by Greg Valliere, AGF Management Ltd.
Insights and Market Perspectives
Author:Â Greg Valliere
September 23, 2020
THIS PASSES AS PROGRESS: Yesterday the House overwhelmingly agreed to a stop-gap funding bill that will keep the government open until Dec. 11. The agreement between Nancy Pelosi and Steven Mnuchin, which almost certainly will pass in the Senate, did not address a pandemic relief bill, which remains stalled.
THE DEAL MEANS THERE WONâT BE A GOVERNMENT SHUTDOWN when the fiscal year begins on Oct. 1, but it also means that a contentious spending battle is likely, as usual, just before the holidays. The so-called âcontinuing resolutionâ probably will need another extension that will last until days before Christmas.
MEMBERS OF CONGRESS are eager to get out of town next week. Republicans believe the economy will recover without another stimulus bill, while Democrats want to begin campaigning against the steamrolling of a Supreme Court nominee, who is poised to win approval in record time.
REPUBLICANS WEâVE TALKED WITH believe the Supreme Court vote will produce a conservative majority for at least two decades, fulfilling their greatest goal. Even if the GOP loses the White House and the Senate this fall, a transformed court will be Mitch McConnellâs legacy; he has an iron grip on the process.
DEMOCRATS WEâVE TALKED WITH are increasingly nervous about Joe Biden, who has not shared their outrage over the court. They fear Trumpâs energy and audacity on the campaign trail, contrasting with Bidenâs passivity. But the Democrats believe theyâre close to flipping the Senate, and we agree.
BOTH PARTIES ARE HOLDING THEIR BREATH ahead of the pivotal first debate next Tuesday night; either candidate is capable of a horrific gaffe. Trump has refused any debate preparation, while Biden is memorizing his lines after weeks of scripting by his camp.
WHILE THE SUPREME COURT AND ABORTION will become dominant issues, this might not affect the electorate much because so many voters â close to 90 percent â have made up their minds. The pivotal issue, in our opinion, is Trumpâs handling of the virus â itâs an even bigger issue than the economy, which slightly favors Trump.
THE PRESIDENT GIVES HIMSELF an A-plus for his âphenomenalâ handling of the virus, and if he repeats that every day until Nov. 3, enough people may believe him. The FDA and other medical experts do not believe him; they are certain that a vaccine will not be available by election day, as Trump claims. A vaccine this winter is a more realistic goal.
THE DEMOCRATS, MEANWHILE, seem fearful of a Trump surge in battleground states that resembles the 2016 photo finish. But Democrats have two very important cards to play: the abortion issue, which will motivate female voters, and a huge financial advantage. Bidenâs TV ads are everywhere, while the Trump camp, surprisingly, has financial woes. In a close election, that could make a difference.
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