by Greg Valliere, AGF Management Ltd.
THE SPOTLIGHT CALLS: Amid all the news in Washington now — controversial Cabinet nominations, Jerome Powell’s remarkable dovishness, the minimum wage hike — here comes the story that no one can resist: Donald Trump, back in the news.
ENDING A MONTH OF SELF-ISOLATION, Trump will address the Conservative Political Action Committee (CPAC) conference on Sunday; his ratings, which matter greatly to the former president, should be impressive.
WE THINK TRUMP will have three objectives on Sunday:
Revenge: No one holds a grudge like Trump, and he will make it clear that he wants opponents like Rep. Liz Cheney drummed out of the party. He and Mitch McConnell loathe each other, so that will be part of Sunday’s narrative as Trump promises to endorse only MAGA supporters.
Controlling the party: Trump reportedly has told visitors to Mar-a-Lago that he thinks the GOP is still his party. Sources report that he wants to keep alive the option of running for president in 2024. We suspect he will tease that on Sunday without making a definitive declaration, which will keep the party in suspense while freezing out other potential candidates.
Issues: We anticipate a ferocious Trump attack on the Biden Administration’s immigration policies, as the Texas border now seems more porous than in the past four years. He will throw out plenty of red meat, focusing on the Paris climate accord, opening up schools, and — of course — irregularities in the November election.
CPAC IS VERY CONSERVATIVE AND POPULIST, so attendees will give Trump a rapturous greeting. But the group accounts for no more than 25% of American voters, and if Trump thinks a boisterous crowd means he’s ascendant, that would be delusional.
THE GOP WANTS TO WIN general elections, starting in 2022, by portraying the Biden administration as too leftist. But the Trump message — mostly about him — is designed to simply stir up his base, which will not help the party with females or in the suburbs, where there’s still revulsion over the Jan. 6 riot.
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THE CHIP SHORTAGE GOT PLENTY OF ATTENTION YESTERDAY, but prospects for quick action seem dim despite production cutbacks from Ford and other auto manufacturers; Ford says its output could contract by 20% this quarter because of the shortage. President Biden signed an executive order yesterday that mandates an investigation of the shortage; he wants recommendations in 100 days.
THAT SEEMS LIKE A LAME RESPONSE to an issue that needs to be addressed immediately. Biden wants to use authority that was granted by the National Defense Authorization Act that would fund U.S. companies that ramp up production. But the funding, projected at $37 billion, has not yet been appropriated — a process that could take months.
THE INFRASTRUCTURE BILL, which should begin moving by late spring, could include this $37 billion — or more — according to chip industry advocates. But we offer two cautions: the infrastructure bill could bog down if the price tag exceeds $2 trillion, and there’s no guarantee that profitable chip makers would receive a windfall in a bill pushed by progressives.
BOTTOM LINE: Washington aid to chip makers is possible, but it won’t come any time soon. The devil will be in the details of a very complicated and expensive infrastructure bill, which may not win enactment until fall.
