by Greg Valliere, AGF Management Ltd.
Insights and Market Perspectives
Author:Â 8
November 16, 2020
AMID A SURGE IN CORONAVIRUS cases, hospitalizations and fatalities, talks have broken down on a stimulus bill. Barring a miracle, nothing will pass until early 2021, even if Joe Biden gets involved in the negotiations.
OPTIMISM THAT BIDEN AND MITCH McCONNELL might reach a deal flies in the face of the deep differences between both sides. House Speaker Nancy Pelosi is hanging tough for a $2.4 trillion package, while most Senate Republicans are reluctant to budge on their call for a $500 billion deal. Thatâs a very wide gap.
MANY REPUBLICANS BELIEVE THE ECONOMY IS HEALING, with unemployment now at 6.9%. But unemployment benefits in many states expire on Jan. 1, and the economy could soften as several states impose partial shutdowns.
BIDEN NEEDS TO SPEND HIS POLITICAL CAPITAL CAREFULLY: Democrats have significantly less power in the House, and the Georgia Senate runoffs on Jan. 5 could certify McConnellâs leadership of the Senate. Biden has a chance to get a stimulus bill passed after his Jan. 20 inauguration, but he might need to woo a handful of Republicans like Susan Collins to get even a $1 trillion bill.
PELOSI HAD A CHANCE to get a $1.8 trillion deal earlier this fall from Treasury
Secretary Steve Mnuchin, but that train has left the station; she wouldnât take yes
for an answer.
SO THE BEST BET is probably a âskinnyâ bill that doesnât win enactment until February, which persuades us that this will be a difficult winter. First quarter economic growth will be soft â before a vaccine changes everything by April and May.
MEANWHILE, THERE WILL BE A LESSON LEARNED from this pandemic bill â Joe Biden will have difficulty getting much done. McConnell is an unabashed obstructionist, and the Democrats wonât be as powerful in the House and Senate as they anticipated just a month ago. Biden will have to compromise, which will prompt scathing criticism from the partyâs Progressives.
* * * * * *
JUDY SHELTON IS CLOSE to Senate confirmation to become a Federal Reserve governor; a Senate floor vote is scheduled for this week. Her views on monetary policy are controversial â she favors light regulation and a return to the gold standard.
BUT SHELTON WOULD BE JUST ONE OF SEVEN GOVERNORS and 12 regional bank presidents, so her influence would be modest; maybe adding a contrarian like her would actually be healthy. The bottom line, as Randy Forsyth wrote last week in Barrons, is that âher impact on policy would likely be limited to casting lonely dissents.â
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 Investments LLC (AGFUS) and AGF International Advisors Company Limited (AGFIA). AGFA and AGFUS are registered advisors in the U.S. AGFI is a registered as a portfolio manager across Canadian securities commissions. AGFIA is regulated by the Central Bank of Ireland and registered with the Australian Securities & Investments Commission. 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.
