Volatility markets to ‘very close to call’ for Georgia runoff

Photographer: Colin Douglas Gray / Bloomberg

Investors are not quite ready to put this chaotic year behind them yet. The final race for the 2020 elections: There is a more risky event to enter next year.

Although not clarified as the hedging seen around Election Day last month, options and volatility futures result in a January 5 runoff race in Georgia as the signal rises high on potential market unrest that will determine whether Republicans Whether or not they control the Senate.

Prior to the November vote, many considered the Democratic sweep of the elections to be one of the most likely outcomes for American equity. Since then, however, the market has shown that it has been comfortable with the government’s continued continued divestment control – a background historically producing strong returns.

“There’s no doubt, if you go from red to blue, you might get the price for something that looks less favorable because of the gridlock-like markets, the markets like the status quo,” Phil Camporell, Managing director said MultipleAsset Solutions for JP Morgan Asset Management.

The focus on runoff – and Hedge’s demand to hedge against the turmoil that followed – focuses uncertainty on how exactly investors should put themselves ahead of the Joe Biden presidency. It needs democratic control of the Senate to execute an agenda that promotes green-energy companies at the expense of fossil-fuel producers, while the prospect of more economic relief packages and infrastructure spending. Nevertheless it can help him raise the corporate tax rate and increase regulatory scrutiny.

“It is impossible to judge how important these elections are to the size, scale, and speed of the 2021 fiscal, tax and regulatory policy,” Kaun analyst Chris Krueger wrote in a note on 21 December.

Hedge in place

Both scenarios have potential winners and losers and it is debatable which would be a better scenario for the overall stock market in the long term. But traders see hedging against volatility that could flare up in the short-term if the Georgia result causes investors to pile in the alleged beneficiaries of the result and dump the alleged loser.

The possibility of hedging also reflects the concern that even a small market may create a small surprise situation that the general public needs to keep on investing after a spectacular run. The S&P 500 has risen 65% from its low in March, a classification of valuation metrics over a decade or more.

“The idea that fiscal policy and public procurement may matter more than income and revenue – sounds like 2020, doesn’t it? – is inherently inconvenient and supports above normal volatility,” Julian Emmanuel, brokerage BTIG The equity strategist at, wrote in a recent note.

Biden stocks will have history and fed on side, not to more elses