Dust Settles After Two Huge Political Developments Rock Washington

by Greg Valliere, AGF Management Ltd.

Insights and Market Perspectives

WE FULLY ACKNOWLEDGE that the war in Ukraine and the Federal Reserve’s tightening have eclipsed the the political narrative in Washington, but there’s news on this front as well — as Republicans face bitter primaries this spring while navigating the enormously controversial issue of abortion.

THE OLD ADAGE OF THE DOG CATCHING THE BUS, then wondering what to do with it, surely applies to the abortion debate. For years, Republican candidates have assured voters that they would ban abortion if they only had the chance — and now that they do, and they’re afraid the issue could backfire on them.

POLLS SHOW THAT ROUGHLY 25-30% of the public supports a total ban on abortion; the rest support keeping the procedure legal (perhaps while imposing some restrictions). Yet in several states, a total ban looms, and a majority of Republicans in Congress fear this will hurt them this fall — especially as they continue to advocate a ban even in cases of rape or incest.

IN MANY STATES where abortion could be banned if the Supreme Court reverses Roe v. Wade, the idea that abortion should be an issue between women and their doctors has widespread support.

WE’LL LEAVE THIS COMPLEX AND EMOTIONAL ISSUE for others to analyze, except to make the following comment: abortion will push other topics — illegal immigration, urban crime, and especially inflation — off the front pages. And that’s a plus for the Democrats, who will benefit as angry voters turn out in large numbers against the GOP.

WE STILL THINK THE DEMOCRATS are likely to lose the House in November, but an intense national debate on abortion may make it more challenging for Republicans to capture the Senate; several northern races suddenly look more difficult for the GOP.
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THE OTHER POLITICAL BOMBSHELL this week was the easy victory by J.D. Vance in the Ohio Senate primary. Vance and other GOP Ohio candidates endorsed by Donald Trump won their primaries in what was a clear victory for the former president. Trump still has enormous influence among the Republicans’ conservative base, but potholes loom for the former president —

A May 10 West Virginia House primary is a fascinating race between Alex Mooney, a right wing Republican endorsed by Trump, against the more moderate David McKinley, a Republican who is aligned with Democratic Sen. Joe Manchin.

Then there’s the major primary on May 17 in Pennsylvania where Trump has endorsed Dr. Mehmet Oz, who is in a neck-and-neck race against a more moderate Republican, hedge fund manager David McCormick. A victory by Oz would be a huge win for Trump.

Also on May 17, there’s a complicated primary vote in North Carolina, with Trump making a surprise endorsement of little known Rep. Ted Budd, who’s running against moderate ex-Gov. Pat McCrory and ex-Rep.Mark Walker, who refuses to drop out. A victory by Budd would be a significant win for Trump.

The May 17 Idaho gubernatorial primary is shaping up as a possible loss for Trump, who has endorsed Lt. Gov. Janice McGeachin, who appears to be trailing significantly against Gov. Brad Little.

Perhaps the biggest fight of all these primaries is the May 24 Republican primary in Georgia, where Gov. Brian Kemp appears to be comfortably ahead of former Sen. David Perdue, who Trump has endorsed. Kemp has infuriated the former President, who claims — without basis — that he was cheated in the 2020 Georgia presidential vote.

THUS THE OHIO RESULT this week is not necessarily a precursor of a clean sweep this spring by Trump. Then there are more races to come, and we think if the farthest-right candidates are on the ballots on Nov. 8, the Democrats have an opportunity if they can convince voters that their nominees are more moderate than the Trump-endorsed candidates.

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.

This post was first published at the AGF Perspectives Blog.

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