Wall Street fears meltdown over election and Supreme Court – Axios

The death of Justice Ruth Bader Ginsburg and President Trump’s vow to name her replacement to the Supreme Court before November’s election are amplifying Wall Street’s worries about major volatility and market losses ahead of and even after the election.

The big picture: The 2020 election is the most expensive event risk on record, per Bloomberg with insurance bets on implied volatility six times their normal level, according to JPMorgan analysts. And it could take days or even weeks to count the record number of mail-in ballots and declare a winner.

What we’re hearing: “Not getting the election results in a timely manner will be destabilizing,” Lou Brien, rates strategist at DRW Trading, tells Axios. “Especially in light of how divided the country appears to be now.”

• “I think stock market moves will be violent intraday and the prevailing trend will likely be down, maybe sharply so.”

The Supreme Court nomination will compound the partisanship and division in the event of a contested election, analysts at TD Securities say in a recent not to clients.

• That not only will increase volatility but also “reduces the likelihood of Congress passing a phase 4 stimulus” package, Priya Misra, TD’s head of global rates strategy, tells Axios.
• It also means “we should be putting in a greater probability of a Blue Wave,” wherein Democrats control the presidency and both chambers of Congress, she adds.

via www.axios.com