by Greg Valliere, AGF Management Ltd.
Insights and Market Perspectives
Author:Â Greg Valliere
October 15, 2019
FIRST, OUR PREMISE: Donald Trump, spinning out of control, abandoning allies, ignoring advice from virtually everyone, is clearly vulnerable. Wall Street may assume that he will win re-election, but we think heâs the underdog â provided the Democrats nominate a plausible president.
THEREIN LIES THE RUB: Tonightâs debate is important, because it may answer a crucial question â is this really a race between Elizabeth Warren and Joe Biden, or is someone lurking whoâs about to catch a wave, as Barack Obama did in 2008?
OUR HUNCH IS THAT WARREN MAY HAVE PEAKED TOO EARLY: The front-runner becomes the target, and suddenly Warren is generating second thoughts. Is she electable? Is she, as some Democrats grumble, a hectoring elitist? How can she pay for her staggeringly expensive agenda? She will be playing defense tonight.
BIDEN NEEDS A STRONG SHOWING: Heâs been adequate in the early debates, but heâs one stumble away from a free-fall. Bernie Sandersâ heart attack re-focused attention on the age and health of the candidates, and Biden carries the added burden of defending his sonâs business dealings, which may not have been illegal but sure looks like cronyism.
WHO COULD EMERGE? The speculation wonât end about a late entrant. Most Democrats would be thrilled to see Michelle Obama run, but she continues to rule it out, in public and in private. There was a buzz about Michael Bloomberg this week; he reportedly is aghast that the anti-Wall Street radical Warren could be the nominee. But Bloomberg, 77, has flirted with running repeatedly, only to demur.
SOMEONE WILL SHINE TONIGHT, and our guess is that Mayor Pete Buttigieg may be the candidate to watch. We were at an event last week in South Bend, Ind., and asked everyone we met what they thought of Buttigieg â and to a person, Democrats and Republicans, blacks and whites, young and old said heâs an exceptional mayor and a decent fellow. Theyâre proud of him, and theyâre rooting for him.
BUTTIGIEG HAS RAISED PLENTY OF MONEY and will stay in the race well into the spring, hoping that Biden fails to energize the base while Warren looks increasingly polarizing. The ultimate goal in this marathon, of course, is winning 270 electoral votes, which continues to be Bidenâs strong suit, as he will emphasize tonight.
THIS NOMINATION IS WORTH WINNING because the Trump White House is in utter chaos, vilified by virtually all Republicans for un-doing years of sacrifice by U.S. and Kurdish troops, who managed to contain ISIS. (See this morningâs Wall Street Journal editorial). And the Ukrainian impeachment probe is yielding results; the next bombshells will come from John Bolton, who knows where all the bodies are buried.
SHOULD THE MARKETS CARE? Absolutely, because Trump is recklessly erratic, and his own party is concerned about his stability. The political climate is so volatile that any Democrat has a chance of winning the presidency â even one who favors dramatically higher taxes, a resurrection of regulations, and sweeping new government programs. If Warren emerges tonight as the clear front-runner, the markets most definitely will have to worry.
The views expressed in this blog are provided as a general source of information based on information available as of the date of publication and should not be considered as personal investment advice or an offer or solicitation to buy and/or sell securities. Speculation or stated believes about future events, such as market or economic conditions, company or security performance, or other projections represent the beliefs of the author and do not necessarily represent the view of AGF, its subsidiaries or any of its affiliated companies, funds or investment strategies. Every effort has been made to ensure accuracy in these commentaries at the time of publication; however, accuracy cannot be guaranteed. Market conditions may change and AGF accepts no responsibility for individual investment decisions arising from the use of or reliance on the information contained herein. Any financial projections are based on the opinions of the author and should not be considered as a forecast. The forward looking statements and opinions may be affected by changing economic circumstances and are subject to a number of uncertainties that may cause actual results to differ materially from those contemplated in the forward looking statements. The information contained in this commentary is designed to provide you with general information related to the political and economic environment in the United States. It is not intended to be comprehensive investment advice applicable to the circumstances of the individual.
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