Learning to Live With the Variants

by Greg Valliere, AGF Management Ltd.

Insights and Market Perspectives

Author: Greg Valliere

December 3, 2021

Learning to Live With the Variants
December 3, 2021
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.

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 Friday December 3rd 2021

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