by Greg Valliere, AGF Management Ltd.
IN A BIND: Donald Trump isn’t responsible for the coronavirus — he’s in uncharted waters — but politics isn’t always fair: Trump’s job rating is slipping, his handling of the crisis is increasingly criticized, and he’s still trailing Joe Biden.
AFTER A POLLING RISE in March, Trump’s approval rating has slid back into the
mid-40s in most polls, a warning sign for any incumbent. And the public believes the
government isn’t doing a good job; the chaotic roll-out of small business aid is a
clear negative.
THE MARATHON PRESS CONFERENCES AREN’T HELPING: They’re filled with self-congratulation and nasty Trump criticism of the media, governors, the World Health Organization, inspector generals, etc. Mike Pence, Tony Fauci and Debra Birx — who have gotten high grades — are less visible; the spotlight is reserved for the combative president.
AND NOW THE DEMOCRATS HAVE THEIR NOMINEE, who leads Trump in virtually every poll. We think Joe Biden, free from sniping on the left, will pivot subtly toward the center. The GOP will charge that Biden is just another big spending socialist but that label doesn’t seem to fit (Biden is vulnerable, however, to charges that he’s lost a step).
IT’S WAY TOO SOON to make a call on the Nov. 3 election. Trump is a ruthless campaigner, and the economy could show signs of improvement by fall, so it’s premature to call him the underdog. But with voters restless over the shutdown — Cabin Fever is rampant — a perception may grow that the government isn’t doing a great job.
BIDEN HAS A CHANCE TO WIN in a campaign that will focus almost entirely on Trump’s track record on the virus; virtually all of the Democrats’ TV ads will target Trump’s dismissive statements (“we only have 15 cases, soon to be one”) and his leadership (“I take no responsibility” for a lack of testing kits). For now we’ll just say that Biden has a plausible path in the Electoral College.
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DYSFUNCTIONAL CONGRESS SQUABBLES ON MORE AID: A quick infusion of $250 billion into the sputtering small business assistance effort should win easy approval in the Senate today. Then things may get complicated.
THE DEMOCRATS SEE THIS AS AN OPPORTUNITY to add another $250 billion-plus to the package — $100 billion for hospitals, $150 billion for state and local governments, and a 15% increase for food stamps. Republicans aren’t enthusiastic about spending that amount so soon after the $2.2 trillion package passed, but Steve Mnuchin — increasingly respected in both parties — could iron out a compromise.
COMPLICATING THIS EFFORT will be a need to get unanimous consent for any deal; that’s unlikely in the House. Some day, hopefully in our lifetimes, Congress will abandon its antiquated voting rules — nothing wrong with Skype, is there? There will be dissents in the House, which probably will require lawmakers to come back to Washington.
BOTTOM LINE: The fate of small businesses in increasingly perilous; they need money ASAP — yet technical glitches, confusion over lending standards and a need for more money will impede progress in this crucial sector. If Congress wants a V-shaped recovery, it needs to act fast on small business aid.
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THE MARKETS ARE CLOSED TOMORROW, and a religious holiday seems very appropriate, doesn’t it? We’ll be back on Monday — good health to you and your families.
The views expressed in this blog are those of the author and do not necessarily represent the opinions of AGF, its subsidiaries or any of its affiliated companies, funds or investment strategies.
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This post was first published at the AGF Perspectives Blog.
