by Greg Valliere, AGF Management Ltd.
IT’S UNCLEAR WHETHER THE OMICRON VARIANT will spiral out of control; studies are due by the end of next week. In the meantime, the delta variant is wreaking tremendous damage in the upper Midwest, and the Biden Administration cannot convince the unvaccinated to get a shot.
A BIPOLAR COUNTRY: Much of the U.S. is enjoying a red-hot economy — this morning’s jobs report is expected to show a dramatic improvement in the labor market, and the economy probably is growing by at least 5% this quarter.
YET THE VIRUS CONTINUES TO TAKE AN ENORMOUS TOLL, as U.S. fatalities approach 800,000 and close to 1,000 people die daily. Joe Biden’s toolkit is nearly exhausted; far-right Republicans are adamantly opposed to mandatory vaccinations, testing, and mask-wearing.
RESISTANCE FROM THE TRUMP BASE to these measures nearly scuttled legislation to keep the government open, but the party’s establishment — led by Mitch McConnell — prevailed yesterday. The government will stay open at least until Feb. 18, the new deadline.
BUT THE IDEA of tying future legislation to bans on mandates has gotten fresh life, with vocal support from Donald Trump. The ubiquitous Joe Manchin declared last night that he opposes mandatory vaccine requirements for businesses, still another potential obstacle for legislation to raise the debt ceiling or pass President Biden’s social spending bill.
BIDEN’S LATEST COVID PROPOSALS STRIKE US AS TOOTHLESS: He knows that U.S. vaccination rates have to rise, but we think the goal of around 65% of Americans fully vaccinated will be the upper limit. That’s not herd immunity, which means the country will have to live with Covid and its variants. Some of the vaccinated may face modest flu-like symptoms; some of the unvaccinated may face hospitalization and death.
EVEN IF THE OMICRON VARIANT isn’t a huge crisis, that still leaves the incredibly infectious delta as a continuing threat during this winter, making a minority of Americans reluctant to go to movie theaters, shopping malls, football games — or return to work.
THE COUNTRY IS BITTERLY DIVIDED between vaccine opponents who will never get shots, and a modest majority that has had two or three shots and wants to travel and resume normal activities.
THIS DIVISION IS EXACERBATED by politicians who see an opportunity to demagogue about government control of people’s lives, and a loss of personal freedoms. The demagoguery — from the U.S. to Germany to Africa — will ensure that a sizable minority will never get vaccinated.
A DOMINANT QUESTION FOR MONTHS has been why ten-year Treasury bond yields have stayed so stubbornly low, around 1.5%. The answer, we suspect, is that the markets get it — the Covid crisis may have peaked, but it isn’t over yet.
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.
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This post was first published at the AGF Perspectives Blog.