Debate: How to Measure and Navigate Market Uncertainty
Featuring: Professor Nick Bloom is the William Eberle Professor of Economics at Stanford University, Senior Fellow at SIEPR, and Co-Director of the Productivity, Innovation, and Entrepreneurship Program at the National Bureau of Economic Research.
Uncertainty is one of the most critical—and elusive—forces shaping markets today. How is it measured? How does it affect economic and financial market behavior? And what strategies can help investors navigate periods of high uncertainty?
On Wednesday, April 2nd — “Liberation Day” — President Trump announced sweeping tariffs targeting countries with which the U.S. has trade imbalances. The tariffs, which disproportionately affected key allies, sent markets into a tailspin. In just 48 hours, U.S. equity markets suffered the greatest two-day destruction of market wealth on record. But even more troubling were the developments in the bond market, which ultimately triggered a 90-day policy pause.
While the direct math of tariffs implies rising inflation and falling consumption—raising risks of a recession or worse—the more complex and destabilizing element is uncertainty.
In today’s episode, we explore:
- How uncertainty is measured
- Its real-world impact on the economy and financial markets
- Strategies for navigating uncertain market environments
Don’t miss our discussion of the Economic Policy Uncertainty Indexes, co-developed by Professor Bloom and referenced throughout the episode.
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