Confusion Reigns as Delta Variant Surges

by Greg Valliere, AGF Management Ltd.

THE GREAT HEADWIND for the U.S. economy, for the markets, and for the 2022 elections is the surging delta variant, with about 40,000 new daily cases in the U.S. and surging hospitalizations. This demands a clear policy response, but there isn’t one.

THE PROBLEM SEEMS TO BE THE “MESSAGING,” which is increasingly confusing. The Washington Post and others are reporting this morning that Biden Administration officials are now considering new masking guidance.

ADMINISTRATION OFFICIALS DON’T WANT TO GET AHEAD of the Centers for Disease Control and Prevention, but that’s what Joe Biden did in Ohio last night on the hot-button issue of vaccinating young people under the age of 12, which is a huge source of confusion for parents. Biden predicted the CDC would soon approve shots for younger people.

AT THE LEAST, the White House is expected to endorse mask-wearing when vaccinated and non-vaccinated people are together. Enforcement seems to be futile, however, which Biden conceded. It will be a “community responsibility,” he said, whatever that means.

THE KEY, OF COURSE, is getting more people vaccinated. And on that front, there’s encouraging news: many conservative Republicans, including Fox TV personalities, are pleading with constituents to get shots — and that will make a difference in deep red states like Louisiana, where the variant is out of control.

BUT THE CONFUSION MAY PERSIST for the rest of the summer on a wide range of issues — including the opening of the U.S.-Canadian border. The main economic threat is that the delta variant could keep people away from restaurants, airplanes and shopping malls because no one is certain about the vulnerability of fully vaccinated people,

THE RESURGENCE OF THE VIRUS is a major reason why Treasury 10-year bond yields have plunged, despite a huge amount of new stimulus from Washington. Nearly two-thirds of U.S. counties have vaccination coverage of less than 40 percent, and more than 97 percent of people hospitalized with severe covid-19 infections are unvaccinated, according to the CDC.

BOTTOM LINE: Biden obviously worries that the House could fall to the GOP in next year’s elections, which makes covid “messaging” crucial. But the public in some states is acting like there’s a jail-break — and these people will not comply when the government issues the inevitable call this winter for booster shots.

* * * * *

SCHUMER’S TACTICAL DEFEAT: It was clear earlier this week that Chuck Schumer would lose a procedural vote yesterday on advancing a $1 trillion infrastructure bill. Prospects actually are quite good that he can move the bill in voting that will begin early next week.

SCHUMER WANTS TO DELAY THE AUGUST RECESS and get this bill passed, along with a budget reconciliation process that would accommodate a huge additional infrastructure bill. That’s an enormous task, complicated by Republican refusal to raise the debt ceiling.

WE SUSPECT CONGRESS WILL LEAVE TOWN on Aug. 6 with this glacial and confusing process still very much alive. It could be late December before there are compromise deals; yesterday’s setback was not pivotal.








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.

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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.

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This post was first published at the AGF Perspectives Blog.

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