Tough Guy Trump Has a Plan

by Greg Valliere, AGF Management Ltd.

WE PREDICTED YESTERDAY THAT DONALD TRUMP would play the “law and order” card in an effort to save his presidency — and now it’s clear that he will eagerly play that card.

UNEASY REPUBLICANS: Sens. Tim Scott, John Cornyn and even Mitch McConnell have spoken out in recent days; Trump’s tweets are inappropriate, they say. They want him to lower the temperature and call for calm.

THAT’S NOT GOING TO HAPPEN: Trump mocked governors as “weak” yesterday, telling them that they “look like jerks” by allowing looting and burning (and, sure enough, the police did little as lower Manhattan sunk into total lawlessness again last night).

IT’S CLASSIC TOUGH GUY TRUMP — and it could work, as police in several cities come under armed assault. Trump wants a massive military response, and if it quells the uprising, he’ll happily take credit.

IF, ON THE OTHER HAND, the violence persists, Trump will have a foil even greater than Robert Mueller or Nancy Pelosi — the antifa and rioters. He has a mortal lock on 35% of the vote and perhaps 180 of the 270 electoral votes needed for re-election; he knows what his base wants.

BUT 35% IS NOT ENOUGH: Trump is in danger of losing the center, but he apparently thinks the country will become so sick of urban violence that even moderates will reluctantly embrace a law and order campaign, as they did in 1968, when Richard Nixon won the presidency.

IT’S A RISKY STRATEGY BUT TRUMP HAS NO OTHER OPTION: He’s not going to go all warm and fuzzy, that’s not in his DNA. Trump will relentlessly portray Joe Biden as addled and weak, and it just might work.

UNCHARTED WATERS FOR THE MARKETS: The economy has not bounced back, the markets are simply anticipating it. If urban America stays restive and virus hot spots erupt, the economy may not recover quickly — especially as Congress dithers until late July before passing more stimulus.

A HUGE CONCERN FOR THE MARKETS, as we wrote yesterday, is a Democrats’ trifecta — winning the House, Senate and the White House. The Senate is crucial, and it appears that a decisive Trump loss in the election would switch the math from a GOP majority of 53-47 to something like 51-49 for the Democrats.

A GREAT IRONY: The looters and arsonists are playing into Trump’s hands — they will give him a path to re-election and he’s ruthless enough to take that path as troops flood into the cities. Mayors like Bill De Blasio in New York have to crush the
insurrection, but they don’t have a plan. Trump does.

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.

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This post was first published at the AGF Perspectives Blog.