Leon Panetta: It will be an election based on turnout

This is a rush transcript from "Your World," November 5, 2018. This copy may not be in its final form and may be updated.

(BEGIN VIDEO CLIP)

REP. BETO O'ROURKE, D-TEXAS, SENATORIAL CANDIDATE: Our message, this is our chance, Texas, to lead this country.

SEN. TED CRUZ, R-TEXAS: If you're tired of the rage and the hatred, come. All of us as Texas, let's come together.

JOSH HAWLEY, R-MO., SENATORIAL CANDIDATE: This is the race.  Missouri is the firewall.

SEN. CLAIRE MCCASKILL, D-MO.: I think we're going to win this thing. There is something going on.

ANDREW GILLUM, D-FLA., GUBERNATORIAL CANDIDATE: If you want to go backwards, you put the car in R. I want to go forward.

REP. RON DESANTIS, R-FLA., GUBERNATORIAL CANDIDATE: Now let's go vote and win this thing. God bless!

(CHEERING AND APPLAUSE)

(END VIDEO CLIP)

NEIL CAVUTO, HOST: Well, the last minute-scramble for votes is on, with the contest for control of Congress now about to formally kick off.

Welcome, everybody. Glad to have you. I'm Neil Cavuto.

Well, it is election eve, and all throughout the country, everyone is confused, not knowing which direction this country will go.

To Jeff Flock in Indiana, where the president is making his next stop. We have also got Kristin Fisher in Missouri, where he will be making his final stop. Then there's Peter Doocy in Florida, where both parties are pulling out all the stops.

And former Clinton Chief of Staff Leon Panetta on what happens tomorrow night and whether this overcharge rhetoric finally stops.

Let us start with Jeff in Fort Wayne, Indiana.

Hey, Jeff.

JEFF FLOCK, FOX BUSINESS NETWORK CORRESPONDENT: We sometimes forget, Neil, I think that each of these states represent individual races.

Is it a referendum on the president? Well, in some states, maybe so. This is the scene, though. I will tell you, it never ceases to amaze me, I guess, in some ways that the crowds continue to come out for President Trump.

If it's a referendum on President Trump, maybe he's a winner. But this race is one that pits two candidates for the Senate, the Democrat, Joe Donnelly, the Republican, Mike Braun.

And the question is, does this sentiment about the president translate to the folks that are running for the Senate and the various House races around the country? That is something that will be determined tomorrow. A lot of folks here standing in the cold, happy to be here, happy to support the president, do they vote from Mike Braun and the Mike Brauns across the country tomorrow?

I guess we will see -- Neil.

CAVUTO: All right, Jeff, thank you very, very much.

Now to the battle in Florida and a crucial Senate race there, to say nothing of a gubernatorial battle.

Peter Doocy right now in Hialeah, Florida, with the very latest.

Hey, Peter.

PETER DOOCY, FOX NEWS CORRESPONDENT: Neil, Governor Rick Scott is trying to get votes out for his Senate bid on a factory floor here in Hialeah.

He's somewhere back in that crush of people, I promise.

While the challenger -- or while the incumbent Democrat, Bill Nelson, is doing it a little bit differently. His social media account shows that he is standing on the side of the road asking for votes. He's also been popping a lot -- popping up a lot at events headlined by the Democratic gubernatorial candidate, Andrew Gillum, who won the primary with Bernie Sanders' help.

And he's running against Republican Ron DeSantis, who won his primary with President Trump's help, leaving voters with a distinct choice.

(BEGIN VIDEO CLIP)

UNIDENTIFIED FEMALE: Rise in taxes, ridiculous. I live here in Florida because I like the low taxes, so I don't want the taxes to be raised.

UNIDENTIFIED MALE: I make pretty decent money. So I do benefit from the tax cuts. The economy has helped a little bit too as well, but at a cost, from my perspective, so I would rather pay more taxes and have a better environment and have a lot of these other social programs.

(END VIDEO CLIP)

DOOCY: But taxes and the economy are not the only issues that they're dealing with here in Florida. They also have to deal a lot with hurricane relief.

In fact, one of the speakers introducing Governor Scott said that they live in an area that was affected by Hurricane Michael, where schools just open today -- Neil.

CAVUTO: All right, Peter, thank you.

Now to Missouri, where Democrat Claire McCaskill battles to keep her Senate seat against Republican Josh Hawley.

Earlier, she joked about how many times she has seen the president visit the state and hoping that the president's overdoing it, overusing his welcome.

Kristin Fisher is there with the very latest from Missouri -- Kristin.

KRISTIN FISHER, FOX NEWS CORRESPONDENT: Yes, hey, Neil.

You know, this is a state that President Trump won by nearly 20 points in 2016. So that's why the Democratic incumbent, Senator Claire McCaskill, has been working very hard to try to distance herself from other Democrats.

She even said today that she would really -- would really be willing to work with President Trump on issues like an infrastructure bill. But her opponent, the state's attorney general, Josh Hawley, he says that Senator McCaskill is simply too liberal for Missouri.

