![\"-1084.jpg\"](\"https:\/\/www.next-finance.net\/http:\/\/beta.next-finance.net\/wp-content\/uploads\/2020\/10\/1084.jpg\")
<\/a>So far, polls between the two candidates continue to diverge with no example since 1980 of a candidate closing
\nsuch a huge poll gap so close to the election.<\/p>\n
Senate elections might be even more pivotal in defining future U.S. policies. The ambitious Democrat agenda on
\nstimulus, taxes, and wages largely depends on a majority in Congress. A third of the 100 Senate seats will be contested,
\n10 of which are likely to be decisive. Republicans have a tight 53-47 majority, requiring a net 3 gain for Democrats to
\ntake control if Mr. Biden is elected (including the Vice President\u2019s tie-break vote, giving him the final say in 50\/50 motions).<\/p>\n
A Biden win still looks likely without false steps or \u201cpolitical\u201d surprises. A clear-cut win would also reduce chances for
\nextended legal disputes. Yet, we find that a \u201cBlue Wave\u201d is not as likely. <\/p>\n
Online bets, consistent with two third odds of a
\n\u201cBlue Wave\u201d, differ from polls that are tighter, and from trends in assets most sensitive to the outcome that are also more
\ncautious. For now, markets are struggling to assess the implications of a \u201cBlue Wave\u201d, weighing impacts of higher taxes
\nand wages vs. larger stimulus and less policy uncertainty, including trade policies. The outcome that is currently little
\npriced by markets is a presidential vote that would be tight enough to result in heated legal disputes and market volatility.<\/p>\n
Elevated uncertainty regarding the majority in Congress makes it speculative to position on U.S. elections. Hegde funds
\ngenerally raised their exposures on signs that the September correction was ending. They are now shaving off some of
\ntheir risks and neutralizing their most directional calls. Overall, feedbacks from U.S. hedge fund managers suggest that
\ntheir positioning is not solely focused on the U.S. elections outcomes. Broader macro trends, including ample liquidity,
\nlikelihood of additional fiscal stimulus (be it delayed), and the ongoing recovery are greater drivers of their exposures.<\/p>\n
Global Macro strategies are still seeing medium-term dollar weakness (with short-term support), are long U.S. breakeven
\nand gold, and favor tactical calls on U.S. treasuries (currently short). EM-focused strategies remain long credit, especially
\non quasi-sovereign and are now long bonds \u2013 partially hedged with selective EM FX positions. U.S. L\/S Equity strategies
\nare cautiously positioning on a Democrat win, with a partial rotation out of some of their tech stocks towards the prime
\nbeneficiaries of a recovery and exposures to Asia Pacific. In Europe, L\/S Equity managers have not materially changed
\ntheir exposures. They are also cautiously increasing exposures to value stocks at the expense of tech positions. Their
\nmain concern regarding U.S. elections, which may have less direct sector impact, is getting the market timing right.<\/p>\n