by Greg Valliere, AGF Management Ltd.
EVERYONE LOVES A HAPPY ENDING, everyone loves a positive spin. After listening to all the self-congratulatory blather yesterday, we offer a more sober assessment, as follows:
The pandemic: At least one hundred thousand more U.S. fatalities are likely by spring, and more lockdowns loom this winter, here and abroad. The vaccines are a godsend, but it’s not certain how long they will protect people, whether most people can get shots for another four months, or — most importantly — whether 30% of the public will refuse to get vaccinated.
This is the end of the beginning, but not quite the beginning of the end. Self-quarantining will persist for months, as people shy away from airplanes, shopping malls and theaters. Maybe life will return to normal by summer — that’s baked into the markets — but it could take longer.
Joe Biden’s victory: Some congressional Republicans are finally accepting the election results — there was no widespread fraud — but a clear majority of GOP voters will agree with Donald Trump that Biden is an “illegitimate” president. Biden already has to deal with a serious scandal involving his son Hunter, and there’s growing unrest among progressives over his Cabinet picks.
Biden coughed repeatedly in his speech last night, and you can be sure that any sign that he’s sick — or simply has another foot injury — will get disproportionate attention because he’s 78. Biden is a decent guy, but his honeymoon could be brief.
The wimpy virus relief bill: After months of futile talks on a desperately needed package, this is the best they could do? A $748 billion measure is better than nothing, but it apparently will not help state and local governments that will have to lay off thousands of employees. The bill’s aid will expire by spring, before the virus ends.
The geopolitical threats: As the U.S. focuses on other issues, the threat from Russia looks even more serious — Moscow is hacking into the U.S. agencies and firms, while brazenly poisoning dissidents. China is enjoying an economic resurgence, Iran is shifting its nuclear enrichment program to a facility that’s deep underground, and North Korea is itching to test its powerful new missiles.
The Barr departure: No, the Attorney General didn’t resign to spend more time with his family. He resigned because he knows what’s coming in the next month: Trump’s pardons of a rogue’s gallery of shady characters, and intense pressure on the Justice Department to appoint a special counsel to look into the baseless assertions that this fall’s election was rigged.
IT’S NOT ALL BAD: Some positives — The Federal Reserve still has options despite Treasury Secretary Steve Mnuchin’s withdrawal of Fed tools. The economy should improve dramatically in the second half of next year. Trump failed to overturn the election, and his tweets eventually will be ignored.
IT’S ALWAYS DARKEST BEFORE THE DAWN: We get that, but amid all of yesterday’s self-congratulation, we couldn’t help but think that it most definitely isn’t dawn yet.
