Yahoo Finance’s Alexis Christoforous and Ed Mills, Raymond James analyst, discuss market reaction as protests on Capitol Hill turn violent.
ALEXIS CHRISTOFOROUS: I want to bring in Ed Mills now. He is Washington Policy Analyst at Raymond James. Ed, boy, oh, boy, what a busy day this one-- we thought it was going to be busy. But I think this is even busier than we expected. I wanted first, before we jump into the Georgia runoff elections, get your reaction to what we're seeing happening in DC right now.
I want to share with viewers something that Senate Majority Leader Mitch McConnell said earlier today. He gave a forceful rebuke of President Trump's claims that he lost his re-election bid because of fraud, saying that there was no evidence of fraud, quote, "anywhere near the massive scale that would have tipped this entire election." Ed, has President Trump basically set up the Republican Party for civil war in the months ahead?
ED MILLS: You know, Alexis, this is scary. I worked on Capitol Hill for almost a decade. I was evacuated for terrorist attacks. I was evacuated for kind of suspicious packages. What I'm seeing here is not a scene that we want to see.
There is a process that is supposed to take place. The electoral college has already voted. This is opening the envelopes. This is certifying and writing down who was the winner. It is unfortunate, in my opinion, that this is happening right now.
But it is happening because there are allegations that are being brought forward that have not been proven in a court of law or provided any evidence. And so I do see those tweets that came earlier, but it is important for everyone to start turning down the temperature.
ALEXIS CHRISTOFOROUS: What about those handful of Republicans who are siding with President Trump, who are contesting Joe Biden's victory, ingratiating themselves with Trump's base, like a Senator Ted Cruz? What happens to them when it comes time for midterm elections in a few years?
ED MILLS: You know, it is a interesting question, because I think what we are seeing right now is that some of the response is clearly political. We do have some of the folks that are leading these charges concerned about primary challenges. We have individuals who are looking to run for president in 2024.
Mitch McConnell in his speech today kind of rose to the occasion and highlighted that what Congress' role here is really more of certifying what has already been certified. And so ultimately, it's probably too soon to tell the kind of electoral consequences of this. But when you have a highly politicized environment here and you have a highly polarized country, there will be some who are rewarded, and there will be some who are not rewarded and harmed based upon their votes and their speeches today.
I do think that it will be remembered for the midterm election. And it's not a clear cut case one way or another who's helped and who's hurt here.
ALEXIS CHRISTOFOROUS: What does this all mean for Joe Biden, who I'm sure is looking at all this playing out today? What does this do for his legislative agenda, when you have these-- and my understanding is there have already been a few arrests-- when you have what are turning into violent protests now on Capitol Hill.
ED MILLS: So for Joe Biden, the most important thing that is happening today is that he will be certified. He will be sworn in on January 20 as the next President of the United States. And we have election results in Georgia that look very likely that he is going to have a majority in the Senate. It's going to be 50-50 with the tie-breaker going to Kamala Harris.
The House is also Democratic. And so what that allows him to do is he will have at least an opportunity for a vote for his agenda items on both the House and the Senate floor as well as a confirmation of anyone that he puts up as long as Democrats stick together. So he will be able to put his team together.
And so what's important is the certification as well as the ability looking forward for him to at least get a fair hearing of his agenda. For Republicans, what we have seen over the last arguably 12 years is that with the polarization in our country, if the other side does not view you as legitimate or has a very low opinion of you, there's very little incentive for compromise. So getting anything grand-- getting the 60 vote threshold in the Senate is still going to be difficult to impossible.
ALEXIS CHRISTOFOROUS: Just moments ago, by the way, Ed, the mayor of Washington, DC tweeted out that she is ordering a citywide curfew for the District of Columbia from 6:00 PM tonight through 6:00 AM tomorrow morning-- so goes to show you there, Muriel Bowser, understanding the severity of the situation playing out right now in DC with these Trump protesters clashing with police.
I want to switch gears for a moment and talk about the Georgia runoff election. That's sort of getting lost now amidst all of this drama that we're seeing in DC, but we still don't know where one of those seats is going to wind up. We could be looking at a blue wave in the Senate. What do you make of the market reaction to that? Because there had been talk that, well, if there's a blue wave, we're going to see this big, dramatic sell-off. That is not what we saw. So what are investors banking on?
ED MILLS: Well, Alexis, I think you hit on the fact that this is a market that people want to invest in. There is no alternative. What we are seeing today is certain sectors outperform others based upon what the legislative and regulatory environment is going to look like for at least the next couple of years. So with anticipation for additional government spending, be it on stimulus, be it for infrastructure spending, there could be a little bit of an inflation concern that comes into the market, a steepening of the yield curve that's very favorable for financials.
Industrials get the bid on any talk about an infrastructure bid. Consumer discretionary is supported on the fact that we could see a vote near term on a $2,000 check. What has been weaker today, what has underperformed is technology, because there's a sense that there could be changes to the tax code, not only on capital gains, but also on profits where you have a lot of tech companies that haven't been paying anywhere close to the statutory rate, as well as more potential regulation, especially on the antitrust side.
So you will see market impacts because of this election. And I think they're reasonable. But overall, we have been telling folks, keep to your plan. Buy any of these dips, because, really, there hasn't been a lot of other alternatives to the stock market and to equities, as well as the reopening trade in additional stimulus should provide a near-term boost to the markets as well.
ALEXIS CHRISTOFOROUS: All right, Ed, I'm going to ask you to stick around. I just want to get back to our Washington correspondent Jessica Smith for more on what she's hearing right now about these protests in DC. Jess.
JESSICA SMITH: Yeah, as we mentioned in the last hit a few minutes ago, protesters have made it inside the Capitol. And now the officer in the Capitol building there and [AUDIO OUT] is telling lawmakers that they may need to duck under their chairs and get ready to evacuate as protesters continue to make their way into the building. We have also seen several reports from reporters who are on the scene there who are at the Capitol saying that some sort of gas has been used.
We know that staff and police are telling people to stay away from doors and windows. They are trying to get the situation under control. Again, the House and Senate both having to take a break from that debate over the electoral college certification, and now they are on lockdown as these Trump supporters and protesters have made their way inside the building-- so a very scary situation at the Capitol here.
We're still trying to learn more about what exactly is going on-- a very fluid situation here. But we know Vice President Pence has been taken outside of the building. He was presiding over that joint session of Congress, and he was taken out. Now, lawmakers told to get ready to get under their chairs and get ready to evacuate as, again, they try to get the situation under control.
ALEXIS CHRISTOFOROUS: My goodness. It is deteriorating quickly-- lots of chaos there, Jess. Thanks for the update. Let's get reaction now from Ed Mills, Washington Policy Analyst at Raymond James. Ed, you used the word scary a moment ago, Jessica did just now as well. What do you make of what's playing out right now in DC?
ED MILLS: Well, I worked on Capitol Hill before 9/11 and after 9/11. And there was a significant change in the security posture, obviously. And so we have a Capitol Hill Police Department that is incredible-- really amazing men and women who know how to do their jobs. Every congressional office, to the extent that there is even any concern about a canister of gas-- every one after 9/11, every congressional office has a go bag.
Every congressional office has enough gas masks for every staff member, unfortunately. There are responders to give messages out in the Capitol. For basically the last 80 years, every single seat in the House of Representatives is bulletproof. They are going to protect this chamber. I hope it doesn't escalate from here. But there are plans in place that have gone back now for 20 years to make sure that members are protected, staff are protected, and they can respond to anything that happens.
ALEXIS CHRISTOFOROUS: It really is incredible, these pictures that we're seeing right now inside the Capitol.