And over the last 24 hours, he's really started trying to compare her to Hillary Clinton. Listen here.

(BEGIN VIDEO CLIP)

HAWLEY: The more I listen to Senator McCaskill, the more she reminds me of that career politician that Donald Trump defeated in 2016. I'll tell you what, friends. We told Hillary Clinton what we thought her in 2016.  Tomorrow, it's time to say Claire McCaskill, you are fired.

(CHEERING AND APPLAUSE)

MCCASKILL: I think the people of this state know that I'm not Hillary Clinton, and I think he's just being told to say that because it polls well. And I think Missourians know better.

(END VIDEO CLIP)

FISHER: And, Neil, this race is razor-tight. It's truly one of the closest races in the entire country.

The latest RealClearPolitics average of polls has Hawley ahead by just half-of-a-point, which is why President Trump is coming here for the seventh time this election cycle tonight. Check out this line. All these folks have been camped out all day long in the cold and the rain to hear President Trump make his final campaign stop ahead of the polls opening tomorrow morning here in Missouri.

And one other wrinkle, Neil. No early voting in Missouri. So it's been very tough to predict how this is going to go -- Neil.

CAVUTO: All right, Kristin, thank you very, very much.

Before we go to my next guest, I want to show you the Dow today, because there is a theme here. Stocks were up today for a variety of other reasons, but the consensus seems to be that the House goes one way, the Senate goes another way. And markets like split government.

Time and time again, when we have had the parties sort of duking it out on Capitol Hill for control of one branch of government or the other, stocks have typically performed quite well.

Leon Panetta is joining us right now, the former defense secretary, former CIA director, former chief of staff. His resume goes on and on.

Leon, it's good to have you.

Are the markets reading this correctly? It's a largely Republican crowd, but, of course, the same crowd loved your old boss Bill Clinton because they were making a lot of money. They like it when the parties can kind of forcibly have to work together. What do you make of that?

LEON PANETTA, FORMER U.S. SECRETARY OF DEFENSE: I think that's a lot of play here.

I think there's a sense that, if there's a -- if there's a divided Congress, that that's a little more of a check on where the federal government is going. And I think everybody kind of likes that approach over the years.

So I wouldn't be surprised if those in business, as well as the American people, kind of look to that possibility of having a divided Congress, with a House held by the Democrats and the Senate continuing to be held by the Republicans, as a good formula for our democracy.

CAVUTO: What do you also make of what could shift in the final days, hours now, before votes begin? I mean, it was in 1980 when Ronald Reagan and Jimmy Carter were essentially tied, and then, by Election Day, we know it was anything but.

We do know that, in 1994, the Democrats were bracing themselves for Republicans picking up a lot of seats. They didn't expect him to pick up more than 50 of them.

So what do you look for?

PANETTA: I think this is going to be an election based on turnout.

If there's a big turnout in all of these states -- and it at least appears that there's a larger turnout than we usually get in a midterm -- I think that would tend to favor the Democrats certainly in the House.

But you never know. Politics is strange these days. We have been finding it difficult to predict over the last few years just exactly what will happen.

I think another factor is that a lot of the House races are based on local elections. I'm not so sure that any kind of larger election for the president or for issues at the federal level are play. I think most of it is going to be decided at the local level.

CAVUTO: You know what's interesting, looking at the '94 election?

While the economy picked up considerable steam after that, but even then, the economy wasn't the issue as much as it was concern about health care and overreach on the part of Bill Clinton. And he had his head handed to him.

But he immediately worked with Newt Gingrich. I think the line was, rather than join the parade, he decided to lead it. And it worked out well for him.

If it is a case where Republicans lose the House -- too early to tell -- what do you think the message will be for both parties?

PANETTA: Well, I think the principal message ought to be that both ought to govern the country.

That's -- that's what the American people want. When we -- when I was chief of staff and Bill Clinton lost both the House and the Senate, obviously, there was a lot of concerned by the president as to whether or not his agenda would be impacted.

But what we found was that ultimately both the president and Speaker Gingrich decided that it would be better to govern. Now, we did go through some rough times. The Republicans did shut the government down. That created a backlash. And I think ultimately Newt Gingrich made the decision that it would be better for his party if he were able to cut deals with President Clinton.

I think the same thing is true now. If the Democrats do take control of the House, I think it would behoove them to try to see if there are not some areas that they can work out some compromises with the president in order to get some things done. I think that's what the American people really want.

CAVUTO: Do you get nervous as a Democrat when you hear so many of your colleagues saying, we have got this in the bag, investigations will ensue, we're pre-planning them, for taking over the House, and all that stuff?

PANETTA: I always get nervous when people assume that they have got anything in the bag.

I think it's much better to run hard and run all the way through Election Day, making sure you have got every vote out and voting.

Look, in the end, I think the most important signal I get from the American people is that they really are a little sick and tired of the gridlock and the partisanship in Washington, and they really do want to see both parties starting to govern our country.

