Fed Chairmanship Decision is Due Within Days; Gavin Newsom’s Romp

by Greg Valliere, AGF Management Ltd.

Insights and Market Perspectives

Author: 8

September 15, 2021

Fed Chairmanship Decision is Due Within Days;
Gavin Newsom’s Romp
September 15, 2021
GROWING FRICTION between the Democrats’ populists and the party’s moderates is breaking out on several fronts — including tax hikes considered too wimpy by the left. Another heated battle, headed for resolution within days, focuses on who President Biden will nominate as Chair of the Federal Reserve.

PROGRESSIVE DEMOCRATS, led by Sen. Elizabeth Warren (D-Mass.) are adamant that Chairman Jerome Powell, a registered Republican, is not sufficiently aggressive on regulatory policies. They have lobbied the White House to nominate Fed Gov. Lael Brainard as the next Chairman; she has a much more aggressive track record on regulation.

OUR BOTTOM LINE is simple: Powell is the clear favorite — he’s the ultimate monetary dove, perhaps the most dovish Fed Chairman ever, which obviously makes him popular on Wall Street. He’s also highly regarded by Congress; the Senate undoubtedly would confirm his nomination for a second term, starting in late February.

BRAINARD, ON THE OTHER HAND, would encounter opposition in her Senate confirmation hearings; according to this morning’s Politico, Republicans may revive “paperwork issues” that surfaced when she was nominated for a Treasury post in 2009. She reportedly failed to disclose late tax payments and errors on legal forms for her household employees.

THAT’S NOT ENOUGH TO KILL A BRAINARD nomination, but Biden needs to conserve his political capital; his sweeping tax and spending proposals face a bruising fight, and then there’s the debt ceiling extension. A fight over Brainard would be a distraction; a Powell nomination would have an easier path.

BIDEN HAS SIDED WITH PROGRESSIVES more than we expected — it’s the path of least resistance in the House — so it’s possible that he will go for a registered Democrat like Brainard as Fed Chair. But the last thing Biden needs is a grouchy stock market; Wall Street quite clearly favors another Powell term, which we think he will get.

* * * * *
CALIFORNIA, WHAT A TRIP: It has the world’s fifth largest economy, 52 House seats in play next year, and the country’s largest population — about 40 million, far above second place Texas, which has 29 million — and an increasingly controversial image on guns, voting rights and abortion.

DESPITE FIRES, HOMELESSNESS AND VERY HIGH TAXES, California still has a mystique; Max Scherzer and other athletes want to play there, and seemingly every day is sunny. After Gavin Newsom’s landslide last night, California has still another presidential hopeful (See: Richard Nixon and Ronald Reagan).

NEWSOM BRINGS BAGGAGE to the national stage, and he can be slippery, but that applies to virtually every other politician who’s eyeing 2024 and beyond. If Joe Biden doesn’t run in 2024 (we think he will not), Newsom has a decent chance to defeat another Californian, Kamala Harris, for the Democrats’ nomination.

WE HAVE NO IDEA who will win in 2024 but we know this: the country wants fresh blood, someone who’s sharp and quick and forward-looking. Watch out for the charismatic Newsom, 53, who would begin a presidential campaign with 74 electoral votes in his pocket from California, Oregon and Washington.


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. 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.

©2021 AGF Management Limited. All rights reserved.

This post was first published at the AGF Perspectives Blog.

Total
0
Shares
Previous Article

Tech Talk for Wednesday September 15th 2021

Next Article

Greenwashing at a Tipping Point: Marketing Jargon Brings Regulatory Risk

Related Posts
Subscribe to AdvisorAnalyst.com notifications
Watch. Listen. Read. Raise your average.