by Greg Valliere, AGF Management Ltd.
Insights and Market Perspectives
Author: Greg Valliere
March 25, 2020
A TRICKY VOTE: A deal on the $2 trillion stimulus package was reached around 1 a.m. this morning, but there’s a potential complication — there aren’t enough House members in town to pass the measure.
THE OPTIONS: Most members have fled Capitol Hill — a coronavirus petri dish — and are reluctant to return. Yet rules require that a quorum must be present on the House floor unless there’s unanimous consent to pass a bill. Getting unanimous consent could be tricky today, so members may be forced to trudge back to town. Couldn’t there be a vote by Skype or speaker phone? It’s unclear whether that would be Constitutional.
WE STILL THINK THE BILL WILL WIN ENACTMENT, and its enormous reach — combined with breathtaking stimulus from the Federal Reserve — should lessen the severity and duration of the recession. But getting the bill enacted today is a close call.
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DONALD TRUMP’S RE-ELECTION STRATEGY: No one ever said President Trump isn’t a cunning and calculating politician — and his strategy to win re-election became clear yesterday with his jaw-dropping call to re-open the U.S. economy by Easter, less than three weeks away. “A new chapter in audacity,” as John Harris writes in this morning’s Politico.
BLAME THE SCIENTISTS AND THE GOVERNORS: No one in politics can demonize a foil like Trump, while absolving himself of any culpability. Trump will now state, in effect: “Don’t blame the lockdown on me, I want it ended ASAP. Blame the scientists, blame the governors, they’re the ones who want to keep the country locked down.”
THE COUNTRY IS IMPATIENT, we all want to get back to our routines, and Trump gets that. So the last thing he wants to do is extend the lockdown into the summer — because eventually he will get blamed for it. So he’s prepared to take an enormous gamble, as follows:
IF HEALTHY YOUNG PEOPLE COME BACK TO WORK by late April, followed by older people in May and June — and there isn’t a spike in new infections and deaths — Trump could be hailed as a hero. But with the virus unlikely to peak in the U.S. for another two or three weeks, Trump could be vilified because of two enormous risks.
THE TWO GREAT RISKS: Obviously, a fresh spike in infections would be politically disastrous for Trump if he prematurely orders an end of the lockdown. The other big risk is that the scientific community — led by Dr. Anthony Fauci — would rebel at a Trump decree to ease up by Easter. If Fauci left this spring, it would be a body blow to the nation’s shaky confidence.
THIS IS GRISLY, DARWINIAN STUFF — gaming out who lives and dies — but Trump surely is making those calculations. As for the Democrats, presumptive nominee Joe Biden didn’t emerge from Delaware until yesterday, and dynamic governors like Andrew Cuomo and Gavin Newsom are more focused on getting ventilators.
TRUMP’S JOB APPROVAL RATING HAS TICKED HIGHER, despite a very mixed performance, and he has gotten an hour and a half of free TV every day, constantly reinforcing a narrative that he and his team have done a great job. Trump is not going to let a bunch of scientists and governors keep the country closed; he’s got a campaign to worry about.
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