Biden extends lead over Trump amid COVID-19 diagnosis: Poll

Salt Financial President & Chief Operating Officer Alfred Eskandar joins Yahoo Finance’s Kristin Myers to discuss the market outlook amid election uncertainties.

Video Transcript

KRISTIN MYERS: We have a lot to chat about today, so let's start with today's market moves with a good friend of "The Ticker," Alfred Eskandar, Salt Financial President and Chief Operating Officer. Alfred, good to see you again. I know it's been a little bit of time. Yesterday, we saw a nice pop in the markets. Today, fairly flat right now. What are you making from today's moves?

ALFRED ESKANDAR: Well, I mean, the pop was over the optimism of a stimulus package, and obviously, the president coming out of the hospital was another good signal, so the market embraced it today. I think it's more of a question around, you know, the volatility, the reality of the volatility you're going to have to deal with going into the election, and we saw the majority of sectors actually pull back, except for the three you mentioned earlier, which were financial, industrials and energy. But those for the year continue to be pretty beaten up, so it's nice to see them get a little bit of a kick.

KRISTIN MYERS: So Alfred, you did mention the elections, I will get to that in just a moment, but I want to ask you about some of the comments that we heard from Jay Powell essentially undercutting that argument that we've often heard from Republicans about a smaller stimulus package. The White House did a counterproposal, that $2.2 trillion package from the Democrats, 1.6 trillion from the White House. I'm wondering what you make of Jay Powell's comments and if you think the markets right now are considering stimulus a foregone conclusion, especially after we've had a couple of months now where negotiations essentially have been stalled.

ALFRED ESKANDAR: Yeah, I think if you compare, you know, sort of side by side with the exception of the overall size, there's a lot of similarities. The big one that really stands out would be the 400 versus $600 a week that the Republicans are offering versus the 600 that the Dems would prefer. And I think Powell's comments are directly contrary to what the White House has been saying about we don't necessarily need it. We have an economy that is improving. 400 is sufficient, so I think he's probably going to hear some tweets or, you know, from the president about that specific comment. That being said, the number 1.6 trillion is tremendous, and obviously, 2.2 is a greater show. I think the market is pricing in a substantial stimulus, and what they're hearing from the Fed is that it is needed. It is something that will clearly be beneficial to help the economy recover at a faster pace.

KRISTIN MYERS: So on the note of elections, which you did mention, you know, we've been talking to a couple of people, and we, of course, keep continuously asking essentially the question I'm asking you, which is how much volatility are we going to be seeing around the election? And folks keep saying listen, make sure not to overplay politics, particularly when we consider the markets moves. But even taking that into consideration, how volatile do you think markets are going to be getting ahead or even right after the election?

ALFRED ESKANDAR: Well, they're pretty volatile right now. If you recall back in April, March, you know, the VIX was north of 45, and it's roughly 28 now. Looking at the VIX futures for November and December, you see an expected level of elevation, and whether that's around the contested outcome of the election, God knows what's ultimately going to progress or if there's another setback with COVID, so there's a tremendous amount of uncertainty for sure. So we do see that VIX levels and volatility going into the end of the year are going to remain elevated. That being said, there's a number of things that investors can do to kind of help protect themselves against some of this volatility.

And the good news for investors is that you don't necessarily have to be a massively sophisticated trader to benefit from hedging and buffer strategies that are aimed to kind of protect you in these volatile times. I mean, there's actual products now like the direction dynamic hedge product that will actually do that for you. There's buffer products that will actually, you know, protect you from the first, you know, nine or 10% of a market pullback. So the good news is there are products for investors to lean on to help get them some protection in these volatile months coming up.

KRISTIN MYERS: Do you think the markets have baked in a Biden victory, a blue wave? We're seeing the polls showing that Joe Biden right now is expanding his lead over President Trump.

ALFRED ESKANDAR: Yeah, the good news for the Biden campaign is the perceived lead seems to be getting bigger. Whether you look at the CNN poll or even the Fox News poll, they've got Vice President Biden building on his lead where CNN, I believe, has him up by 16 points versus Fox is 14 points. Either one is a tremendous, tremendous margin. And even if you factor in the margin of error, there's still nearly double digits that the Vice President seems to be ahead of Trump right now.

KRISTIN MYERS: All right, so Alfred, I was reading your note, and you say that tech continues to drive returns. I was looking today, however, we are seeing financial ETFs performing well. I'm wondering if investors should really start considering to look more and more at value.

ALFRED ESKANDAR: Well, value in small caps seems to be working together right now, which is not something that has worked all year. Again, I go into sort of what is the risk appetite for the particular investor? Are you matching up that risk appetite with the appropriate mix of products? I mean, financials are up roughly 10% in the last week or so of trading, but they've been down all year, and they're still net down for the year. So a lot of times when you have a few sectors that are really pulled away, the ones that have been really beaten down become a little bit more attractive as the investor takes money, some of them might be off of the big winners, and starts buying some of these sectors or ETFs that have been pretty beaten up for the year.

KRISTIN MYERS: All right, well, we will leave that there. Alfred Eskandar, Salt Financial President and Chief Operating Officer, always good chatting with you. Hopefully it won't be a whole month before I get to talk to you again. Thanks so much.

ALFRED ESKANDAR: Good to be with you again, Kristin