by Greg Valliere, AGF Management Ltd.
Insights and Market Perspectives
RASKIN’S ANTIPATHY TOWARD THE FOSSIL FUEL INDUSTRY will be a major topic. Her critics say she would use Fed stress tests to penalize banks that work with energy firms, and that she would favor “sustainable investments” in a way that could politicize the Fed, which only has a mandate to ensure stable prices and low unemployment.
RASKIN’S CRITICS ALSO WILL POUNCE on her work and compensation at Reserve Trust, a non-bank financial technology company that received special access to the Fed’s payments system while she was serving as a director. These ties are explored extensively in this morning’s TheHill.com.
CONSIDERING THE STRONG SUPPORT RASKIN ENJOYS from Progressives like Sen. Elizabeth Warren, this could be a nasty confirmation process. Our early take is that Raskin has a 55% chance of prevailing; she’s hardly a shoo-in.
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VLADIMIR PUTIN’S GOAL of sowing dissent in America is closer to success, as the Republican party splinters over Ukraine. Egged on by Fox commentator Tucker Carlson, a significant chunk of Republicans are urging the U.S. to stay out of the potential conflict. Sen. Josh Hawley, the Missouri Trump supporter, is leading the opposition.
MOST REPUBLICANS (like Marco Rubio and Lindsey Graham) enthusiastically support the Biden Administration’s hard line. But public opinion hasn’t coalesced yet, and we suspect that if there’s a conflict, an isolationist sentiment may grow.
“WHY ARE WE IN UKRAINE?” could be a growing refrain in the U.S. — and could give isolationists (both Trump supporters and leftists) an issue to exploit. Putin would be delighted to see this issue divide the U.S.
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THE NATIONAL DEBT HAS ECLIPSED $30 TRILLION, which is a dominant subject when we meet with retail clients, who correctly view this trend as unsustainable. They always ask: why doesn’t Washington do anything about the surging debt?
AND WE ALWAYS ANSWER: First, lawmakers aren’t interested in major deficit reduction because they don’t see a catalyst from the markets, which seemingly don’t care about deficits. Why should we act, members of Congress say, with interest rates so low?
SECOND, ALL OF THE PRESCRIPTIONS for curbing the deficit would require very unpopular measures — tax hikes, deep benefit cuts, etc. For most members of Congress, getting re-elected is paramount, and a call for significant belt-tightening could cost many members their jobs.
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SANITY IN SACRAMENTO: A sweeping single payer health bill, costing several hundred billion dollars, has been rejected by California’s House, where Democrats dominate 60-19. The measure was supported by progressives, who wanted to pay for the bill with massive new taxes that even California couldn’t tolerate.
PROBLEMS PERSIST IN THE GOLDEN STATE: Los Angeles and the San Francisco Bay Area still face a staggering increase of crime, which is largely tolerated and lightly prosecuted, but in our opinion the state’s biggest problem is that its devastating drought has not ended.
HEAVY SNOW AND RAIN in December has been followed by five bone-dry weeks, and current jet stream patterns seemingly rule out any relief through mid-February. Experts anticipate a terrible fire season this year.
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This post was first published at the AGF Perspectives Blog.
