by Greg Valliere, AGF Management Ltd.
Insights and Market Perspectives
Author:Â Greg Valliere
April 21, 2020
STILL NOT DONE: Proponents of a $500 billion coronavirus aid bill face two enormous issues that could stall enactment for several more days: insistence on a national testing strategy, and a growing controversy over who got the initial aid â big chains or small local businesses?
THESE DISPUTES COULD delay passage until late this week as both parties haggle over details, but thereâs a theme in these packages: Donald Trump isnât sweating the details. He wants more stimulus and he will get it this month, with more coming by summer.
TRUMP IS CONVINCED THAT DEMOCRATS want to hurt him politically over the issues of testing and swabs, but it really isnât about him. Itâs about meeting standards set by Anthony Fauci and Deborah Birx that stipulate when states can open up.
SOME GOVERNORS HAVE JUMPED THE GUN, so Congress will insist on $25 billion to establish a federally-funded testing component, which is very likely to be included in the final bill.
THE OTHER OBSTACLE STEMS FROM A BITTER PUSH-BACK over the initial aid to small business. Large hotel and restaurant chains gobbled up much of the aid, thanks to savvy lobbyists and the industriesâ political clout, leaving thousands of small businesses and local restaurants shut out.
THERE ARE FAR MORE ANGRY small business owners than the number of protesters at raggedy anti-lockdown demonstrations. Trump asserts that the small business aid has been a great success, but itâs been a mess, thanks to antiquated computers at the overwhelmed Small Business Administration â and aid that has gone to big companies that have cut in line.
THIS NEW PACKAGE WILL CONTAIN ABOUT $300 BILLION MORE aid to small businesses, but Congress will insist on provisions that will re-define the size of businesses that will be eligible for the aid. That process could take another few days.
ONCE THIS BILL PASSES, lawmakers will flee for several weeks, but still another
bill will take shape by June. Partisanship is on the rise, and calls for $500 billion
to aid reeling state and l
ocal governments will encounter opposition from deficit
hawks.
BUT MORE FISCAL AID SEEMS CERTAIN, and we donât rule out an infrastructure component in the summer bill. Trump wants it, and he correctly says this is the time to do it, with interest rates close to zero. Lots more will be in this next bill, perhaps including some aid for the oil industry, where bankruptcies loom.
EVERYTHING HAS ITS LIMITS, and the sentiment in Washington that money is no object may begin to fade later this year; the deficit in fiscal 2020 could hit $4 trillion. Some conservatives are already alarmed, and their desire to be heard will be a factor as Congress is forced to return to Washington this week to hear objections before this latest measure finally passes.
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.
AGF Investments is a group of wholly owned subsidiaries of AGF Management Limited, a Canadian reporting issuer. The subsidiaries included in AGF Investments are AGF Investments Inc. (AGFI), Highstreet Asset Management Inc. (Highstreet), AGF Investments America Inc. (AGFA), AGF Asset Management (Asia) Limited (AGF AM Asia) and AGF International Advisors Company Limited (AGFIA). AGFA is a registered advisor in the U.S. AGFI and Highstreet are registered as portfolio managers across Canadian securities commissions. AGFIA is regulated by the Central Bank of Ireland and registered with the Australian Securities & Investments Commission. AGF AM Asia is registered as a portfolio manager in Singapore. The subsidiaries that form AGF Investments manage a variety of mandates comprised of equity, fixed income and balanced assets.
About AGF Management Limited
Founded in 1957, AGF Management Limited (AGF) is an independent and globally diverse asset management firm. AGF brings a disciplined approach to delivering excellence in investment management through its fundamental, quantitative, alternative and high-net-worth businesses focused on providing an exceptional client experience. AGFâs suite of investment solutions extends globally to a wide range of clients, from financial advisors and individual investors to institutional investors including pension plans, corporate plans, sovereign wealth funds and endowments and foundations.
For further information, please visit AGF.com.
© 2020 AGF Management Limited. All rights reserved.
This post was first published at the AGF Perspectives Blog.
