Bloomberg Out, Huge Plus for Biden; Wall Street Transaction Tax Introduced
Author: Greg Valliere
March 6, 2019
SEVERAL INTERESTING DEVELOPMENTS YESTERDAY, mostly obscured by the all-out war between Donald Trump and investigators, and by a tense standoff in the House over an anti-Semitism resolution. Here goes . . .
SENSING A VERY NARROW LANE, Michael Bloomberg, 77, announced yesterday that he will not seek the presidency. We thought he could win the general election but not the nomination; Bloomberg’s conservative positions on Wall Street, deficits and police made him a pariah among the party’s progressives (who aren’t shy about taking his money).
THIS IS A HUGE PLUS FOR JOE BIDEN: The moderate path is virtually wide open for him; John Hickenlooper and Amy Klobuchar don’t have the firepower to stop the well-funded former Vice President. His main challengers seem to be Bernie Sanders, who’s quite unpopular with the party’s establishment, and Kamala Harris, who may need more seasoning. The wild card, hard to handicap, is Beto O’Rourke.
SO THE CLEAR FAVORITE FOR THE NOMINATION appears to be Biden, 76, who has been vacillating. Like every candidate, he has his flaws, but Biden has the strongest argument: he has a plausible chance of winning Pennsylvania, Michigan and Wisconsin, three states that helped propel Donald Trump to the White House in 2016.
WALL STREET TRANSACTION TAX: Progressive activists, led by the ubiquitous Alexandria Ocasio-Cortez, have introduced legislation to impose a transaction tax on Wall Street trading. It would be 0.1% per trade, which doesn’t sound like much, but it would raise $777 billion over a decade, proponents claim.
THE FINANCIAL SERVICE INDUSTRY believes this is a revenue grab aimed at electronic trading and, if enacted, could eventually move higher than 0.1%. So the lobbying against this proposal will be fierce; the proposal could pass in the House but has virtually no chance in the Senate. You can be sure this will be a rallying cry in the 2020 election.
ALARMING DEFICIT NEWS: Data for the first four months of the fiscal year, released yesterday, showed red ink at $310 billion, up a staggering 77% from the same period last year. The Trump tax cuts are getting most of the blame; receipts were down 2%. But spending rose by an eye-popping 9% as Washington abandons any pretense of caring about deficits.
FEDERAL RESERVE ON HOLD: Interesting speech yesterday from Boston Fed President Eric Rosengren, a moderate who’s an FOMC voting member this year. He said it could be “several meetings” before the central bankers have a clear idea of the economy’s direction; he cited uncertainties such as trade and slower growth abroad.
OUR GUESS is that a rate hike — or, less likely, a rate cut — won’t be on the table until the July 30-31 meeting . . . or the Sept. 17-18 session. This dovish outlook comes as Donald Trump resumes his sniping at Chairman Jay Powell; in his marathon speech last weekend, Trump lashed out at Powell, partly because the dollar is too strong, Trump indicated.
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 Asset Management (Asia) Limited (AGF AM Asia) and AGF International Advisors Company Limited (AGFIA). AGFA is a registered advisor in the U.S. AGFI is registered as a portfolio managers across Canadian securities commissions. AGFIA is regulated by the Central Bank of Ireland and registered with the Australian Securities & Investments Commission. AGF AM Asia is registered as a portfolio manager in Singapore. 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.
© 2020 AGF Management Limited. All rights reserved.
