Goldman Warns Investors to Hedge for U.S. Elections Delay
- Virus, more mail-in voting add to risk for murky results
- UBS Wealth sees a wave, either way, as positive for stocks
Goldman Sachs is telling investors to prepare for volatility around the November U.S. election, as the coronavirus adds a “major complication” to tabulating results, with a recommendation to extend hedges out to December expirations.
“Delayed primary results, a precedent for extended vote-counting, and a slightly inverted term structure lead us to prefer December hedges to November hedges,” strategists led by David Kostin wrote in a note dated July 7. “Given the several-week delay in finalizing the results of the 2000 presidential election (in addition to the contentious 1876 election), the elevated volumes of mail-in ballots used in recent primary elections, and potential for increased mail in ballots this November, we see heightened risk that election-related volatility could extend beyond Election Day.”