On Inauguration Day, Barack Obama could sign a $1 trillion stimulus package, according to Greg Valliere, chief political strategist at Stanford Washington Research Group.

What we are witnessing is "triage, like a MASH episode," said Valliere, adding "money doesn't matter; all that matters is saving the patient." Valliere, together with Charles Schwab & Co. chief investment strategist Liz Ann Sonders, addressed advisors in a meeting entitled "Expert Perspectives on the 2008 Election and Economy." The discussion was moderated by CNBC anchor Maria Bartiromo.

Both Valliere and Sonders gave advisors some reason for optimism. Sonders said that if she was asked about the prospects for the equity markets over the next decade one year ago when the Dow had reached 14,000, she wouldn't have been very optimistic.

"If one looks at a chart of the Standard & Poor's 500 over the last decade, it's a perfect upside down W," Sonders observed. "What's interesting is what's happened to valuations. In the brutal revaluation in 2002, valuations didn't really decline because earnings fell as fast as stock prices."

With regard to the economy, Sonders predicted that the current quarter will be 'the single worst quarter," and indicated she thought "mid-2009 was the best chance for the recession to end. [But] we may not know it. We won't get a V bottom." She added that consumers are deleveraging, and while that's a good thing, it will mute the early stages of the recovery.

Valliere seemed a little more optimistic that the recession will end by mid-year, citing the "staggering amount of medication and the gift of cheap energy prices." 

"Obama has dispelled the notion it will be a socialist administration," Valliere continued, noting that the president-elect is well aware of what happened to President Clinton after he swung too far to the left in his first term only to be greeted with Newt Gingrich's Republican landslide in 1994. "Taxes are the litmus test and he [Obama] knows the economy is too sick to raise taxes."

Valliere also predicted that while private firms and hedge funds would lose their privileged tax status and have to pay the same rates as everyone else, the passage of a windfall profits tax on the oil companies is highly unlikely, even if they have any profits to tax.

Sonders said the financial markets will start to see a return to normalcy in 2009, with the 3.8% daily changes in the major indices over the past few months eventually fading away. In 2009, the market will "trade on fundamentals, not hedge and mutual fund redemptions," she added.