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GALLAGHER: The Kerry environmental agenda is negative for traditional energy producers but positive for alternative energy producers.
VALLIERE: A pure play here would be coal. Kerry and his wife have a strong bias against coal in terms of regulations and emissions. But they would be good for alternatives like wind and solar. Florida Power & Light is considered the leader in developing wind power.
TIME: How about financial services?
VALLIERE: The purest plays in this election are FREDDIE MAC and FANNIE MAE. The Republicans have taken a very harsh view on their line of credit with the Treasury, whereas Kerry really likes Freddie and Fannie. If it looks like Kerry is going to win, I think Freddie and Fannie would be clear winners. Democrats feel very strongly that the government's line of credit to Fannie and Freddie is desirable, that it promotes home ownership.
GALLAGHER: If Bush wins, by the way, they are really coming after Fannie and Freddie next year. They're asserting the Treasury's authority to regulate the amount of debt that Freddie and Fannie issue. That's a power that's been in the closet. It's like a visit from the Ghost of Christmas Future. This is what your future is if you don't change. So that's a meaningful issue for Fannie and Freddie.
TIME: Any other industries to talk about?
GALLAGHER: If Bush wins and the Republicans do surprisingly well in the Senate and the Democrats feel they paid a price for their stand opposing tort reform, you could get some significant relief for companies with asbestos liabilities. Some, like maybe USG, if they go bankrupt, are $5 stocks, but if we get asbestos relief are $35 stocks.
BERNSTEIN: A lot of engineering and construction firms fall in this category.
VALLIERE: Yes. I can see a re-elected President Bush vetoing the highway bill. So I agree Kerry is more favorable for construction stocks.
TIME: Thanks, all.