Welcome to our exchanges at Goldman Sachs Markets Update for Thursday, October 22nd.

Each week we check them with a leader across the firm to get a quick take on what they're watching in markets. I'm Jake Stewart

global head of corporate communications here at the firm and joining us today we have

Alex Phillips who is our chief US political economist out of Goldman Sachs

research. Alec welcome back to the program.

Thanks a lot.

So we're within two weeks of election day, Alex, and there's obviously a lot going on on the campaign trail.

What can we learn from the markets about what investors are expecting to happen on November 3rd?

So I think we've seen a couple of things.

One is if you look at some of the baskets on the equity side that we have that reflect kind of different

theme so as an example one would be stocks that benefited from tax reform in 2017 versus those that maybe benefited less.

They do seem to be reflecting an expectation of a change in tax policy, and so that presumably implies that they are also expecting a change in

control. Now what seems to be the case is they're not expecting the full change in tax policy so that either

reflects an expectation that you know there's still some uncertainty around the

election or it reflects the idea that well maybe a Democratic sweep is the more likely outcome but that

things won't change as much as what former Vice President Biden has laid out in

his campaign plans. I was gonna say you can see that concerns around a hung-up election

results have also subsided some. So we used to see that there was a pretty noticeable kink in the curve.

So essentially a lot of implied volatility right after election day,

but that it sort of spread out over a couple of weeks past election.

It's now looking a little bit more concentrated pretty close to the election,

which I would say probably reflects the idea that Biden has a bigger lead and therefore maybe a higher probability

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