1, Trading community carrying decent amount of exposure – traders have decent “skin in the game”…expect lower liquidity (TME comment here) and erratic price action
2, the post-election gains will not be absolute, but relative in the event of a clear move blue…we agree the take that a lot of re risking has taken place, reflation positions bigger now than going into 2016 elections, link here.
3, implied vols to reset post elections
4, GS is above consensus on growth for 2021…negative real rates and significant fiscal support…expect bond yields to rise…forecast significant upside for commodities…expects a vaccine before year end (goes “against” the latest vaccine “polls“) …valuation spreads between growth and value are at a record high.
EM to outperform in 2021 and like the Japan trade, Suga will deregulate and drive corp reform etc (recall Kolanivic’s most recent bullish call on Japan, here)
5, investor behaviour post elections – hungry for equities