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First Presidential debate was 'dumpster fire,' here's how the market will likely react

Yahoo Finance’s Alexis Christoforous and Brian Sozzi review last night’s first 2020 Presidential Debate with Raymond James Washington Policy Analyst, Ed Mills.

Video Transcript

ALEXIS CHRISTOFOROUS: Wall Street is weighing in on last night's chaotic presidential debate that, for most of the 90 minutes, didn't seem very presidential at all. President Trump and Former Vice President Joe Biden clashed in heated exchanges over health care, taxes, coronavirus, the Supreme Court and racial protests. Difficult to watch and cringe worthy at times, the debate also highlighted the risk of a contested election in November, and stock futures are reacting.

Right now, we actually have stock futures off their lows of the morning. Dow futures down 55, NASDAQ futures giving back more than 20, and S&P futures down about four points. I think it's fair to say we're all still trying to make sense of last night's presidential debate. It quickly descended into name calling and interruptions with President Trump refusing to stop talking and declining to condemn white supremacists. Former Vice President Joe Biden evaded answers on questions like packing the Supreme Court.

DONALD TRUMP: Why won't you answer that question?

JOE BIDEN: Because the question is--

DONALD TRUMP: You want to put a lot of--

JOE BIDEN: The question is--

[INTERPOSING VOICES]

DONALD TRUMP: Radical left.

JOE BIDEN: Will you shut up, man?

DONALD TRUMP: Listen, who is on your list, Joe?

JOE BIDEN: This is so--

CHRIS WALLACE: All right, gentlemen. I think we've ended this--

JOE BIDEN: This is so unpresidential.

DONALD TRUMP: He's going to pack the court.

CHRIS WALLACE: We have ended--

DONALD TRUMP: And not going to give a list.

CHRIS WALLACE: We have ended this segment. We're going to move on to the second segment.

JOE BIDEN: That was really a productive segment, wasn't it? Keep yapping, man.

ALEXIS CHRISTOFOROUS: Yeah, so if you missed it, a lot of the night was just like what you saw. You'd like to think the American people deserve better than that. Ed Mills is Washington Policy Analyst at Raymond James. He joins us now. Good morning to you, Ed. You call the debate a dumpster fire. That's pretty accurate. Do you think, though, that it swayed any undecided voters last night?

ED MILLS: Alexis, you know, it was a dumpster fire, and what our job is trying to figure out the outcome of the election and what the market impact will be. I think most people that I have spoken with, things that I have seen, is for the undecided voter, they probably turned it off, and I wonder if that they're going to be completely turned off from this election. So you look at the polling data, so far Joe Biden is ahead, especially on the national level. He's had a decent lead in some of the swing states, not as big as his national lead. So the real question is did Donald Trump pick up voters last night? I think we have to wait to see the polling data, but what's been remarkable to me about this whole election is that we have big event after big event, and the polling data does not necessarily move, so I am wondering how many undecided voters are actually still out there.

BRIAN SOZZI: Ed, what do you think the market impact will be?

ED MILLS: Brian, I think what we've been looking at in the last 24, 48 hours is a little bit of a glimmer of hope on a fiscal relief deal. When you look at the partisanship and the kind of debate last night, you say there's probably a new political hurdle in getting that done. You look at the conversation about election integrity-- if this is a close election, if Donald Trump loses this election, the probability that he is going to contest it, that there is some uncertainty after the election goes up after his answers last night. When I talked to investors here at Raymond James, their number one concern is not necessarily who wins the election, but when we will know, and that kind of conversation last night extends the probability or increases the probability of an extended uncertainty after the election. And from that perspective alone, the market will not like those answers.

ALEXIS CHRISTOFOROUS: Yeah, and I think you're seeing it play out in the futures market, at least for the time being, Ed. Did you hear anything, though, in those 90 minutes last night that was substantive that spoke to policy, that maybe even dare we say could be a bipartisan topic for these two?

ED MILLS: Well, I thought what was really interesting is when Joe Biden kind of claimed that I am the Democratic party and trying to say that the kind of message that Donald Trump is pursuing that Biden is going to do whatever kind of the left of the party wants to do is going to be his agenda. Biden wanted to send a message that he is his own man and that the policies he would pursue are not necessarily as aggressive as what some people fear. I don't know if the market will accept that as an answer. I don't know if that's going to be the outcome if there is a Democratic sweep in November. But for him to moderate like that and not embrace the most liberal policies of the Democratic party, that's probably a net positive for market outcomes in terms of what could happen in 2021 and beyond. In terms of bipartisanship, I just didn't see it.

ALEXIS CHRISTOFOROUS: You know, after these debates when we post-mortem them, we talk about winners and losers. I mean, I said at the top that I thought the American public was the loser last night, but was anybody a clear cut winner between these two?

ED MILLS: I don't know. I'll let the American people decide that. I do think that the expectations on Joe Biden were so low going into this based upon the narrative that the Trump campaign wanted to pursue. Was it the best night for Biden? You know, I'll let the viewers decide. But the fact that he came, was kind of able to look into the camera, tell the American people what his vision is at times probably is a net positive for him and that gives us kind of some idea of how he would govern if he's president. So from that perspective alone, based upon expectations and execution, that probably won't be what would be the winner from last night.

BRIAN SOZZI: Ed, CBS did a poll right after the debate, and it showed most Americans were quote "annoyed." Does this help either side?

ED MILLS: Brian, I mean, I think you're right, and that's what I've been trying to, you know, kind of get across here. I think that if most Americans were annoyed, that probably takes some of the undecided voters and decide to stay home. If you are kind of leading in the polls, that's probably a net benefit to you. If you're lagging in the polls, you need to find a way to get to that 50 percentage mark. And if you are stuck in the low 40s and you are tuning people out or turning people off from this election, that really does rely on your base to be energized. So I think from the Trump campaign, what they would say from this is that Trump has pursued a base strategy throughout this campaign, and there is a lot of things that he did last night to energize his base. But the question is-- Is his base large enough to win in swing states and to win 270 electoral college votes?

ALEXIS CHRISTOFOROUS: As hard as it is to think about, there are two more presidential debates to come between now and November 3. The next one October 15. Do you think they're even going to happen? I mean, there's talk that maybe Biden shouldn't even show up.

ED MILLS: Yeah, so there's been a lot of conversations from the beginning, Alexis, on whether or not all three will take place. I think there is far more doubt that [AUDIO OUT] than at any other point. We saw flouting of debate rules throughout the evening, and, you know, I think there is going to be a conversation about what additional debate rules need to be added. Does the moderator have the ability to cut off the mic if a other candidate continues to interrupt and talk over during another candidate's time? And I think there's going to be some pressure on Biden to say, look, the person who didn't follow the rules right out of the gate was Donald Trump, and we're not quite sure he will continue to follow the rules.

And therefore, he is not going to legitimize having, you know, additional debates. I think that the base case continues to be that we will have these debates. There is kind of some downside if it is viewed as Biden is walking away, but kind of the way that it went last night and no one following the rules and kind of it being kind of that dumpster fire makes it more likely now than I would have ever imagined about canceling these additional debates.

ALEXIS CHRISTOFOROUS: All right, I think they need a mute button. The moderator needs to be armed with one of those next time. Ed Mills, Washington Policy Analyst at Raymond James, thanks so much.

ED MILLS: Thank you.