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The market has expressed relief with Joe Biden seemingly having a fairly clear path to victory: CIO

Jason Ware, Albion Financial Group Partner and CIO joins the Yahoo Finance Live panel to discuss the 2020 presidential election and the impact on the markets.

Video Transcript

ZACK GUZMAN: With us is Jason Ware, Albion Financial Group partner and CIO. And Jason, I mean, I'm not sure what your expectations were coming in after last night, but clearly, investors are liking at least some clarity they're getting now. What's your take on the big moves we're seeing here on a sector by sector basis and what about expectations moving forward?

JASON WARE: Yeah, it's been a wild election so far, and I don't think anyone really anticipated that it was going to be this close and that it might come down to the 2nd district in Nebraska to put Joe Biden over the top. So there's still a fair amount of uncertainty as we work through the next 24 to 48 hours. The market has been expressing I think some relief in that Joe Biden seems to have a fairly clear path to victory, given what we're seeing in Wisconsin, what we're seeing in Nevada, what we're seeing in Michigan. Pennsylvania would be the cherry on top for him.

But I think the markets read is, you know what? We're going to get a Democrat in the White House. We're going to have the Senate probably have narrow control or retain narrow control in Congress, a mixed result in DC, i.e. gridlock is probably good in that you get some of Biden's pro-growth policies. We'll probably get a stimulus here in a couple of months.

And how big that stimulus is going to be is up for debate, whether it's a trillion, trillion and a half. The blue wave two and 1/2, three trillion's off the table. But a little bit of stimulus, maybe a national strategy around the pandemic. Trade war is going to be gone under Biden. And that's on balance, OK for stocks, and it's a result investors can live with. And I think we're seeing a bit of a relief rally from that.

AKIKO FUJITA: Yeah, that's a lot of ifs though, especially given that we have that count total just yet. I am curious to get your thoughts on the tech sector. We are seeing that rally up about 4% right now. A number of key issues that were out there. Uber and Lyft particularly got a big boost on the back of Prop 22. But we also had that measure out in California that expanded these data privacy rules. And so when you sort of piece things together with a potential Biden administration, some additional regulation on the local level, is that ultimately a positive or a negative from a regulatory standpoint around the tech sector?

JASON WARE: I think from a regulatory standpoint it was always a bit over exaggerated the impact on tech, whether Biden won or whether Donald Trump would remain in office. And I think even at the Senate level, there was an exaggeration in the market and among investors about what would happen to tech under either scenario. So I think the good news is that most of the technology regulation is going to come out of Department of Justice, it's going to come out of the FTC.

The House released their long-winded report from their Judiciary subcommittee, and I think the market has discounted a lot of this tech regulation overhang and is saying, you know what? This is probably not going to be a big deal for these mega cap tech companies over the next couple of years. We agree with that assessment. So I think the regulatory landscape looks pretty well solidified for now, and the market is expressing some of that relief of maybe a blue wave would have put a little additional pressure there and that's off the board. So we are seeing a bounce in tech stocks.

But I think more important than regulation, the reason we're seeing tech rallying today is a function of this idea that if we're not going to get a big blue wave stimulus package north of two and 1/2 trillion, what we're looking at is by more modest growth. If we get a one trillion stimulus, growth is still a premium. And growth over value, where do you go? You go to Apple, you go to Amazon, you go to Microsoft, you go to Google. That growth theme in a low growth world, a low growth economic environment rings true. And I think that's what investors are expressing through the trade today.

ZACK GUZMAN: And Jason, yesterday we were chatting about what a lot of the market was pricing in. I think, when you look at the polls, was that blue wave. And you talk about the impact it's going to have on tax policy here. But also the impact it might have on other sectors outside of big tech. Health was watching that very closely when it comes to regulations and pricing changes that come under a more progressive administration there. So when you look at that, I mean, it's today's big standout. A five, it's the leader here 5 and 1/2 [AUDIO OUT] in terms of the sector gain. Talk to me about how that shapes up now if you do get that gridlock playing out too.

JASON WARE: Yeah, it's a really great question. And as we're looking at our screen, companies like United Healthcare and IBB, the biotech ETF that we own for clients, Thermo Fisher, et cetera, are all showing a pretty strong tape so far. And I think that speaks to this idea that if Trump had won the White House, and again, we should caveat that with, this is not over yet. We still, anything could happen.

But I think the market is telling us that it looks likely that Trump is going to lose. And that if he does not retain the White House, then Biden Care becomes a higher probability outcome here over the next, let's say year or two under a new administration. Even with a Senate-controlled or I'm sorry, a GOP-controlled Senate. I think there's still higher chances that we get some changes to health care that are positive for the health care sector.

So I think that's what the market is telling us, is that under Biden, we like the health care space better than we do under Trump. [AUDIO OUT] it was going to be a lot less growth-oriented. And we're seeing that showing up in a lot of these stocks that you mentioned.