I hope both parties get that message.

CAVUTO: Real quickly, I mean, it's usually within a nanosecond after the final votes are cast in a midterm that the presidential race is on.

Hillary Clinton has made some noise that she just might be looking to run.  What do you think of that?

PANETTA: I think we're a long way from the presidential election. I think you're going to see an awful lot of people talked about, particularly on the Democratic side.

I do not think there is any front-runner right now for the Democratic nomination. I think it's wide-open. And that's probably the way it should be. Hopefully, we will determine who that individual is as time goes on.  But nobody has a lock on that race right now.

CAVUTO: So, if Hillary Clinton were to run, it wouldn't surprise you?

PANETTA: I -- you know, nothing surprises me in politics these days. So, who knows?

CAVUTO: All right.

PANETTA: But I think she would -- I think she'd have to -- she'd have a fight on her hands if she did.

CAVUTO: Yes, with quite a few others as well.

Leon Panetta, always good chatting. Thank you very, very much.

PANETTA: Good, Neil. Good to be with you.

CAVUTO: Same here.

All right, let's go to Fort Wayne, Indiana. Big crowds getting ready for the president, who is going to be speaking there a little bit later on tonight. Some of these crowds form the day before, sometimes almost two days before, and a big crowd expected in Indiana, where Joe Donnelly right now might feel comfortable in some of the latest polls, but the president determined to make sure he is not going to be looking at another term.

Now, meanwhile, ahead of tomorrow, what is early voting telling us like right now? Sometimes, it can telegraph some very big changes, very big -- after this.

(COMMERCIAL BREAK)

CAVUTO: All right, you're looking to live at Littleton, Colorado, where they are counting early ballots, and there are lots of early ballots, and not just there, in key states and throughout the country, many at record levels.

So, can we glean anything about that or from that this early on?

Let's talk to Sean Trende. He is a senior election analyst with RealClearPolitics.

It's interesting, Sean. I can remember there was a great deal of early voting in advance of the Florida general election two years ago that seemed to telegraph it was going to be a good night for Hillary Clinton. It wasn't. So I don't know what we can extrapolate from this. But what do you think?

SEAN TRENDE, SENIOR ELECTIONS ANALYST, REALCLEARPOLITICS: Well, predicting from early voting is always really dangerous, because you don't know who's going to show up to vote on Election Day. That's exactly what went wrong in 2016, when people looked at a early voting and there was a huge turnout for Republicans on 2016.

What we can say is, it looks like people on both sides are very engaged and very excited about this election.

CAVUTO: So, is there any way to glean that at more engaged? In other words, if you're in a Republican area, you're getting a disproportionate number of ballot from Republican strongholds, let's say -- I'm hypothetical here -- the Florida Panhandle, vs. the other side of the state, the Palm Beach area.

So, what do you what do you look for, as someone who analyzes this?

TRENDE: Well, you do look for those sites sorts of tells.

So if this were going to be a massive Democratic wave year, perhaps you would expect to see more urban turnout, larger turnout among registered Democrats. And, to be honest, we haven't seen a whole lot of evidence of that. At the same time, we don't know who's showing up on Election Day, but, right now, it's pointing to some very tight races in places like Arizona and Florida, which isn't necessarily what we expected a month or two ago.

CAVUTO: There's no way to break down by age or demographic group, I understand, but there is some anecdotal evidence that pickup -- Democrats say they're getting more women voting, suburban moms. You hear a lot of talk like that.

I don't know how readily and reliable that kind of data can be, but what are you noticing as far as the breakdown of who's voting thus far, who's more engaged, that sort of thing?

TRENDE: Well, right now, we're seeing minority turnout started out very slow. It's starting to pick up, which isn't the traditional pattern for it.

We are seeing a little bit of youth enthusiasm. But, again, we don't know how many of this is people who are going to be voting that would have been voting on Election Day anyway.

CAVUTO: Much has been made of the fact it's hard to tell House races, because, last I checked, better than 30 of them were in the margin of error, four or five points, so anything could change, possibly would change.

It is an easier math for Democrats there, less so for them in the Senate.  Do you buy that?

TRENDE: Yes.

I mean, certainly an easier map for them in the House than in the Senate.  But, as you said, we have a bunch of House races on a knife's edge...

CAVUTO: Right.

TRENDE: ... that could fall either way tomorrow. So this is still -- I wouldn't be measuring curtains if I were on either side.

This is a race that could break. And it's just going to come down to who turns out and votes tomorrow.

CAVUTO: Yes.

And I know we rely on your fine folks with sort of a RealClearPolitics average of polls, but some stand out to me, like in New Jersey, a new poll, a Quinnipiac poll -- and we're going to explore it later on in the show -- that has all of a sudden Senator Menendez up double digits, 15 points, when virtually everything prior to that was within mid to high single digits.

Do you remove that? Or do you add that in and recognize there's a sentiment trend going on? What?

