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Biden Vs. Trump: Here's what to expect in the markets once 2020 election is decided

Will Weatherford, Weatherford Capital Managing Partner and Former Speaker of the -Florida House joins Yahoo Finance with his market outlook as the presidential election in the U.S. approaches.

Video Transcript

ADAM SHAPIRO: So let's look at how all of this impacts markets, and to do that we're going to invite into the stream Will Weatherford. He is Weatherford Capital managing partner and former speaker of the Florida House. Good to have you here. I want to ask you, Will, in a broad sense, with what, 18 days until the election, do markets-- is it already in the rearview mirror for markets?

WILL WEATHERFORD: I think the markets have baked in quite a bit of what's taking place in the election. I mean, when you look at it, it seems like the markets are buying into the polling and that the polling is suggesting that Joe Biden is leading this race and is more likely than not to win it. It also appears that the Democrats may take the Senate, so it does feel like the market's done a good job of baking in some of the more likely outcomes.

JULIE HYMAN: And so walk me through, Will, then you're thinking about if that is the likely outcome, then what, right? What are the sort of presupposition the market is making with an acknowledgment that-- even forget about the polling the last time around. The market also was all over the place, right, in terms of reaction. That was also very unpredictable.

WILL WEATHERFORD: Yeah, I mean, I think, you know, the market's thinking short term. They're focusing on, more likely than not, a big stimulus bill. I mean, if the Democrats win, you can just count on a much larger stimulus package taking place. Conversely, if the Democrats get a clean sweep, you're going to see tax increases, and you're probably going to see more regulation.

So it appears the market's focusing on the short term, almost kind of like they'll get to the tax issue and they'll get to the regulatory issues sometime later. But it does seem like they're baking in a much larger, more muscular, you know, stimulus package, and they're probably right.

DAN ROBERTS: Will, Dan Roberts here. It's interesting to hear people, you included now, saying that some of the election results are already baked into the market. We've even heard people roll through and say even if it's a contested election, even if we don't necessarily know the winner for as long as a week after election day-- well, markets expect that. They now expect the unexpected.

But if we do assume that, it almost makes you feel like well what then could happen that would be a surprise, because we know that, you know, what markets really care about is the unexpected? They care about uncertainty. So, you know, if the market isn't going to be shocked and isn't going to have turmoil resulting from a crazy election situation, then what is the next big overhang that could hurt stocks? I mean, is it just the fact that the pandemic is dragging along? Is it stimulus-- how much, whether or not we get it? What's the next big roadblock for stocks?

WILL WEATHERFORD: That's an interesting question. I mean, let's run the scenario if the Democrats get a clean sweep. You know, we know there's going to be higher taxes, but we don't know how much. We know there is going to be more regulation. We don't know how much. As those things start to unwind and become more transparent, you could see some, you know, serious shocks in the market reacting to that.

Conversely, the biggest surprise would be Donald Trump, of course, winning. I mean, I don't think you can count him out. Four years ago we all thought he was going to lose. Most people did. All the polls did at least, and he won. So if Donald Trump wins again, it'll be a much bigger surprise because the polls have him down much more than they did four years ago.

But with a Donald Trump presidency, you'd probably see a much smaller stimulus package. And on top of that, you probably see the Trump tax cut stay the same. So it's just hard to say what the market is going to do. I do think the overwhelming unknown is COVID. You know, when is the vaccine going to come out? How many people are going to take it? You know, what's going to happen in the winter months when we know people are going to be indoors? That seems to be the overlay to everything and probably the most uncertainty that's still baked in.

RICK NEWMAN: Hey, Will, Rick Newman here. To go back to the Biden tax hikes, the Tax Policy Center just yesterday lowered its estimate for how big those tax hikes would be. It was $4 trillion before, and now they're saying Biden has changed his plan and the economy is different. So they're saying now only about $2 trillion. And in reality, what-- even if the Democrats control the Senate, that doesn't mean they can get every tax hike through, so maybe only $1 trillion or less if Biden-- if-- then that's if there is a blue-wave scenario. So if that's the sort of realistic outlook, is that good for markets?

WILL WEATHERFORD: It should be. I mean, I agree with that. I think it's going to be really hard in the middle of a recessionary environment and an uncertain environment to raise taxes in a dramatic fashion but, you know, never put it past my friends on the Democratic side of the aisle to try to do so. And so it will probably be scaled down. There's no question about that.

But it's just unknown, and I think that's the biggest issue. If the Democrats take the Senate-- you know, Joe Biden is a more moderate candidate, but, you know, leadership in the House and Senate not necessarily as much. And so it'll be a very interesting dynamic that will take place post-election, assuming there's a clean sweep, of course.

ADAM SHAPIRO: I want to bring you to the state of Florida. You were the former speaker of the house there and a Republican. I'm curious. From your vantage point, what's going to happen in Florida? Not-- I'm not interested with this point with the markets, but you talk to the political leaders, at least on the Republican side I would imagine still to this day. So what do you see unfolding?

WILL WEATHERFORD: Well, Florida-- you know, we're always almost inherently within 1%. I mean every governor's race, every presidential race, it's always close. I don't care what the polls say. The polls had Hillary Clinton winning by a wide margin. They had Andrew Gillum beating our governor Ron DeSantis by a meaningful margin. Ron DeSantis became governor. Donald Trump became president.

So I think it's going to be within 1%. I have no idea where it's going to land. You can make a case for both candidates. And we don't have any really large statewide elections that are downstream that will be implicated on top of the presidential race.

So it really-- I hate to say it. Florida just likes to keep us all hanging out there. Hopefully we can count our ballots well this time unlike like we did in Bush v Gore, but it is a coin flip literally down here in Florida.

ADAM SHAPIRO: And then we're going to be inundated with talk about the I-4 corridor and surprises with Hillsborough County. I've got to say thank you very much, Will Weatherford, Weatherford Capital managing partner and former speaker of the house of the great state of Florida. Good to have you here "On the Move."