Uncertainty to last long beyond Election Day - Steve Sosnick joins Alpha Trader Alpha Trader

This week's Alpha Trader podcast features hosts Aaron Task and Stephen Alpher talking the day before the election with Steve Sosnick, chief strategist at Interactive Brokers.
There's at least a modest amount of conventional wisdom out there that volatility (VIX) - which has been elevated for several weeks and spiked dramatically higher during last week's big market selloff - will return to normal levels after the election. After all, despite a lot of dramatic chatter, there's every reason to believe we'll know the winner of the presidential election, and the majority in Congress soon after. That means markets can start discounting a big fiscal stimulus, and there's still the Fed at ZIRP for as far as the eye can see.
Steve Sosnick would take exception to that thinking. First, he's not positive a stimulus will be agreed upon if the government remains divided. Stimulus is clearly more likely in the event of a "Blue Wave," but the inauguration isn't until Jan. 20 - it could be months before any money flows from this.
And concerning that Blue Wave, stimulus fans may want to be careful what they wish for, says Sosnick. A Biden-led government is likely to raise capital gains taxes, and thus investors' first reaction to the news next week (should that come to pass) might be to sell.
Sosnick's suggestion for those wanting to sell some volatility is to have a look at put options on the VIX in March, for instance. By the middle of 2021's Q1, there will surely be a lot more visibility on stimulus, and a Covid vaccine and/or treatment. Volatility should be down, and those puts will rise in value.
There's plenty more, including why Sosnick thinks the Fed is nervous, but not enough to explore the "nuclear options" like negative rates or outright purchases of common stocks.
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