Americans have a big decision to make in next month’s presidential election, but markets don’t seem to know how to account for it, according to Raoul Pal, a former hedge fund manager.
“Volatility is way too low considering the outcomes and how nervous markets are about it,” Pal told Business Insider’s Matt Turner on Monday in a Facebook Live interview.
“I always have an expression, which is that suppressed volatility leads to hyper volatility,” added Pal, who is the founder of Real Vision and Global Macro Investor. “Once you suppress things this much, whether it’s central banks or whatever is suppressing it, the moment the lid is taken off, the genie comes out of the bottle, the volatility explodes.”
Watch Business Insider’s full interview with Raoul Pal below:
Credit Suisse said in a research note out Monday that oil, US rates, and European equity volatility have all hit one-year lows.
Pal added that he expected the US economy to go into recession before long, and said that every time there has been a two-term election since 1910, there had been a recession within 12 months.
“Maybe the odds aren’t 100%, but there is a very high chance we’re coming in to a recession,” he said. “That is when the weak links in the chain go.”