by Greg Valliere, AGF Management Ltd.
Insights and Market Perspectives
Author: 8
December 17, 2020
THERE’S A REASON WHY CONGRESS has a 19% approval rating; that reason is on full display this week — an inability to move quickly when the country demands it. A pandemic aid bill will pass, but not quite yet, which means people who desperately need aid may not get it before Christmas.
A $900 BILLION PACKAGE OF ASSISTANCE is finally coming into focus. Fed Chairman Jerome Powell and many economists believe it isn’t enough, but it’s more generous than we anticipated earlier this week. There will be government checks of $600 or $700, plus unemployment benefits of $300 per week.
OTHER KEY PROVISIONS will include about $300 billion for small business, including about $257 for the Payroll Protection Program; $25 billion for rental assistance, including aid for landlords; $80 billion for schools and universities; about $16 billion for vaccine distribution, testing and tracking.
THE MEASURE WILL NOT INCLUDE money for state and local governments, although there’s a drive to “backdoor” aid with $90 billion to the Federal Emergency Management Agency (FEMA). There also isn’t money for liability protection to protect against lawsuits. The need to act on these two issues makes another bill — in February — increasingly likely, especially if jobless benefits expire by early spring, which would necessitate more funding.
THE TIMING OF PASSAGE: It could take a few more days. There could be an announcement as early as today that there’s an agreement in principle, but staffers will have to write legislative language, still not in print after seven months of debate.
IT’S POSSIBLE THAT STILL ANOTHER EXTENSION of several more days will
be necessary for the stimulus and the massive $1.4 trillion budget, which will be
combined. The government will not shut down at 12:01 a.m. on Saturday morning; if
necessary there will be still another extension, perhaps lasting until Monday.
LAST-MINUTE LEGISLATING like this is exasperating, especially as powerful members insert pet provisions into a “must pass” bill. They may provide money for surprise medical bills, New York theater, restaurants, etc. Washington lobbyists will insert other provisions at the last minute.
BOTTOM LINE: The economy will get a badly-needed boost that will arrive by early January. And it’s possible that Biden and Mitch McConnell will agree on another bill that could pass in February. This should keep the economy out of recession during this bleak winter, until vaccines become readily available.
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. 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.
