The U.S. election is getting ugly – and investors are getting nervous
July 31, 2020 – By David Randall and April Joyner
NEW YORK (Reuters) – Investors are increasingly preparing for the risk of a contested U.S. presidential election come the fall, worried that an ugly political situation will create volatility across markets.
A key risk is that Republican President Donald Trump is already questioning the legitimacy of the election, analysts said. His Democratic challenger, former Vice President Joe Biden, currently has a 9 percentage point advantage among likely voters and a significant advantage among voters who are undecided, according to a Reuters/Ipsos opinion poll.
“It is going to get ugly,” said Nick Maroutsos, head of global bonds at Janus Henderson Investors. “I would expect a lot of volatility … but it will be very short-lived, you are talking about a two-week span.”
A contested election due to mail-in ballots would likely be more extensive than the hanging chad issue in Florida in 2000, said David Kotok, chief investment officer at Cumberland Advisors, referring to the confusion over voter intention due to a ballot in Florida that led then-Vice President Gore to challenge the election outcome and call for a recount. The U.S. Supreme Court eventually ruled that Florida did not have to do a statewide recount, ensuring the election of then-Texas Governor Bush.
“My guess is that markets would sell off and maybe sharply with that outcome,” Kotok said.
Links to other websites or electronic media controlled or offered by Third-Parties (non-affiliates of Cumberland Advisors) are provided only as a reference and courtesy to our users. Cumberland Advisors has no control over such websites, does not recommend or endorse any opinions, ideas, products, information, or content of such sites, and makes no warranties as to the accuracy, completeness, reliability or suitability of their content. Cumberland Advisors hereby disclaims liability for any information, materials, products or services posted or offered at any of the Third-Party websites. The Third-Party may have a privacy and/or security policy different from that of Cumberland Advisors. Therefore, please refer to the specific privacy and security policies of the Third-Party when accessing their websites.
Cumberland Advisors Market Commentaries offer insights and analysis on upcoming, important economic issues that potentially impact global financial markets. Our team shares their thinking on global economic developments, market news and other factors that often influence investment opportunities and strategies.