Cumberland Advisors Market Commentary – Year-End & 2020 Forecast Note #3: Potential Volatility Driven by US Politics

Author: David R. Kotok, Post Date: December 5, 2019

US politics will be a closely watched, bubbling pot in 2020, and the media will boil over every news item.

Market Commentary - Cumberland Advisors - Year-End-&-2020-Forecast-Notes 3 - Potential Volatility Driven by US Politics

That said, it is Super Tuesday (March 3) which becomes the key date for Democrats. Republican challengers to Trump seem to be non-starters as best as we can determine. Perhaps the New Hampshire or Massachusetts primaries (occurring on February 11 and March 3, respectively) will give some delegate count to Weld. Even so, the Republican nomination is solidly in the Trump-Pence re-election camp and is already seriously well-funded.

The Biden candidacy may be wounded by the Burisma payments to Biden’s son. It makes for an incessant and damaging media attack on Joe Biden. We can expect it and the Ukraine/impeachment fight to continue to generate a nauseating amount of media attention. And there has yet to be offered any clear, detailed explanation on why the payments were made and for what value-added proposition. A Reuters article published in October characterizes what Hunter Biden did for Burisma during his five-year tenure on the board in general terms, stating that Biden “provided advice on legal issues, corporate finance and strategy,” whatever that advice might have entailed (

In American history it is big deal to impeach a president, even when impeachment is a partisan political act. In this case we may witness a trial in the Senate that probably will be unlike anything the country has seen in its history. There is only the written documentation of the trial of Andrew Johnson in 1868, which is viewable page by page at In the case of the second trial, of President Bill Clinton in 1999, there are video recordings of the trial, the presentation of the articles of impeachment, and the vote, which occurred without debate. (See all at

The Trump impeachment trial promises to be a much different type of show. We expect it will surpass The Apprentice in ratings and that it will end without a “you’re fired” conviction in the Senate. That said, the trial will distract from any policy advancement,  it will damage the country in the eyes of the world, and it will make all global negotiations more difficult.

So we must wait on the timeline for an impeachment trial, but we know about a date that is certain: March 3, 2020, when Super Tuesday will better define the Democratic race. Pravit Chintawongvanich, equity derivatives strategist at Wells Fargo, has done superb analytical work on the pricing of derivatives around the important March 3 political date. I cannot reveal that analysis here, as it is for institutional customers only, and “distribution or dissemination is strictly prohibited” by Wells Fargo.

Suffice it to say there are noticeable market-based pricing references around the political outcome dates. The only forecast we can make on this subject is that volatility is likely to rise or even spike on any surprise.

Please note that Cumberland employs three quantitative strategies that may be impacted by any of these events. On December 1, 2019, two of those three strategies were 100% in cash or cash equivalents, and the third strategy was in defensive mode. These strategies can change at any time. Information on the three strategies is available upon request. Just send me an email.

David R. Kotok
Chairman and Chief Investment Officer
Email | Bio

Read the full series of “Year-End & 2020 Forecast Notes” by David R. Kotok at this link (updated as they are published):

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