Worried About Election Day Liquidity: There's An ETF Trade For That

There is something rather remarkable afoot about next week's presidential election: despite prevailing consensus that the two candidates, who couldn't be more different in terms of their proposed policies, are neck and neck, the market is eerily complacent, and as Goldman trader Brian Garrett pointed out last week, the implied move for the election day stands at just 2% - the lowest reading since Goldman began tracking the excess variance, a number which even Garrett notes "is perhaps getting a little too low."

While it would be naive to assume that the market is increasingly convinced that there would be no outsized reaction one way or the other - especially since numerous economists suggest that neither Trump not Kamala are "priced in" - there is a different explanation. And that is that traders are simply afraid there won't be enough liquidity to re-trade the election day outcome, and as a result are quietly pulling out and degrossing.