Stefanie Miller, FiscalNote Markets Managing Director, joins Yahoo Finance’s The First Trade with Alexis Christoforous and Brian Sozzi to discuss what we can expect around the upcoming election.
ALEXIS CHRISTOFOROUS: Wall Street keeping a close eye on the possibility of another round of stimulus, but our next guest thinks that a resolution for a new aid package isn't likely until early 2021. Here to discuss is Stefanie Miller, Managing Director at FiscalNote Markets. Stephanie, good to see you again. So are both sides basically digging in their heels here and they're not going to move on any kind of bill until after the election?
STEFANIE MILLER: Thanks for having me. Yeah, I think that what we saw over the last probably four or five months was the two sides remaining very far apart, neither coming off. And over the last few weeks, you see them start moving closer and closer together, but they're stuck now about here. There are still big differences on how big the package could be. There are still big differences on whether or not to include liability protections for businesses, which Republicans say they have to have and Democrats are not interested in.
There's big differences on how much money to state and local aid. And you know, what looked like, earlier this month and even late last month, like maybe progress was moving and they would not let the perfect be the enemy of the good-- we're now seeing that they're being politically rewarded for digging in. So it does not seem like there can be a deal before the election where the political stakes are highest. So the real question to me is, is there going to be the political ability for them to come together in the weeks following the election?
BRIAN SOZZI: Stefanie, in a reasonable scenario, how big should a stimulus package be? Just based on what we're seeing with the economy and what we know about the pandemic, is what the Democratic House, what they have put forward-- is that big enough?
STEFANIE MILLER: Yeah, so their first bill in May was $3.5 trillion. Their second bill was closer to $2.2 trillion. I think that economists would say don't worry about the size. $3.5 trillion is just fine. Like let's keep spending. I think that's why we're seeing the market rally recently-- is this idea that if Democrats do win the election that there will certainly be a blue wave and very big stimulus will be coming.
But you know, what's unclear to me is how quickly that can happen. So I don't think Democrats will get cute with the number. I think Republicans, for political reasons, although I don't totally understand them, are saying you know that $1 trillion is a number that they're comfortable with-- maybe $1.2 trillion. The president went up to $1.8 trillion. But it's very unclear to me, why Republicans-- after getting cover from Fed Chair Powell and others, why they're not more willing to spend more.
ALEXIS CHRISTOFOROUS: Do you think that investors have lowered the odds of a contested election, Stefanie? When you take a look at the polls, it seems like Biden is really pulling away from Trump with about three weeks to go here before the election. And do you think that we'll know who definitively won this race, you know, the evening of November 3rd.
STEFANIE MILLER: So this is to me where the Street I think is missing the most. I don't think we'll know November 3rd, and I don't think the Street expects to know November 3rd. But the way that there is so much confidence in a blue wave, to me, makes it sound like you expect to have an answer on that relatively soon after the third. I don't even think all the votes will be cast until about November 10th-- about a week later. There is three states that are swing states that really matter that do not allow by their state law for ballots to be counted ahead of November 3rd.
So it's going to be a lot of very contested and close contests that are not even-- you don't even know if you want to sue, for example, if you're a campaign until a few days after the election and what it looks like. I then think that the litigation will be protracted, even if it's not formally contested, meaning the loser doesn't formally say they reject the outcome. It will still be litigated and still be very close.