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A Whiff of Panic in Washington

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A Whiff of Panic in Washington

Author: Greg Valliere

July 20, 2020

AS CONGRESS RETURNS TO THIS STEAMY CITY, it’s not an exaggeration to report that there’s a whiff of panic in the air, as the U.S. fails, utterly, to control the pandemic.

THE ANXIETY IS PARTICULARLY ACUTE among Republicans, many of whom say — in private — that Donald Trump has become an albatross for the party, which now faces the very real prospect of losing the White House, the Senate and the House.

THE ECONOMY, WHICH SEEMED POISED TO REBOUND nicely this quarter, is a huge unknown, as a majority of Americans — especially in the Sunbelt — once again are reluctant to dine out, travel or go to malls. There will not be a V-shaped recovery; the public still thinks the country opened up too soon.

AN UNWIELDY, COSTLY STIMULUS BILL still looks likely by early August, but the differences between both parties — and the differences within the parties — guarantee several weeks of bickering before a bill is enacted, which may simply prevent the economy from tanking, not rebounding. More aid may be necessary.

THE DOMINANT ISSUE, OF COURSE, is the dramatic increase of infections, hospitalizations, and fatalities. The successful response has come from countries like Germany and Canada; the response in the U.S. has been a cacophony of confusing signals from leaders and the depressing refusal by many Americans to embrace social distancing and masks.

A CONSENSUS IS EMERGING IN WASHINGTON: Manage the crisis, spend another $1.5 trillion, ignore Trump (if possible) and wait for a vaccine. The mantra that we’ll have a vaccine by December is deafening; we shudder to think that this timetable may be unrealistic.

IN THE MEANTIME, there’s an election in less than four months. Trump, in his train
wreck of an interview with Chris Wallace, made it clear that there will be no limits
on his assault on Joe Biden, who still looks like a shaky front-runner. And Trump
continues to allege that the election will be rigged.

THE POLLS SEEM HARD TO BELIEVE: Is Biden really ahead by 15 points, as the Washington Post/ABC News poll showed this weekend? We think Biden’s lead is more like 10 points, and there’s downside risks for him as his leftist agenda becomes a central issue. But as one Republican told us this weekend, the issue seems to be whether Biden will win narrowly or in a landslide.

IN THE DECADES WE’VE BEEN IN WASHINGTON, there’s never been a combination like this, as a pandemic and urban gun violence persist ahead of a potential tidal wave election. A stretch of exceptional volatility looms for the financial markets, in our opinion, as the economy fizzles and it finally sinks in — the U.S. has failed, utterly, to control the virus.


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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