Grocery shortages are a worry of the past! What are established investors doing to prepare for market volatility?

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The Top MarketBites Investment Stories for September 28th, 2020
WHAT IS DRIVING MARKETS TODAY?
Futures point to a slight rise in stocks at the market open.
Market Commentary –
The 4-week slide took the S&P 500 down 10% at last week’s low, and the tech-heavy NASDAQ declined as much as 14%. Briefly, the S&P 500 returned to where it traded June 8th, the peak of “reopening optimism”. The stock market seemed to have found support at that level and bounced Thursday and Friday, closing out the week in the green. Continue to expect volatility leading up to the Presidential election.Missed our newsletter on stock market bubbles? – (click here)
TOP STORY 1: Grocers and big box stores proactively prepare for Winter illness surge
What is Happening?
Consumer staples producers throughout the supply chain are ramping up production ahead of the winter in preparations for potential COVID resurgence as the weather changes. Major producers will not be caught unprepared in the face of another pandemic surge.Why does this Matter?
This should be a sigh of relief for consumers. In the event of another COVID spike or horrible flu season, all of your needed items will be in stock.  In addition, firms such as Coca-Cola, Hormel Foods, Kellogg Inc., General Mills, Campbell’s, Costco, and others have announced plans to handle such an event, and catch up on consumer-preferred products that have experienced manufacturing disruptions. They have even taken the steps to produce “COVID Pallets” according to one executive. Meaning paper products and sanitization products have also been accounted for.
“We started talking about Thanksgiving in June. That’s earlier than we ever have,”
– United Natural Foods President Chris Testa
The Takeaway:
A lot of the aforementioned firms experienced difficulty during the first wave of COVID-19. Those production struggles, according to them, will never happen again. Perhaps keep an eye on consumer staples stocks and retailers as the holiday season comes upon us.

TOP STORY 2: How are investors acting prior to the U.S. Election?
What is Happening?

As always during an election cycle, hedge funds and traders are looking to make the most of, or protect themselves, from future uncertainty. This year however, they are trying new things and certain protective measures are more expensive than ever before.

Why does this Matter?
What is the most different in this year’s election compared to year’s past is how long investors are expecting volatility. According to Jeff Yarmouth, global co-head of foreign exchange flow derivatives trading at UBS Group, this year, there is protection against volatility using currencies, VIX options, and other vehicles lasting all the way through the end of November. In the past, these behaviors had only been seen for a few days surrounding an election. 

“It is being priced as one of the most volatile expected events of all time,”
–  Mike de Pass, global head of Treasury trading at Citadel Securities.
The interesting truth here is that many established investors are choosing to get defensive as opposed to attempting to predict what the election could produce. A defensive investment strategy is a conservative method of portfolio allocation and management aimed at minimizing the risk of losing principal. Such strategies are meant to protect investors against significant losses from major market downturns, volatility, and unpredictable market-changing events. This allocation may include an increase in fixed-income investments, or perhaps defensive stocksThe Takeaway:
Established investors foresee the remainder of 2020 as extremely volatile regardless of future outcomes. For retail investors, it is important to remember not to panic about daily or weekly swings in asset prices. Trust your long term investment strategy or investment professional. 

DEAL & IPO WATCH:

– Palantir IPO on Wednesday, shares priced around $11.50


– Devon Energy and WPX Energy are in talks to merge
– Allbirds, the sustainable footwear maker, lands $100 million funding. The funding valued Allbirds at $1.7 billion


WHAT ELSE IS HAPPENING:
– What does the lumber bubble mean for investors – (read here)
– XPeng debuts “flying car” – (read here)
– Some travelers miss flying so much, they’re flying to nowhere – (read here)

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