“The news of President Trump contracting COVID-19 may completely change the direction of the campaign and adds to our already cautious outlook on the stock market,” said James McDonald, CEO of Los Angeles-based Hercules Investments. “President Trump contracting the coronavirus will elevate institutional money’s preparation for a Democratic White House and all the tax, trade and budget implications that go along with it. We expect institutional investors to start de-risking portfolios and increasing hedges in preparation for market volatility.”
That said, McDonald noted that he is not changing his strategy. “We have been long volatility due to market overvaluation, the absence of fiscal relief from coronavirus-triggered economic pressure and uncertainty heading into the U.S. presidential election,” he noted.