TRENDE: Well, it's hard to say this late in the game.

We aren't going to get enough polling to see if it's a late break. It could be.

CAVUTO: Right.

TRENDE: But, at the end of the day, we just say average it. Polls have a wobble to them. And by taking an average, you help take that wobble out.

And what that points to is that Senator Menendez is in OK shape, but certainly not as good a shape as he would like to be at this point.

CAVUTO: All right, thank you very, very much, Sean Trende, RealClearPolitics.

So, we're following that very, very closely.

A lot of folks look at this and sort of think that, after a midterm, the markets will have a hiccup, no matter what happens. What if I told you it is the exact opposite?

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: Let's hear it for Ted Cruz!

(CHEERING AND APPLAUSE)

UNIDENTIFIED MALE: Go, Ted Cruz! Ted Cruz! Ted Cruz! Ted Cruz! Ted Cruz!

UNIDENTIFIED FEMALE: That's right. That's right. Get up! Get up!

(CHEERING AND APPLAUSE)

AUDIENCE: Beto! Beto! Beto! Beto!

O'ROURKE: Thank you!

(CHEERING AND APPLAUSE)

(END VIDEO CLIP)

CAVUTO: All right, would you invest money based on that, the confusion over that, whether it's the battle for that Texas Senate seat held by Ted Cruz, or the idea that we're going to be confused after Election Day, and maybe we could have the House in one party's hands, the Senate in another party's hand?

Well, what if I told you that Wall Street likes that? And, in fact, in most incidents in history, divided government has been very good for stocks.

Now, of course, the Republicans have had a run of the table right now, controlling the White House, the House and the Senate, and it's been very, very, very good for stocks. But the notion that it would be damaging to Republicans simply because the party should -- changes a little bit, well, not necessarily.

For example, in the midterm elections, when Ronald Reagan lost a whole lot of seats, a lot of people would think it'd be bad for stocks and bad for him. Quite the opposite. Stocks surged. And, of course, he went on to win reelection easily in a booming economy.

But, of course, it can tell you a lot of things about what to look for and what not to look for and whether your money and investments and maybe your whole economic future sort of hang in the interim.

Let's go to Greg Valliere on that, Art Hogan, and Sam Stovall.

Sam, end it with you, begin with you.

How much of a stake you put in that, that notion that divided government suits Wall Street just fine, because the government can't do that much?

SAM STOVALL, CFRA INVESTMENT STRATEGIST: Well, Neil, I actually find that historical precedent can be interesting. It can be a good guide, but it's never gospel.

And I think it really, really depends on where the economy is headed, where interest rates are, et cetera. So you have to focus more on the fundamentals, in my opinion, than you really do looking at the political background.

CAVUTO: You know, Art, there is another flip here that, while divided government might be beneficial historically, for a lot of folks at the corner of Wall and Broad who've enjoyed tax cuts, lower regulations, that kind of thing, stymying that, stopping that, maybe reversing that wouldn't be welcome news.

What do you think?

ART HOGAN, MARKET STRATEGIST: Yes, you know what is interesting, Neil? I can't come up with a result from tomorrow that's going to make what's already been done in terms of pro-growth, pro-business policies go away.

So even if a non-consensus, Democrats take over both chambers, they're not going to have a veto-proof majority. So I don't think anything changes necessarily.

I think the good news in terms of the historical precedent is, midterm election fourth-quarters are very good for the market. So you usually have volatility in September, October. We had that in spades. And then November and December tend to be very good.

So I think that's the thing to key on, understand that we get this behind us and markets actually do better.

CAVUTO: Greg, how do you feel about that?

GREG VALLIERE, HORIZON INVESTMENTS: I agree with Art 100 percent.

First of all, I think Trump's veto is good. I can't see 67 votes to override a Trump veto. So his economic agenda will stay in place.

Secondly, Neil, I think Trump might use a Democratic House as a foil. He's great at using foils. And I think if Nancy Pelosi is speaker, he will find a way to make that work to his advantage.

CAVUTO: That's a good point. I think Bill Clinton did just that when Republicans controlling the House shut the government down.

And people can be at various sides of this issue, but, Sam Stovall, we learned them that this notion that a president is wounded after losing control or his party losing control doesn't always work out that way.

But then it's up to what the markets can do from there. I mean, do you like the backdrop, the party battles notwithstanding, Sam, for what's going on now, good earnings, record low unemployment among so many groups, et cetera? What do you think?

STOVALL: Well, I keep hearing that old Michelob commercial where it just doesn't get any better than this.

So I have to sort of wonder, what's going to drive equity prices further?  I think, in the coming year, it'll be a good one, but probably not a great one, because, at least based on the forecast now, we're looking for good economic growth, we're looking for earnings increases, but actually they have been ratcheted down for all of 2019.

And with interest rates expected to continue to rise, I think the bar has been set a lot higher for 2019 vs. 2018.

CAVUTO: Yes, there are still a lot of studies that have been done, Art, that show, with the craziness in the market, it is still deemed by some -- I don't know about you -- to be a rich market. Is it?

