Yahoo Finance’s Seana Smith and Adam Shapiro speak with Brian Gardner, Chief Washington Policy Strategist at Stifel, about the election and what it could mean for the markets.
ADAM SHAPIRO: All right, so are you willing to bet on the outcome of tomorrow's election before you put your money on the table? Let's invite into the stream Brian Gardner. He's the chief Washington policy strategist at Stifel. It's good to have you here, and I am not a betting man. But I am curious, there are estimates as to who's going to win this election.
And I believe Stifel is saying that Joe Biden has a 65% chance of winning, Donald Trump, a 35% chance of winning. Everyone has a different take on this. So what should we keep in mind, as I throw those numbers out, that Stifel is talking about?
BRIAN GARDNER: So keep in mind, I think it's going to be a close election. Whether it goes one way or the other, I don't think a blowout is likely. Possible, but not likely. So I think it's going to be close. There's a very good chance we're not going to know the outcome when we go to bed Tuesday night or wake up Wednesday morning. It'll take a couple of days.
As long as it's only a day or two, I don't think there's too much market volatility. If it's really close and you have several states that are likely to be litigated, then you can start to see some volatility as the market worries that this is going to go beyond a week, two weeks, three weeks.
SEANA SMITH: And Brian, going off of that, I know you laid out four different scenarios in your most recent note. But in terms of what investors are expecting or the best outcome for the market at this point, how are you reading that?
BRIAN GARDNER: So there are a lot of crosscurrents. So I think for weeks, investors have been thinking a blue wave was the best outcome because it was the biggest stimulus relief COVID response. And I still think that is the scenario that provides the biggest dollar package. There's little doubt about that in my mind.
I do think that investors are also starting to just sit back, take a little bit more notice of the Biden agenda, what a tax bill could look like on corporate taxes, capital gains taxes, and rethinking the regulatory environment. So they're-- on the one hand, it's more stimulus, bigger dollar amount. On the other side, it's money coming out of the private sector in terms of a tax hike and possible more regulation in some key sectors.
ADAM SHAPIRO: Do you see any kind of-- the preparation's underway in New York and Chicago, Philadelphia, across the country, the boarding up of windows with the potential for either side to be upset, not accept the results. Do you see long-term damage to the political psyche of the country, no matter who wins this election?
BRIAN GARDNER: I think that's a great question. And I don't think it's new. I think this is an evolution that our civil discourse has been deteriorating over several decades. And this is the next step in it. So, you know, I'm hoping that we do avoid civil unrest and rioting. But, you know, I can see it happening, regardless of the outcome.
And I don't think this is the end game. I think we are in a danger point that, unless there's some kind of event catalyst out there that unifies the country, the country seems to be fraying a little bit at the seams. I mean, I don't want to be-- sound overly alarmist, overly negative, because, in my gut, I'm an optimist.
We're going through-- we have been going through, and we will continue to go through a really rough patch in terms of our civil discourse for a while longer, I fear.
SEANA SMITH: Brian, that's interesting. Because if we do see Republicans sweep, then there's lots of questions just about, how, I guess, maybe that unrest would potentially skyrocket over at least in the short term. So if Trump wins and the GOP does keep the Senate, just in terms of the market standpoint of it, do you think we're still going to see a bit of a rally? Because I think that's what investors were initially expecting we would see.
BRIAN GARDNER: Yeah, so again, if this is the reverse of the blue wave scenario that I talked about a second ago, so investors would probably be a little bit disappointed on the stimulus side. It's not going to be a $3 trillion package, it'll be a $1 trillion package. On the other side, there's no tax hike coming. The rhetoric is actually going to be about tax cuts, I'm skeptical that would happen.
But that's going to be the rhetoric. And the regulatory agenda keeps going as is. It's status quo. And the regulatory agenda has been favorably received by most investors. So I think once investors get their arms around that there is stimulus coming, and even that this may not be the last stimulus package, that there's a rolling phase of these coming out, that this is just the latest one and we could see one later on in 2021, I think investors, at the end of the day, will be OK with that. Because I think they'll side with no tax hike and a more positive benign regulatory environment.
ADAM SHAPIRO: On that note, we say thank you, Brian Gardner, chief Washington policy strategist at Stifel. We look forward to the next time you come back. And we don't have to keep talking about the presidential election. Take care, sir.