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Some Like It Hedged

BNP Asset Management's Pojarliev discusses a variety of options to address foreign currency exposures. Although there is no single best-practice solution for addressing foreign currency exposures, institutional investors have three main choices, he says.

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December 1, 2000

Election Count Spat Chills Traders World

By William Hoffman

Standing on a client's trading floor on Nov. 9, attorney Guy Molinari remembers traders' reactions when campaign spokesmen for Vice President Al Gore announced they would fight Gov. George W. Bush over every disputed ballot in the Florida recount.

"You could feel the chill descend over the room," said Molinari, a shareholder in New York at Heller Ehrman White & McAuliffe representing underwriters, venture capitalists and new businesses.

And he remembers the market's response: a panicky nose-dive that drove the Dow down 300 points before most of the loss was recovered later that day. "I think the American people - Wall Street included - want a resolution on this issue," said Molinari (who has the same name as the Staten Island Republican borough president).

Regardless of how the candidates react, and even without lawsuits, recounts and re-votes, the U.S. presidential election system may not produce the expected results. About half of the 539 members of the Electoral College are not bound by law to either presidential candidate. These unbounded electors are allowed to vote for any presidential candidate. The electors' decision could in turn be invalidated by Congress, when it meets in joint session in early January to confirm the electors' selection.

No Mandate

"The new president is not going to be able to declare a mandate," said Bill Rhodes, chief investment strategist in New York at Williams Capital Group. In Congress, a nearly even GOP-Democrat split in both chambers "makes the moderates the power brokers," Rhodes said. Big-ticket items - Bush's $1.3 trillion tax cut, for example, or Gore's trillion-dollar lock box for Social Security - are unlikely to be approved in a Congress where "members are going to have to cooperate," he said.

What this could mean for reducing or capping Section 31 transaction fees would be anybody's guess. Prof. Jahangir (Jay) Sultan, associate professor of finance and director of the Bentley College Trading Room, in Waltham, Mass., said investors could react to the lingering crisis by sitting on their cash, or even moving it from equities to bonds.