. House control is 50/50, also. If Senate control were 50/50, the joint probability of one-party control of government by either party would be 25%. But the Senate is 100/0 in favor of Republican control with West Virginia and Montana in the bag. The joint probability of one-party control remains 25%, but it can only be by Republicans. That opens the possibility for the extension of expiring provisions of the 2017 tax cuts. But there remains a 75% probability of gridlock, pointing to general stability of economic policy no matter who wins the presidency.