by Greg Valliere, AGF Management Ltd.
Insights and Market Perspectives
Author: 8
November 5, 2021
Is Today the Day?
November 5, 2021
THE EXCRUCIATING, MADDENING gridlock over infrastructure legislation may be nearing a resolution — perhaps as early as today — thanks to restive voters who have prompted the Democrats to finally move.
NOTHING CONCENTRATES THE MIND like the prospect of being hanged, the great British writer Samuel Johnson proclaimed centuries ago, and that still resonates today. The reeling House Democrats, facing a blowout election next year, are finally prepared to vote on both infrastructure bills.
IF THE HOUSE PASSES THE BASIC INFRASTRUCTURE MEASURE — costing as much as $1.2 trillion for highways, bridges, dams, wi-fi, clean water, etc — that bill would go directly to the White House, where President Joe Biden could sign it within days.
BUT FIRST, the House must approve the massive social spending bill, and negotiations continued through the night on contentious provisions — family leave, immigration reform, the SALT tax, etc.
IF NANCY PELOSI can get just enough votes for that bill, the next vote would be passage of the basic infrastructure package, which the Senate — and Mitch McConnell — have already approved and Biden is prepared to sign.
THE SOCIAL SPENDING PACKAGE WOULD THEN FACE WEEKS OF DEBATE, as the House and Senate iron out differences. The major issue will be Sen. Joe Manchin’s complaint that this second bill needs even more debate on its potential impact on deficits and inflation.
THIS COULD BE SHAPING UP AS A WIN-WIN FOR THE MARKETS: First, passage of a simulative infrastructure package, positive for a wide range of companies; second, the other bill — with tax hikes and huge new cradle-to-grave social spending — could languish through the winter.
FOR BIDEN, WHO HAS BEEN IN A DEEP SLUMP since the inept withdrawal from Afghanistan, this would be a major win (a solid unemployment report in a few hours would be another positive for him). Why this infrastructure bill couldn’t pass this summer speaks volumes about Biden’s disastrous veer to the left.
BUT A HOUSE AGREEMENT today (or this weekend) would allow Biden to proclaim victory on infrastructure; a final agreement on social spending and new taxes may have to wait.
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.
