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Reeling White House Has a Scapegoat

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Reeling White House Has a Scapegoat

Author: Greg Valliere

June 1, 2022

WITH INFLATION THIS BAD, the White House needs a scapegoat — ASAP. And there’s an easy target to blame: Jerome Powell and the Federal Reserve, who now own the issue of inflation.

WE’RE HEARING THAT THERE’S NEAR-PANIC within the White House as Joe Biden’s job approval rating remains stuck in the low-40s amid the growing likelihood of an election blowout this November. The Republicans need a net gain of only five seats to capture the House, and a pickup in the 20-to-30 seat range looks likely.

THIS IS ALMOST ENTIRELY a product of surging inflation, where the president has no answer, as his Wall Street Journal column confirmed yesterday. Actually, he has one option — blame his own team, especially Powell, who was spectacularly wrong on inflation a year ago.

A WHITE HOUSE STAFF SHAKEUP is increasingly likely, starting with Chief of Staff Ron Klain, who’s in the doghouse for not coming up with an inflation battle plan. But the big target is Powell, as Biden makes it clear that winning the inflation battle is up to the Fed.

IT STRUCK US AS DISINGENUOUS YESTERDAY to hear Biden proclaim how much he supports the Fed. His real message is that fighting inflation is the Fed’s job, not Biden’s. So the implicit message is clear: failing to succeed should be blamed on Powell, not Biden.

THE NEXT STEP IN THIS BLAME GAME will come as the Fed hikes rates by 100 basis points this summer. If the unemployment rate begins to drift higher, Biden can blame the two 50-basis point rate hikes, which the Fed is virtually certain to impose on June 15 and July 27.

WHAT’S CHANGED IN THE PAST FEW WEEKS is the president’s anger toward his staff, which is why we think a shake-up is coming, quite possibly before the Nov. 8 election. Of course, that may not make his decision-making any smoother; just this week there was public indecision over U.S. missile shipments to Ukraine and imposing student loan relief.

A LIFE PRESERVER FOR BIDEN would be a sharp drop of inflation during the summer, which seems unlikely, or signs that Republicans are on the wrong side of public opinion on gun reform and abortion curbs. Because of those two issues, the Senate remains too close to call in November, as Democrats in the North hammer away on guns and abortion.

EVEN IF THE DEMOCRATS HANG ON TO THEIR RAZOR-THIN SENATE MARGIN, the House appears to be lost, which means Biden’s agenda will be doomed in the second two years of his first term. And House Republicans will have a field day investigating Hunter Biden for those next two years.

SO IT’S TIME TO START BLAMING OTHERS, and perhaps firing others. But the likely November blowout will instantly prompt the party — and Biden — to consider whether to make a change at the top of the ticket as the next presidential race begins.

THREE ENORMOUS POLITICAL STORIES ARE TAKING SHAPE: The House will flip, Biden probably will not seek re-election, and Donald Trump is losing altitude as Republicans look at other options, led by Florida Gov. Ron DeSantis. This all starts with inflation, which is likely to persist until the war ends.
* * * * *
EDITOR’S NOTE: We have a 5:45 a.m. flight tomorrow morning, so we don’t plan to publish. Back on Thursday . . .


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.

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©2023 AGF Management Limited. All rights reserved.

Written by

Greg Valliere

Greg Valliere

Chief U.S. Policy Strategist

AGF Investments

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