HOGAN: No, we're trading at something like 15 times forward earnings estimates. We should be trading to closer to 17 times.

I think that the one thing we need to get in the rearview mirror -- and I would love to see the president campaign as hard on this as he has for the midterms -- is getting something constructive done with China. I think that is the biggest headwind in the market.

And if we can get the G20 meeting to actually be a constructive conversation, I think this market can put that behind it and start trading more on fundamentals. I agree with Sam. We're certainly going to see deceleration in earnings, but it's not -- we're not at peak earnings.

And 2019 will be fine, if not for a mutually destructive trade war.

CAVUTO: All right, well, the president is off -- rather, leaving Indiana, heading right now, I think it is to -- heading to Indiana, I should say, after leaving Cleveland.

He has been faulted, Greg Valliere, for not bragging more about the economy, getting distracted or sidetracked, some even within his own party tell him, on the caravan thing. I'm not here to debate the politics of that, but he was pounding a lot more the economic boom that we have been seeing.

I guess Paul Ryan and others have been saying, this is -- this is our ace card here. Are you surprised that it hasn't had -- and, again, the polls could be wrong -- the measurable effect you would think it would?

VALLIERE: Right.

Yes, I'm very surprised, and surprised that the tax cuts haven't resonated more.

I would just add to what the other folks have said. I think the big stories for next year are China, as Art said. And if we get any signal at all from the Fed that they might slow down the pace of tightening a bit, I think that's also very positive.

CAVUTO: Yes.

And, if anything, the good news obviously complicates the Fed's future, right?

VALLIERE: Yes.

CAVUTO: I mean, Sam, one of the things that's been brought up is that we're going to see more rate increases. Nothing has slowed that talk down.  What do you think?

STOVALL: Well, we saw very strong employment data last week.

And so I think that gives the Fed additional reason to raise rates at least in December of this year.

CAVUTO: Sure.

STOVALL: And we're looking for two times, maybe three times next year that the Fed raises rates.

But, still, it's going to be a relatively stimulative environment, because typically Fed funds is about a point-and-a-half above the rate of inflation. Today, it's still below inflation.

CAVUTO: We're looking at Florida right now. Marco Rubio is campaigning on behalf of the Republican gubernatorial candidate, Congressman DeSantis.

That is -- that's a tough battle. That is close, as is the gubernatorial race itself, and the Senate race featuring Rick Scott, the present governor.

Are you looking for any closure out of this race, Art? I mean, people forget. They make sweeping statements about a midterm, if a president has a tough bearing for his party, that he's a guaranteed one-termer. They said that for -- a little bit about Barack Obama. They said that about Bill Clinton in '94. They were even saying that about Ronald Reagan in '82.

But we can overreach here, can't we?

HOGAN: Oh, certainly can.

And I think that using the midterms as that report card towards what the next presidential election is going look like is getting way ahead of yourself. Remember, you're two years down the road. In 2020, the economy could look much different than it does now. I certainly wouldn't take a snapshot of what the economy looks like today and say that's going to help us predict what's going on in 2020.

I think the biggest non-consensus surprise we get out of tomorrow, though, might be that we don't know. And I think that there are so many elections that are so close, that we may not have clear, concise decisions.

And then, remember, back in 2000, when that happened. The market does not like uncertainty. So if you're looking for a market-moving event, it would be a lot of uncertainty over what the actual results are.

CAVUTO: Guys, I want to thank you all very, very much.

We're following these breaking news developments. The president of course now en route to Indiana, then later on Missouri, where he will wrap up what has been a busy campaign theme, where he is doing his darndest to make sure the Senate certainly stays in Republican control, and he hopes the House, by definition.

These are crowds lining up in Fort Wayne, Indiana. He knows how to sell out a place here. Now, will that have any influence on the Senate race going on there, were Joe Donnelly has a lead in some polls? The trend has been going his way. But the president is determined to stop that trend and do so tonight -- after this.

(COMMERCIAL BREAK)

CAVUTO: That caravan that is heading north, it's capturing certainly a lot of attention in some of the border states, but is it moving any votes in those states? We're about to find out.

We're back in 60 seconds.

(COMMERCIAL BREAK)

CAVUTO: All right, in Jackson, Mississippi right now, that was a wonderful head shot we were getting just a few seconds ago.

There she is, Senator Cindy Hyde-Smith, the Democratic incumbent. She's facing a strong challenge from Republican Mike Espy. These battles are going on all across the country. You might have heard there's a big election tomorrow.

We're on top of that, and these razor-tight races not only /going on there, but in places like Texas and Arizona, where the whole caravan issue, more to the point, is a big issue.

I want to go first to Texas and Casey Stegall in El Paso with how that is all going down -- sir.

CASEY STEGALL, FOX NEWS CORRESPONDENT: Hey, Neil. Good to see you.

