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Trump’s phone call ‘could scramble the Georgia race’: strategist

Yahoo Finance’s Brian Sozzi, Myles Udland, and Julie Hyman discuss the Georgia Senate Runoffs with Greg Valliere, AGF Chief Strategist.

Video Transcript

MYLES UDLAND: Let's stay on Georgia. And let's bring in Greg Valliere. He's the chief US policy strategist over at AGF Investments. Greg, always great to get your thoughts. So let's just begin with your expectations ahead of today's vote, and sort of how you are seeing the two races, what your base case is for when we do learn the result, what that result will be.

GREG VALLIERE: Well, we've got a ways to go. I think we've got at least 24 hours to go before we know for sure who won. There could be recounts. There could be charges of voter fraud. That seems to be the pattern these days.

The one major point I would make is this. Even if the Democrats win two seats, which would give them the Senate in a 50-50 tie, there are a couple of Democrats who are quite moderate. You've got Joe Manchin of West Virginia. You've got Jon Tester of Montana. Those two moderate Democrats, I think, will not go along with everything the Democrats want if they control the Senate. So no matter how you slice it, I think we're looking at a pretty centrist environment for the financial markets.

JULIE HYMAN: I think that's really interesting, Greg, because that doesn't seem to be the conventional wisdom, does it? We've heard all these prognostications that if there is a Dem sweep, we'll see stocks go down, even as much as 10% in the wake of this. It sounds like you think that would be unjustified.

GREG VALLIERE: I think so, Julie. I mean everybody's hyping some horrible event that's going to make things terrible for the financial markets. So let's say the Democrats do control the Senate in a 50-50 tie. I cannot see a big tax increase coming right away. I can't see Joe Manchin approving it. I think even Biden himself probably would like to wait and make sure the economy is back on its feet before we get any kind of big tax increase.

So there's been a lot of hype. I think the bottom line when I look at this is that we've got a pretty centrist environment.

BRIAN SOZZI: Greg, let's say the Democrats do get back control of the Senate. How does that change the first 100 days of the Biden presidency?

GREG VALLIERE: Well, there is one big change. Let's leave tax increases off the table, or Green New Deal. The big difference would be in getting confirmation of cabinet secretaries. Janet Yellen makes it, even though she's been in a little bit of controversy lately. You've got the Defense Secretary making it. You've got Neera Tanden at OMB making it. So I think if the Democrats do control the Senate, they'll get virtually all of their nominations through. If they don't, some of these nominations could stall.

MYLES UDLAND: Greg, amazingly we've made it this far into the segment. We haven't discussed what the president said over the weekend on that recorded phone call with Georgia's Secretary of State. And certainly it's been a series of unprecedented statements, unprecedented uses of the power of the presidency from Trump over the last few years. But just as someone who's watched Washington for a long time, where does this rank to you in just absolute shocking moments?

GREG VALLIERE: Probably in the top five of things that in all my career that just are mind-boggling. I think this could scramble the Georgia race. There might be Republicans who don't vote.

I think the big impact here in Washington is that you've got a Republican Party that is now bitterly, bitterly divided. Maybe, maybe you get it up to 14 or so Republicans who will go along with not certifying the electoral college. The rest of the Republicans will. But I think you've got a party now that is badly fractured. And that's going to persist for a while.

JULIE HYMAN: What is all of this going to do, Greg, to then President, as he takes the presidency, Joe Biden's efforts to combat the coronavirus? Is this going to slow things down in the effort to get more vaccine out there and to help with other safety measures?

GREG VALLIERE: Well, that's a good point. And Biden certainly has a full plate. He has to deal with this. We're not vaccinating enough people.

He has to deal with an angry electorate on the Republican side. He's got to deal with a soft economy. And I would also argue, Julie, that he's going to probably have to deal with Iran, which seized a South Korean ship yesterday, that has big issues with nuclear-- it's a nuclear power. They're enriching uranium.

So sometimes I have to wonder who would want this job of president. I think for Joe Biden there's a lot on his plate. And it's going to stay that way for quite a while. The number one story, clearly, is the virus, and we have not done that well.

MYLES UDLAND: All right, Greg Valliere with AGF. Greg, always great to get your thoughts. I know we'll be speaking in the weeks ahead, probably when there is President Biden. So strap in for the next couple of weeks. Surely they will be eventful.