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A Turning Point is Coming Into Focus

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Insights and Market Perspectives

A Turning Point is Coming Into Focus

Author: Greg Valliere

April 27, 2020

LIFE WILL BE FAR DIFFERENT, perhaps for years to come, but a turning point is coming in May, which begins this Friday. Five more states are gradually opening up this week, on the heels of four that already have eased restrictions (eight states never did lock down).

MOST PEOPLE ARE WILLING to accept social distancing, more testing and tracking, the use of masks, gloves and sanitizers, etc. It’s the new normal. The key is that the world will simply adapt — no handshaking, no sold-out Yankee Stadium — while accepting the grim reality of new infections until a vaccine is available.

THIS IS STILL DEADLY SERIOUS: U.S. fatalities are headed higher, perhaps approaching 100,000 by late summer. Some battered states, like New Jersey, will need many more weeks before re-opening. Still another stimulus package will be necessary.

THE FINANCIAL MARKETS HAVE PRICED THIS IN: A terrible second quarter will be followed by a halting recovery in the second half; interest rates will stay ultra-low. A depression is unlikely — just one hellacious second quarter followed by a choppy recovery.

THE TIPOFF COMES FROM THE “SCARF LADY,” Dr. Deborah Birx, who said this weekend that while social distancing will have to persist through the summer, a “dramatic” decrease in infections and fatalities is likely by late May. That gives cover to most governors, who will open up by Memorial Day — or perhaps even by May 15.

THIS IMPROVING SCENARIO may come too late for Donald J. Trump. The one thing that politicians dread — ridicule — is now an albatross for him after his bizarre suggestion that disinfectants could be ingested or injected. He wasn’t being sarcastic.

A GREAT IRONY is that an improving economy by the second half may not be enough to save the Republicans. Democrats will retain the House on Nov. 3, and their chances of capturing the Senate have improved (more on this tomorrow). Trump has no better than a 50-50 chance of winning re-election.

THUS HE WILL HAVE NO CHOICE but to accept more stimulus, placing him at odds with Mitch McConnell and GOP fiscal hawks. The next package will cost at least $1 trillion, most of it going to state and local governments. McConnell worries about the deficit but Trump couldn’t care less — money is no object.

THE FOUR GREAT QUESTIONS THIS SPRING: First: Can Washington prevent a depression? Yes. Second: Will the public come out of hiding? Yes, but maybe not immediately. Third: Will Trump win re-election? Too early to make that call. Fourth: The biggest question of all — will there be a second wave of the virus? Can’t rule that out by winter, but we’ll be ready for it, we’ve turned a corner.


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.

©2021 AGF Management Limited. All rights reserved.

Written by

Greg Valliere

Greg Valliere

Chief U.S. Policy Strategist

AGF Investments

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