Yahoo Finance’s Rick Newman joins the Live show to discuss Kevin McCarthy’s (R-CA) failed bid to capture the House speakership.

Video Transcript

JULIE HYMAN: Turning to politics now and the feedback to what that means for markets, the House will come back into session at noon today after Kevin McCarthy-- you see him there-- his bid to capture the Speakership failed in three rounds of voting. McCarthy's failure to round up a group of hard line conservatives could mark problems ahead for the new Congress. And Yahoo Finance's Rick Newman is here with us. The new Congress and the Republican Congress, in particular, is what we're talking about here because this is not a good look for them. He did just get a big supporter in his column.

RICK NEWMAN: Isn't this fun?

[LAUGHTER]

Right, Donald Trump, former president, this morning, said, I want all Republicans to get behind Kevin McCarthy. He might-- he will do a good job and maybe even a great job. So this is another fascinating wrinkle on top of the chaos within the Republican Party. So what this means-- so this is-- first of all, it's a test of Trump's power. And he is trying to persuade the most radical of the conservative wing of the Republican Party to get behind Trump.

These are Trump's biggest supporters. I mean, this is the Freedom Caucus who are holding out against Kevin McCarthy, and Trump is basically saying to the most extreme MAGAnots in the Republican Party, get behind this guy. So will they get behind him, or won't they? And so if they do, if they follow Trump's lead, then they are sort of abandoning their firebrand campaign here to get somebody who they think will be more combative.

And they want somebody who's not just combative against Democrats. They want somebody who's more combative against, like, moderate Republicans in the Senate. So will Trump persuade these people, in which case, Trump gets a little bit of a bump in terms of his political power, or will they tell Trump to go pound sand because they're doing their own thing, in which case Trump's political power continues to wane. I mean, Trump is clearly a sell at this point. So will he-- will there be a little bounce in the Trump stock, if you will?

BRIAN SOZZI: There shouldn't be coverage on it-- sell rating only--

RICK NEWMAN: I've had a sell rating on Trump since the end of 2020, so.

BRAD SMITH: We're going to break out the technicals in a little bit. But additionally here, if you're on the other side of the aisle, then what is the calculus? What's the strategy that Democrats are trying to lean into as this is taking place with the GOP?

RICK NEWMAN: What's the old axiom in politics when your opponent is self destructing? Just get out of the way and let it continue to happen, which is exactly what they're doing. So there has been this idea-- so in order for somebody to be elected Speaker, you need a simple majority of votes of those who are present in the House.

So all the Democrats have been showing up and voting, and that's why their leader, Hakeem Jeffries, has actually been getting more votes than Kevin McCarthy, because he's getting literally every single Democratic vote, and literally every Democrat is showing up.

So there's been this idea that Democrats could help McCarthy by some of them just don't show up to vote. And so McCarthy still doesn't get the holdouts, but the quorum shrinks in size. But I can't imagine why Democrats would do that. That is one pathway for McCarthy to become Speaker. That seems unlikely. So it looks as if Democrats are just going to sit back and enjoy this.

And, you know, I think politically, the question is, will this have lasting implications? And if this is a preview of how the Republicans are going to run the House, then it will have positive implications for Democrats because the Republicans are just in disarray, and they can't even manage themselves. So you cannot make a great case to voters going into 2024. Trust us to manage the economy. Trust us to manage the Southern border. Trust us to manage healthcare when you can't even manage yourself.

BRIAN SOZZI: Rick, two questions in one. Then who ultimately gets this Speaker gig? And then what does this mean for markets? Because investors have been trained to think gridlock is good for markets.

RICK NEWMAN: We're really throwing spaghetti at the wall here. I mean, usually, this drama we see in Washington, a lot of it is man made, and it all leads to what is kind of a foregone conclusion. There is not a foregone conclusion here. So before the Trump endorsement, the analysis I was seeing said McCarthy looking very weak. And it's hard to see how he pulls this out, which means Steve Scalise, who is McCarthy's number two right now, could emerge as the guy who could get all the traditional votes and enough of the MAGA votes to actually get elected Speaker.

Now does the Trump endorsement of McCarthy change that? If McCarthy falls away, will Trump then say, OK, fine, go with Scalise? And if not Scalise, who? So I think Steve Scalise looks like the most likely at this point.

JULIE HYMAN: But then there was also some talk about Fred Upton, who's a more moderate Republican, maybe even getting some Democratic votes.

RICK NEWMAN: This is fun sort of political theater. I do not see any Republican getting any Democratic votes because why would the Democrats help them resolve this? I mean, if this-- I mean, I think the longest this has ever gone in the history of Congress is it once went all the way into March before there was a Speaker. And I think if Democrats could let that happen, they would absolutely just let that happen because the more ridiculous the Republicans look, the better it is for Democrats.

BRAD SMITH: All right, breaking down all of the political calculus and how the markets may move on some of this as well, Yahoo Finance's own Rick Newman. Appreciate it.