A House Divided: Index Calm Masking Election Risk
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Betting markets give Democrats a 90%-plus chance of flipping the House, but history suggests a midterm flip is business as usual, not a signal for 2028. Volatility measures suggest little of the typical election risk is priced at the index level, but stock-level volatility is elevated, particularly in politically sensitive sectors, and politically exposed stocks are underperforming. Index protection looks inexpensive.
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