Yes, no rest for the weary. You may have heard a little something about this election tomorrow. And we're down to the wire. Both candidates here in Texas are doing some last-minute campaigning. They are using this time to hold some last-minute rallies across the Lone Star State before voters head to the polls tomorrow.

Incumbent GOP Senator Ted Cruz has been fighting, as you know, to keep his Senate seat. He is leading in all the recent polling, though a very strong showing among early voters and newly registered voters in this state, analysts say, could bode well for his Democratic challenger, Congressman Beto O'Rourke.

But Senator Cruz tells me, at the end of the day, he is confident Texans will make the -- quote -- "right choice."

(BEGIN VIDEO CLIP)

CRUZ: There's a reason Beto is the number one Democratic fund-raiser, because if you're a crazed left-wing activist, you have got this guy in Texas running like Elizabeth Warren, and pledging to go after and impeach Trump.

That -- in this polarized time, that draws in millions of dollars.

O'ROURKE: I'm focused on all of us in Texas doing big things, being ambitious, driven not by our fears and who we're supposed to be scared of, which is not helpful in this environment, but what we want to achieve and how we can work together.

(END VIDEO CLIP)

STEGALL: Health care, the economy and, no surprise, immigration, Neil, among the top issues that Texas voters have identified most important to them this election cycle -- back to you.

CAVUTO: OK, Casey, thank you very much.

You could say the exact same thing right now, what's happening in Arizona.

Alicia Acuna is there in Phoenix with what is a tight-as-a-tick Senate race going on -- Alicia.

ALICIA ACUNA, FOX NEWS CORRESPONDENT: Hi, Neil. Yes.

And even though this is a seat that's been controlled by the GOP since the mid-'90s, this is also a state that elected the very independent Republican Senators Jeff Flake and the late Senator John McCain.

In this border state, immigration is one of the top issues.

(BEGIN VIDEO CLIP)

REP. MARTHA MCSALLY, R-ARIZ.: The caravan highlights what's happening in a border crisis every single day. The numbers of up -- are up of illegal apprehensions and the number of people who are taking advantage of the loopholes.

And so we have got to be able to secure our border and fix this crisis and use all means necessary.

REP. KYRSTEN SINEMA, D-ARIZ.: It's our duty to get a bunch of judges down to the border, so we can decide the cases as quickly as possible when people present themselves at the border and ask for permission to come into our country.

(END VIDEO CLIP)

ACUNA: In a CNN poll among registered voters, 25 percent say it is the most important issue on deciding their vote for the U.S. Senate.

Health care tops that, though, with 31 percent. Democrat Congresswoman Kyrsten Sinema has made health care her number one issue. She stands firm on border security and also supports a path to citizenship for dreamers.

Her team right now is working on getting those last Democrats who have not voted and convincing independents to turn out as well. Republican Congresswoman Martha McSally is a hard-liner on immigration and stands with the president. As you heard, she believes this country needs to do whatever is necessary to secure its borders.

In terms of voter turnout, Neil, the secretary of state's office says participation has been so high that right now they're on trend to surpass the 2014 midterm elections.

However, there's also a possibility, they say, that it could surpass the 2016 presidential election in terms of turnout -- Neil.

CAVUTO: Incredible. Midterm.

ACUNA: Yes.

CAVUTO: Just incredible to believe that.

Alicia, thank you very, very much.

All right, a quick peek of what's going on in Florida right now, Marco Rubio there working on behalf right now of Ron DeSantis, the Republican gubernatorial candidate. That race is also very, very tight, as is the Senate about going on there between Rick Scott and incumbent Senator Bill Nelson.

It tells you something about this race. It also tells you something about how Donald Trump could influence this race. We were just showing you some crowds that are getting ready right now in Fort Wayne, Indiana, the next stop on the president's political marathon to work on behalf of Republicans, ensuring that they can not only keep and maybe improve their lead in the Senate, but, by definition, maybe help some very, very tight House races there and in that neck of the woods as well.

We will have more after this.

(COMMERCIAL BREAK)

CAVUTO: All right, if I were to ask you real quick who Wall Street titans, financial types are giving money to, Republicans or Democrats, you would probably, say, oh, Republicans, right?

Well, actually no. They have been giving more this cycle to Democrats than Republicans. Now, some could say that they're betting on a Democrat turn to the House and they're just being phony little worms and whatever, or you could just say, well, that's an interesting development that bears watching and maybe a worry for Republicans down the road.

Former UBS America CEO and former Obama adviser Robert Wolf, so much more, good to see you.

What's going on there? Where is...

(CROSSTALK)

ROBERT WOLF, FORMER OBAMA ADVISER: Not surprising.

CAVUTO: Yes?

WOLF: I mean, as we talk about it, one, it's midterms. Midterms are local.

And local is really about looking at various policies.

CAVUTO: And, by the way, a lot of this money channels to those local races, right?

WOLF: Yes, to those local.

And Democrats are a lot of finance people. And they look at things like the caravan, they think that has become absurd, the birthright citizenship.  They're pro-immigration. They're pro-climate change. They're pro-gun reform.

