What Joe Biden Would Do in His First Month

by Greg Valliere, AGF Management Ltd.

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Insights and Market Perspectives

Author: Greg Valliere

October 29, 2020

IT’S TOO PREMATURE for Joe Biden to measure for drapes in the White House — the race seems to be tightening — but his top advisers are making plans for his first month in office. We’ll look at that today, and tomorrow we will focus on what Donald Trump might do in a second term.

IF BIDEN WINS, he will begin assembling a very diverse — and progressive — Cabinet that will come into focus in December. If he is inaugurated on Jan. 20, he then would focus on five major issues in his first month as president:

1. Pick up the phone: Within hours of his inauguration, Biden would begin calling global leaders — Angela Merkel, Emmanuel Macron, Boris Johnson, Justin Trudeau, Benjamin Netanyahu and perhaps Xi Jinping and Vladimir Putin.

The message will be simple: the U.S. will seek more predictable relations, and trade policy will become more pragmatic. A normalization of U.S.-China trade relations may not come quickly, however, because many Democrats would resist a liberalization.

2. Regulatory reversals: Biden probably would convene a task force to decide which Trump regulatory reforms will have to go. Emissions regulations — for factories, autos, tankers, etc. — would be high on the list, as well as labor regulations.

3. The pandemic: Biden would rely heavily on Dr. Anthony Fauci, so a mandate on masks and social distancing is possible; a nationwide lockdown is unlikely. A readily available vaccine by spring seems likely, but a spike in new cases, hospitalizations and fatalities will prompt many Americans to self-quarantine this winter, regardless of progress on a vaccine.

4. Pandemic stimulus: It appears that Nancy Pelosi and Steve Mnuchin cannot agree on the details of a stimulus bill; they will try again after the election, but the negotiators are out of gas. If there’s no deal during the lame duck session, this will be a major Biden priority early in his first month.

Even if Trump wins re-election, a $2 trillion package seems likely — but it increasingly looks like a stimulus bill may not win enactment until February, a negative for the markets, which want some economic medicine quickly.

5. Tax hikes: Once there’s movement on the four issues listed above, Biden would begin to focus on a sweeping package of tax increases on wealthy Americans, businesses, capital gains, estates, etc. We think he may go slow, especially if the economy looks fragile early next year. And would he really want to antagonize the financial markets by proposing tax hikes immediately after his inauguration?

But make no mistake — higher taxes are coming if Biden wins. The Democrats’ progressive activists will push aggressively to hike taxes on the wealthy, and they are determined to impose a wide range of tax increases on corporations. The House Ways and Means Committee probably will begin marking up a bill by spring, once a stimulus package has passed.

The effective date for tax hikes could be date the Ways and Means Committee introduces a bill, perhaps around July 1. The economic impact of higher taxes might not be felt until early 2022 — which could expose Democrats to a difficult election in the fall of that year.
* * * * *
POLLS AND MORE POLLS: A cacophony of polls will be out in the next few days, and some seem dubious. We simply don’t believe CNN’s poll yesterday that showed Trump trailing nationside by 12 points; this feels like a 5 or 6 point race — and the Democrats have to worry about Pennsylvania, where Biden’s lead has been shrinking.

WE STILL THINK BIDEN WILL WIN THE POPULAR VOTE, but that’s irrelevant; Hillary Clinton won the popular vote. Biden still has more paths than Trump to 270 Electoral College votes, but he may be making a mistake that doomed Clinton — why spend time and resources in states like Texas and Georgia when the election will be decided in Michigan and Pennsylvania?


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.

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), 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 is registered as a 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. AGF’s 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.

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