Yahoo Finance’s Alexis Christoforous and Brian Sozzi speak with Isaac Boltansky, Director of Policy Research at Compass Point Research & Trading, about the state of the presidential race with President Trump hospitalized with COVID-19.
ALEXIS CHRISTOFOROUS: President Trump's stay in the hospital and mixed messaging from his doctors and the White House creating a lot of confusion in the halls of power just as the race for the White House enters its final weeks. Let's dive deeper now with Isaac Boltansky, director of policy research at Compass Point. Good morning, Isaac. If you are like me, you've been looking at President Trump's Twitter feed this morning and seeing that he has gone on a tirade of sorts, tweeting out-- I think it's more than two dozen tweets urging Americans to get out and vote. How much of today's early market action do you think is tied to optimism that the president's health is improving?
ISAAC BOLTANSKY: Good morning. So look, I think a portion of the optimism is obviously connected to headlines yesterday that the president will at least have a chance of going back to the White House today. But I have to urge caution here. Because the White House's woeful, bumbling communication effort over the weekend actually resulted more misstatements, and missteps, and utter confusion for those of us tracking the conversation closely.
So I would urge caution based on anything that we hear. And I think it's difficult to have certainty regarding any element of the Trump health story at this point. To me, the optimism in the market has to do a lot more with a increased conviction that Biden will win, and that will bring in a blue wave, which in turn, will bring a very large fiscal stimulus package early next year.
BRIAN SOZZI: Isaac, as someone who's studying pretty much everything on the political scene right now, when you see a Wall Street Journal poll showing Joe Biden ahead by 14 points, do the rest of these debates-- if some of them even happen-- do they even matter?
ISAAC BOLTANSKY: Well, I can tell you with some certainty, Brian, that Wednesday's vice presidential debate won't matter, largely because vice presidential debates never matter. But we don't have any confidence as to whether there will be any more debates and what form they'll take. My message to clients is simple. I think that Biden was ahead before the debates. I think Biden was ahead before President Trump's coronavirus infection. And I think he's still ahead.
But if we've learned anything it's that the news cycle is now measured in dog years, given just the past week that we lived through. So who knows what the story is going to be in 30 days when the votes are hopefully being counted?
BRIAN SOZZI: Isaac, what would you need to see from President Trump? How does he claw back from a 14 point-- really, I mean, he's getting a drubbing right now in the polls.
ISAAC BOLTANSKY: Yeah, so this is the biggest point here, right? He was behind in the polls before the debate. And he didn't really land any punches. He didn't change any minds. And he's still behind. And he's now talking about COVID, which is not what he wanted to be talking about. He wanted to be talking about the Barrett nomination to the Supreme Court, which would rile up his base, and help with certain voter segments. But he's not.
And so look, what you need to see to believe that the Trump White House has a viable shot at re-election, you need to see the president emerge from this health crisis healthily and quickly, which I think would bolster some of his arguments around the response to coronavirus?
ALEXIS CHRISTOFOROUS: But, Isaac, is a possible Biden win what's moving markets higher, or the fact that perhaps some uncertainty is being lifted? Because if you think about a blue wave, and what that could mean for corporate America, it could mean higher taxes, especially for companies that do a lot of business overseas, a lot of the multinationals, a lot of the tech companies, could be hit with higher taxes, which could hit their earnings potential.
ISAAC BOLTANSKY: Yeah, look, there's no doubt. In a blue-wave scenario, you will have higher taxes for capital, for corporations, and for high earners. There's no doubt of that. But I think as the market slowly gets its arms around those realities, and digs into the potential legislative responses, it sees that it's not just higher taxes, it's also a broader fiscal expansion that would come from a blue wave, especially farther down the economic spectrum.