Baker Institute expert available to comment on financial markets’ reaction to presidential race

EXPERT ALERT

David Ruth
713-348-6327
david@rice.edu

Jeff Falk
713-348-6775
jfalk@rice.edu

Baker Institute expert available to comment on financial markets’ reaction to presidential race

HOUSTON – (Nov. 8, 2016) – The financial markets reacted strongly to the presidential race this year, according to an expert at Rice University’s Baker Institute for Public Policy.

Credit: shutterstock.com/Rice University

Edward Egan, fellow and director of the Baker Institute’s McNair Center for Entrepreneurship and Innovation, is available to comment on how markets reacted over the course of the campaign and how they might react when the votes are counted.

“In the 50 trading days ending Sept. 30, more than one-third of the Dow’s movements were explained by Mr. Trump’s poll numbers,” Egan said. “In that data, a rise in Mr. Trump’s popularity by one point was associated with a 65-point drop in the Dow.”

Egan said the relationship between poll numbers and the markets weakened a little in October; announcements from the Federal Reserve to the public and the FBI to Congress had impacts on this relationship. In the five days following FBI Director James Comey’s first letter to Congress Oct. 28, the Dow fell 254 points (1.4 percent); following Comey’s second letter, the Dow rose 367 points (2 percent), Egan found.

“If Mr. Trump wins the election, regression models based on the market’s previous reaction to his popularity suggest that we would likely see a material drop across the major indices,” Egan said. “This drop may be large enough for the markets to suspend trading to prevent panic selling. Conversely, if Secretary Clinton wins, models suggest a material increase across the major indices. The scale of the gains and losses is likely asymmetric, with the markets having largely, but not entirely, priced in a Clinton win at this point.”

Egan is an applied microeconomist who specializes in entrepreneurial finance, intellectual property policy and startup strategy. He was previously an assistant professor of entrepreneurship at Imperial College Business School in London and the innovation policy fellow at the National Bureau of Economic Research in Cambridge, Mass.

The Baker Institute has a radio and television studio available for media who want to schedule an interview with Egan. For more information, contact Jeff Falk, associate director of national media relations at Rice, at jfalk@rice.edu or 713-348-6775.

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Follow the Baker Institute McNair Center for Entrepreneurship and Innovation via Twitter @BakerMcNair.

Follow Rice News and Media Relations via Twitter @RiceUNews.

Related materials:

Egan biography: www.bakerinstitute.org/experts/edward-j-egan.

Baker Institute McNair Center for Entrepreneurship and Innovation: www.bakerinstitute.org/mcnair-center-for-entrepreneurship-and-innovation.

Founded in 1993, Rice University’s Baker Institute ranks among the top five university-affiliated think tanks in the world. As a premier nonpartisan think tank, the institute conducts research on domestic and foreign policy issues with the goal of bridging the gap between the theory and practice of public policy. The institute’s strong track record of achievement reflects the work of its endowed fellows, Rice University faculty scholars and staff, coupled with its outreach to the Rice student body through fellow-taught classes — including a public policy course — and student leadership and internship programs. Learn more about the institute at www.bakerinstitute.org or on the institute’s blog, http://blogs.chron.com/bakerblog.