by Greg Valliere, AGF Management Ltd.
Insights and Market Perspectives
Author: 8
May 26, 2021
A Long Legal Slog For Donald Trump
May 26, 2021
THE DISTRICT ATTORNEY IN MANHATTAN apparently has convened a grand jury to probe Donald Trump’s business activities, and other prosecutors are weighing charges. This will have an impact on the 2022 and 2024 elections.
IT’S UNCLEAR WHETHER the target in New York is the Trump Organization or Trump himself; we’ll take wild guess: it’s both. Legal experts believe NYC District Attorney Cyrus Vance feels he has enough evidence to indict, so he has convened a grand jury, which will meet three days a week through the end of the year, probably focusing on tax fraud. Vance, of course, has Trump’s tax returns.
THIS NEW GRAND JURY DEVELOPMENT was reported overnight by The Washington Post, which quite clearly is in a fierce competition with the New York Times and other media outlets — they’re all eager for headlines, and the New York prosecutors leak like sieves.
WHETHER TRUMP WILL EVER BE CONVICTED of a crime is debatable; with an army of lawyers, he could drag this process out for years until appeals are exhausted. In the meantime, a growing group of Republicans — led by Senate Minority Leader Mitch McConnell — views Trump as an albatross; they consider him a distraction who could hurt the party in upcoming elections.
TRUMP APPARENTLY IS WORKING WITH NEWT GINGRICH on a new “Contract With America,” according to this morning’s Politico, that would offer talking points for Republicans running for office next year. And Trump himself has not ruled out running for president in 2024.
WE THINK THE ELECTORATE WILL MOVE ON: New polls show about a quarter of the general public thinks Trump is the legitimate president, which means 75% don’t think so or aren’t sure. The absurd recount in Arizona doesn’t help Trump with moderates. That’s the key — Trump’s passionate base alone cannot produce GOP victories (especially since he has lost his megaphone on social media).
McCONNELL HAS IT RIGHT — Keep arm’s length from Trump as the former president’s legal issues intensify, and focus on Joe Biden’s problems with immigration, spending, tax hikes, inflation, etc. There’s a path for solid Republican gains in upcoming elections, but not if the party ties itself to Trump (see: Georgia’s two Senate races earlier this year).
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NEW INFRASTRUCTURE COMPROMISE: A small group of Senators will offer a new proposal later this week to break the infrastructure logjam. Mitt Romney is part of the group, which includes moderates like Joe Manchin. Count us as skeptical; their plan will encounter fierce resistance from the left and right.
THE PRICE TAG — a little under $1 trillion — is far lower than progressives are
demanding, and the absence of any new taxes is a deal-beaker for Democrats who want to go after big corporations and other wealthy taxpayers. Congress will leave for the Memorial Day break without reaching an agreement.
NOT A PROBLEM FOR THE MARKETS: Failure to enact a big spending bill filled with new taxes is hardly a negative for investors. Gridlock is good.
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This post was first published at the AGF Perspectives Blog.
