Amrith Ramkumar

speaker

860 appearances 16 recordings 1 series first heard May 2018 last heard Sep 2021

Amrith Ramkumar’s voice in public audio — every appearance, attributed to the second.

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WSJ Your Money Briefing · Will Trump or Biden Win? Wall Street Hedges Its Bets. · 13 Oct 2020 podcast

Thanks so much for having me.

investors are using a lot of different data points to inform their opinions as we get closer to november people are really worried about possible disruptions due to mail-in voting and counting the ballots and the result or a contested outcome in the case of a presidential race that's why a lot of people are betting on volatility using things like cboe volatility index futures or even other haven assets like gold or even some currencies

And yes, as polls have shown that Joe Biden's lead on Trump is increasing, they are ramping up their bets on a so-called blue wave, which could see Democrats also gain control of Congress.

So that is showing up in certain sectors.

But as you've said, historically, what we've seen is that many of these bets can often be misguided or they can become too extreme.

So in general, people are definitely bracing for some volatility in both directions.

Some of the sectors we see the biggest bets being placed in are energy and kind of sectors that could be more regulated.

So let me start with energy there.

We've seen big bets on green energy companies and companies tied to renewables.

So Tesla, Sunrun, NextEra Energy, the iShares Global Clean Energy ETF is up some 80 plus percent this year.

That's, again, an area where even if Biden wins and the Democrats gain control of Congress, you could see a bit of a pullback just because of how much that sector has risen already, if that makes sense.

A lot has been priced in about that.

We've also seen private prison operators tumble on expectations of a Biden win because Trump's hardline stance on immigration and deportation was a big driver for those companies to

And Biden has proposed ending the federal government's use of these private prisons.

Similarly, student loan servicers like Navient and SLM, they could be subject to more stringent regulations.

And Biden has proposed canceling a lot of federal student debt outstanding.

So these are some of the sectors that would be most directly impacted by policy choices.

And on a broad scale, investors are also considering what would a higher corporate tax rate under a Biden proposal mean.

Goldman Sachs estimates that would slice about 9% off S&P 500 corporate earnings, but at the same time, lower tariffs, more clarity on policies generally, and greater fiscal spending could actually boost the economy as well and help companies.

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