by Greg Valliere, AGF Management Ltd.
Insights and Market Perspectives
CONFIDENCE IS A HUGE WILD CARD and it appears to be plunging on many fronts; a shortage of baby formulas is a metaphor for an economy heading off the tracks. Food shortages also loom, and inflation in general may stay elevated through the summer.
IT APPARENTLY DOESN’T MATTER that consumers — and states — are flush with cash, or that the labor market is still red-hot. The public’s confidence is plummeting, as fears of recession spread from Goldman Sachs to Main Street.
THIS IS STARTING TO LOOK like a self-fulling prophecy, and Joe Biden can’t do much about it. He may agree to modest student loan relief and a gasoline tax break, but he’s flailing, headed for a major election defeat in November.
BIDEN HAS THREE POTENTIAL PLUSSES that could lessen the magnitude of his defeat this fall. First, Ukraine has repulsed the inept Russian invasion; second, the Federal Reserve may slow its tightening after two more 50-basis point moves this summer; and third, the Republicans are in disarray, as we describe below.
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ALL EYES ON PENNSYLVANIA: Donald Trump’s dominance in the Republican Party faces a major test tomorrow — the turbulent Pennsylvania primary, where his endorsement of Dr. Mehmet Oz could fail. What’s surprising is that many mainstream Republicans in this town are rooting for Trump to stumble.
THE FURIOUS BATTLE BETWEEN TRUMP and Senate Minority Leader Mitch McConnell has erupted again, as the former president urges Congress to reject new aid for Ukraine. McConnell was in Kyiv this past weekend, urging passage of the $40 billion bill. Incredibly, 57 House Republicans voted against it last week, opening a wide fissure within the party.
RIGHT WING ACTIVISTS want to kill the measure, citing its cost and pressing needs at home, and some will oppose virtually anything that Biden wants. The Ukrainian bill eventually will pass, but McConnell and the mainstream have a fire to put out within the isolationist GOP grass roots.
THE TOXIC DEBATE OVER White Replacement Theory has also divided the party, with hard-line conservatives embracing Tucker Carlson’s charges that illegal immigrants and people of color want to dominate U.S. policy. In light of the Buffalo massacre this weekend, White Replacement Theory has become a major controversy.
THIS IS THE LAST THING McCONNELL WANTS: As we wrote last week, he wants to run out the clock, staying away from controversy — and that includes staying away from Trump. Many Republicans want investment banker David McCormick to win in Pennsylvania — which would be a repudiation of Trump. McCormick may have the best chance of winning in November; if fast-closing right wing activist Kathy Barnette wins tomorrow, she probably would be the underdog in the general election.
TRUMP NEEDS A VICTORY TOMORROW NIGHT, because he almost certainly faces an embarrassment in Georgia next week, when his arch-enemy Brian Kemp is expected to win comfortably in the GOP’s gubernatorial primary.
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This post was first published at the AGF Perspectives Blog.