CAVUTO: But they're also pro-making money. And they made a lot of money with this president, right?

And they -- Wall Street's been soaring. Their own wallets have fattened up, right?

WOLF: But this is not Hillary Clinton vs. Donald Trump presidential election.

CAVUTO: Understood.

WOLF: This is a midterm.

And with midterms, you're voting for the House, you're voting for Senate, you are voting for governorships. And I think they're looking at some policies and say they want change.

And I think some of...

CAVUTO: You know what I read into it?

WOLF: Go ahead.

CAVUTO: And you know this probably better than I do, but, as you know, I read a prompter, so I'm qualified.

WOLF: Yes, you do.

CAVUTO: So, what I see it to, you ever sense, all right, every number I'm seeing says Democrats are going to take the House, I want to ingratiate myself with them, and many of your colleagues, not you, my friend, are phony little worms, as I said?

WOLF: Yes, I think we don't have a clue who is really going to win.

If I was...

CAVUTO: If you're hedging your bets, wouldn't you hedge more that direction?

(CROSSTALK)

WOLF: Yes. If you ask me, do I think the Dems win the House, and the Dems have an incredibly narrow path for the Senate, the answer is yes.

CAVUTO: Yes.

WOLF: But I think what we're not speaking about is the governorships.

There's a chance that the Dems tomorrow take minimum six, almost 12 governorships, which will be the biggest news of the day, because it will change 2020. It will change...

CAVUTO: Explain why that is a big deal. That's a very good point, because these governorships are getting not nearly the attention I think they should.

We have got 33 Republicans now, 16 Democrats, one independent. So you could make the argument, if they were to shift by those numbers, they own a majority of the statehouses.

WOLF: I mean, people are not speaking about it. I mean, I was on FOX with Bret last night. And you and I talked about bringing it up today.

But if you think, they could win Michigan, they could flip Michigan, Illinois, Ohio, Iowa, New Mexico, Maine. There's a chance about Kansas.

CAVUTO: And, again, explain. You know this so well. Why would that matter for 2020? It helps to have a friendlier governor.

WOLF: Because, at the end of the day, with all the gerrymandering and voter registration and how they decide on what is a congressional district, at the end of the day, governors have a large voice.

And they have a big voice on things like climate change and how they look at budgets. And I think, at the end of the day, everyone is talking about the Senate and the House, and the truth is, we have no clue. We have never seen this many early people vote. We have never seen this much money into a midterm.

And I think people losing focus on the governorships.

CAVUTO: But you knew early on from early voting -- of course, it wasn't as big a deal when Barack Obama first getting elected -- but we did have a sense of enthusiasm.

WOLF: I would agree.

CAVUTO: Is it your sense that the enthusiasm tips more to Democrats, Republicans? How do you feel?

WOLF: There's no question this feels like 2008 for me with the Democratic Party vs. 2016, the millennial vote, the diverse vote.

CAVUTO: The big difference being, it's a midterm and all that.

WOLF: Big difference, right.

It's a -- well, I think...

CAVUTO: But the same thing.

WOLF: The electricity in the air. Yes, they are...

(CROSSTALK)

CAVUTO: But millennials, they are notorious for...

(CROSSTALK)

WOLF: They never vote in midterms.

But I think they're -- I think health care is on the ticket. I think, listen, there is a huge anti-Trump wave. But I don't think that wins elections. You have to be for something.

And I think protecting preexisting conditions, protecting the environment are things that Democrats are for. And I think it's going to be a very interesting day. I'm not good at predicting. But my gut tells me there is a better chance that the Dems win the House than obviously the Republicans.

And if there was an upset...

CAVUTO: See, and I could be wrong.

WOLF: Yes.

CAVUTO: I won't own up to it if I am.

WOLF: It wouldn't be the first time.

CAVUTO: Exactly.

But I think Republicans do hang onto the House. It might not be by much, but they hang onto it.

So, as a money guy, does that make a difference how you strategize for that, if Republicans still have the run of the table?

WOLF: Yes, there's no question, in my opinion, that would be better for the markets.

CAVUTO: Right.

WOLF: If President Trump stays...

CAVUTO: Whereas, if it's split?

WOLF: If it's split, I think, whether we like it or not, we're going to be in a polarized environment until 2020 again.

CAVUTO: Who is the next president?

WOLF: Who's the next president? I don't know.

CAVUTO: Who is the next Democratic nominee?

WOLF: I can't -- I can't play this early in that. Right now, I'm focused on tomorrow.

(CROSSTALK)

CAVUTO: Yes, they all come sucking up to you, because you're loaded and they want your money and influence, right? So, who do you like?

WOLF: Well, I like a lot of them.

(LAUGHTER)

WOLF: There are a lot of -- there are a lot of them who are my friends.

Listen, obviously, I like Vice President Biden a lot. I like Kamala Harris and I like...

