Easy Part Done, Biden Moves to Contentious Issues; Could the Fed Support a New Currency?

by Greg Valliere, AGF Management Ltd.

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Insights and Market Perspectives

Author:Ā Greg Valliere

June 14, 2021

THE BIDEN LOVE-IN: Whether it was tea with the Queen, joking around with Boris Johnson, or bonding with Emmanuel Macron, Joe Bidenā€™s European trip has gotten off to a very good start. Happy photo ops could push Bidenā€™s job approval rating past 60% positive.

G-7 LEADERS AGREED to condemn Chinaā€™s human rights abuses and its ā€œnon-market economic practices,ā€ and Biden got agreement on an investigation into Beijingā€™s handling of the Coronavirus, sending a signal that U.S-China relations
may stay rocky for months to come.

WHILE THERE WAS SEEMING UNITY ON CHINA, some issues were not resolved ā€” including the timing of a phase-out on the use of coal, or an opening of the border between the U.S. and Canada, which may not come until later this summer.

NEVERTHELESS, THE CLEAR TAKE-AWAY WAS THAT BIDEN is the anti-Trump, a gregarious politician, eager to cut deals. ā€œThe U.S. is back,ā€ was the mantra, but now Biden faces contentious issues, starting with todayā€™s meetings in Brussels, where Afghanistan will be a major topic.

BIDEN APPARENTLY DID NOT CONSULT WITH ALLIES before announcing a Sept. 11 deadline for the withdrawal of U.S. forces, and many countries with troops in Afghanistan want assurances that there will be an orderly pull-out; 36 countries ā€” including Germany, Italy and the U.K. ā€” have troops stationed there. At the least Biden will have to offer support for counterterrorism operations as troops depart.

THE HIGHLIGHT OF BIDENā€™S TRIP obviously will be Wednesdayā€™s meeting with Vladimir Putin, who Biden has insulted over the years. Biden once told Putin to his face that he ā€œhas no soul,ā€ and recently called him ā€œa killer.ā€

YET PUTIN SAID LAST WEEK that he can deal with Biden, so there may be some modest agreements on issues like helping Syrian refugees. But a meaningful deal on malware attacks or Russiaā€™s designs on Ukraine seem highly unlikely this week. Actually, some smiles or light banter before and after the summit may be as much as can be expected.
* * * * * *
IN A POTENTIALLY ASTONISHING DEVELOPMENT, THE FEDERAL RESERVE reportedly is considering the possibility of launching its own virtual currency, ā€œa move that could shake up banks, give millions of low-income Americans access to the financial system and fortify the dollarā€™s status as the worldā€™s reserve currency,ā€ according to an article in Politico this weekend.

THE FEDERAL RESERVE BANK OF BOSTON and MITā€™s Digital Currency Initiative are aiming next month to publish the first stage of their work to determine whether a Fed virtual currency could succeed on a practical level, according to Politico.

MITā€™S LEAD EXPERT ON PROJECT called it ā€œa once-in-a-century opportunity to redesign the dollarā€ in a way that supports innovation much like the internet did.

NEEDLESS TO SAY, even a hint of something like this has upset U.S. banks; they have begun lobbying against the idea, which would need Congressional approval. So this is a long way from enactment, but itā€™s an issue that wonā€™t go away, and many members of Congress are intrigued by it.


The views expressed in this blog are those of the author and do not necessarily represent the opinions of AGF, its subsidiaries or any of its affiliated companies, funds or investment strategies.

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. AGFā€™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.

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Ā©2021 AGF Management Limited. All rights reserved.

This post was first published at the AGF Perspectives Blog.

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