1. Unfazed by Hillary Clinton FBI twist, investors hold onto Donald Trump-upset hedges

Unfazed by Hillary Clinton FBI twist, investors hold onto Donald Trump-upset hedges

Some of the biggest investors are holding tight to their hedges against market swings should Donald Trump be elected U.S. president, even after the Federal Bureau of Investigation absolved Hillary Clinton a second time of committing a crime.

By: | Published: November 7, 2016 11:18 PM
Polls still show a tight race hours after the FBI said it adhered to an earlier finding that absolved Clinton of crime in handling e-mails as secretary of state.  (Reuters) Polls still show a tight race hours after the FBI said it adhered to an earlier finding that absolved Clinton of crime in handling e-mails as secretary of state. (Reuters)

Some of the biggest investors are holding tight to their hedges against market swings should Donald Trump be elected US president, even after the Federal Bureau of Investigation absolved Hillary Clinton a second time of committing a crime. Millennium Global Investments Ltd. is sticking to its view that the Republican candidate still has a 35 percent chance of winning the vote Tuesday. Old Mutual Global Investors says it’s keeping its protection as prospects of a surprise victory by the political novice can’t be ruled out. Janus Capital International echoes that view. Together they manage more than $500 billion.

Polls still show a tight race hours after the FBI said it adhered to an earlier finding that absolved Clinton of crime in handling e-mails as secretary of state. While that signaled a boost for her to become the first female president, investors continue to hark to the scenario of the UK Brexit referendum in June, saying they’re focused on not getting burned by underestimating a resurgent underdog vote.

“I’m not sure if this is a game changer,” said Richard Benson, a London-based money manager at Millennium Global. “I haven’t changed my positions because of this new development. It may halt the Trump momentum that had seen a sharp narrowing of the polls. The issue now is how many quiet Trump supporters are out there.”

Benson declined to reveal details of his stakes, saying he has “a number of good/risk reward positions with limited downside established,” to hedge the election outcome.

For analysis of currency forecasting days before election, click here.

Back on Oct. 28, FBI Director James Comey informed Congress in a letter that the law-enforcement agency, which had ended its previous probe in July, was examining new e-mails potentially related to its investigation of Clinton’s use of a private computer server. The bombshell, which roiled markets, was followed by a second letter from Comey to members of Congress on Sunday saying the FBI had “not changed our conclusions” from July.

“We have not done anything material following Sunday’s news,” said Ryan Myerberg, a money manager at Janus Capital International in London. “We are focused on managing downside risk to our portfolios. While we expect Clinton to win, a 30 percent probability of Trump victory is a very high number in that context.”

Click here for Monday poll showing Clinton’s edge similar to margin of error.

Mark Nash of Old Mutual Global Investors said he still thinks Clinton will win, and that the dollar will rise along with bond yields, without reducing protection in case the result went the other way.

“The new development makes a Clinton win more likely but we need to be cautious,” said Nash, head of global bonds at the asset-management company in London. “It is prudent to have some hedges on regardless of the new news given the risk/reward into the vote.”

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