CAVUTO: You like Kamala Harris, her idea where she would just rescind all the tax cuts and give $500-a-month checks to the poor?

WOLF: Listen, I don't think we're going to have all of a sudden taxes be done by executive order.

CAVUTO: But do you like that idea? It sounds a little goofy.

WOLF: I'm not populist left. I have never been.

CAVUTO: OK.

WOLF: I actually think I'm to the right of conservatives on both fiscal discipline and trade, OK?

CAVUTO: No, you remind me of Bill Clinton in that regard.

WOLF: OK.

CAVUTO: You are like a very pragmatic type of guy, right?

WOLF: I am very pragmatic. That's why I like being on your show. Fair -- we call it fair and balanced.

CAVUTO: And we like having you.

Thank you very much, Robert Wolf.

Something to watch. And, again, we touch on those gubernatorial battles here. They're going to have a lot to do with deciding the course of the country. And keep in mind seven of those battles are within two points.  Imagine that.

More after this.

(COMMERCIAL BREAK)

CAVUTO: All right, we told you about these polls that are tight.

Indiana is a good example of that. A new poll that shows, for example, in that state that the two senatorial candidates are split only right now by less than half-a-point. And that's a RealClearPolitics average.

The situation in New Jersey, though, is a little bit weird. And that's something we're going to be following here, because entering into that mix is a sudden poll that shows a 15-point gap between Bob Menendez and Bob Hugin, the Republican, who had been within single digits here.

So it's hard to get an average out of this or what to make of this.

Assistant director of the Quinnipiac University poll, Peter Brown, with us now.

Peter, thanks for taking the time.

The New Jersey one just shocked me. What happened there? How did it widen out? Is it an anomaly? What do you think?

PETER BROWN, ASSISTANT DIRECTOR, QUINNIPIAC UNIVERSITY POLL: No, I don't think it's an anomaly.

What it is, it's the Democrats coming home. New Jersey is one of the handful of bluest states in the country. And Donald Trump is not a very popular person there.

What you saw was...

CAVUTO: But he was the same person -- he was the same person before. So what changed? Just sort of a galvanizing moment or what?

BROWN: Well, one, the DCCC sent several million dollars into New Jersey to remind people that they're Democrats.

And it showed in our poll that was out today. Fifteen points is a lot of points.

CAVUTO: It is a lot of points. That's what makes me think, if everything up until now had been within a single-digit -- mid to high single-digit range, that's quite a swing.

Do you think that holds?

BROWN: Yes, I believe our numbers.

CAVUTO: OK.

Well, you don't have to get so sensitive about it. I'm just inquiring.  That's all.

(LAUGHTER)

CAVUTO: So, let me step back and get your sense of what's going on in the country.

If it's indicative of what could be happening in New Jersey, if your data is correct, then it could be showing a late break, possibly a late break, for Democrats. How do you look at that?

BROWN: There is some evidence.

Quinnipiac had a poll this morning in Florida. And we saw in both cases, in the governor's race and the Senate race, that independents were going heavily towards the Democratic candidate for those two offices.

CAVUTO: OK.

BROWN: Is it typical of other states around the country? We don't know.

CAVUTO: Yes. Yes.

BROWN: But we did see some movement in Florida this morning.

CAVUTO: Right.

Now, what we're showing you as you're speaking is just sort of a RealClearPolitics average of the polls that we're getting here.

What is -- we always talk about, in a midterm, Peter, the angriest voter gets to the poll. It's unusual in a midterm, but that -- that is kind of the way it goes.

Whose voters are angrier or more riled? I mean, the traditional argument has been Democrats, and then, after the Kavanaugh hearings, Republicans.

Any early data on that on who's coming out, who are the early voters, who - - that sort of thing?

BROWN: There's some evidence that Democrats are doing very well getting people who show a Democratic allegiance to the polls.

But we don't know exactly how they voted.

CAVUTO: Right. All right.

BROWN: In other words, we're seeing a large turnout, but we don't know where that turnout is coming from and how those people voted.

CAVUTO: And we will know, probably tomorrow.

Peter Brown, thank you very much, Quinnipiac, joining us out of Orlando.

BROWN: Pleasure.

CAVUTO: More on this and what are some early things you might want to look for tomorrow -- after this.

BROWN: No problem.

(COMMERCIAL BREAK)

CAVUTO: I bet a lot more of you pay taxes than you do own stock.

And maybe that's why a lot of these folks, they don't all look like necessarily Wall Street titans, but they're gathering in Fort Wayne to hear from the president of the United States, who's going to remind them that both Main Street and Wall Street have prospered very, very much under his stewardship.

It's a message he hopes will resonate and get Senate control beefed up under Republicans and maybe save the House.

It's something that we're following very closely at Fox Business Network, where we pay attention to both, because we think both matter to you, so not only the latest on the races, but how the futures markets are faring, foreign markets and faring, how China is responding.

That financial fallout is something unique to Fox Business, and only Fox Business. Other financial networks are showing tupperware commercials.
 
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