Joe Biden, Grasping at Straws

by Greg Valliere, AGF Management Ltd.

Insights and Market Perspectives

IT DOESN’T GET MUCH WORSE THAN THIS: A terrible inflation number is likely today, the President’s job approval rating is plunging, gun violence is out of control in many U.S. cities, mask mandates are coming back and — most ominously — the threat of biological and chemical weapons is very real in Ukraine.

WHAT CAN WASHINGTON DO to reverse this horrible narrative? The options are very limited.

THE WHITE HOUSE will agree to send more weapons to Ukraine, but Russia’s threat to use weapons of mass destruction is a potential game-changer. The American public wants Biden to do more, but an overt U.S. involvement in Ukraine is very unlikely.

VLADIMIR PUTIN is poised to capture much of eastern Ukraine before an alleged deadline of May 9, the anniversary of the end of World War II in Europe — but he cannot capture Kyiv. A war for Kyiv could last for months.

MEANWHILE, THE VIOLENCE IN AMERICA is out of control, with a spike of shootings in Chicago, Washington and New York, where Mayor Eric Adams was supposed to boost Democrats who have been battered by charges that they want to defund the police. But crime has spiked in New York.

AN INITIATIVE ON GASOLINE: The White House is expected to announce today that there will be new regulations allowing a blended form of gasoline that uses ethanol, known as E15, to be sold this summer — a proposal that will infuriate environmental activists.

THE ADMINISTRATION will do this by having the EPA issue an emergency waiver for the summer sale of E15. Typically, E15 cannot be sold in most of the country between June 1 and Sept. 15 because of air pollution rules. The White House believes that the use of E15 can shave 10 cents per gallon of gasoline.

DESPITE THIS GASOLINE INITIATIVE the inflation crisis is likely to prevail into
the summer. The cure will be aggressive rate hikes from the Federal Reserve, which no president wants; the next crisis could be a plunge in house prices.

ONE MEDIA-FUELED CRISIS that we don’t worry about is that a resurgence of Covid variants is a major threat. Panicky universities in the Northeast have reinstated mask mandates but these new variants don’t get people very sick; they produce a mild flu, hardly a reason for panic.

WHAT BIDEN NEEDS is a bill that could curb drug prices, expand pre-K education benefits, and tax very wealthy individuals and corporations. These options, part of the wreckage of Build Back Better, poll well but the option of more government activism has faded in light of the inflation surge and opposition from Sen. Joe Manchin, the maverick West Virginia Democrat.

FOR THE BELEAGUERED Joe Biden, there are few options; once the CPI report is digested this morning, the greatest challenge will be how to respond if Russia uses biological or chemical weapons on civilians in Ukraine. This could become a huge crisis for NATO — and Biden.

 

 

 

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.

©2022 AGF Management Limited. All rights reserved.

This post was first published at the AGF Perspectives Blog.

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