Republicans vs. Big Business; A Glimmer of Hope on Iran
Author: Greg Valliere
April 7, 2021
THE MEDIA IS HAVING A FIELD DAY over the fight between Republicans and Blue Chip businesses like Coca-Cola, Delta Airlines and even baseball — and now Mitch McConnell has bluntly entered the dispute.
THIS REVOLVES AROUND NEW ELECTION LAWS in Georgia and other states. Liberal activists have convinced many businesses that the laws restrict voting, but the Wall Street Journal editorial page and many conservative Republicans say Georgia has actually made it easier to vote. There are two sides to this bitter story.
THE FRICTION ESCALATED this week when McConnell called companies opposing the voting laws “stupid,” and he threatened unspecified “serious consequences” if corporations “become a vehicle for far-left mobs to hijack our country from outside the constitutional order.” But after looking at this high-visibility fight, McConnell’s “serious consequences” look less threatening.
THERE ARE TWO REASONS WHY THIS IS WORTH FOLLOWING:
1. There’s an implicit threat from Republicans that they could drop their opposition to higher taxes on businesses. This probably is a hollow threat, but it’s clear that relations between the GOP and business have soured; even the Chamber of Commerce has become less supportive of Republicans.
2. A populist backlash — and boycotts — may erupt among anti-corporate Donald Trump supporters. During his presidency, Trump frequently bashed Fortune 500 companies, ranging from drug companies to Big Tech. Many companies refused to support Trump’s claims that massive voter fraud denied him a second term, and now he’s seeking revenge.
IN THE FINAL ANALYSIS, the interests of Big Business and most Republicans will continue to intersect; this is a family fight. McConnell’s threats will stir up the Trump base, but our prediction is that this controversy will be a headline risk, with a modest impact on corporate earnings.
* * * * * *
A GLIMMER OF HOPE ON IRAN: Neither side is talking directly to each other this week in Vienna, as intermediaries shuttle back and forth with proposals from U.S. and Iranian officials — but this is a start.
TALKS ARE LIKELY to continue through the end of this week, with little hope for a comprehensive agreement until after the June 18 Iranian elections. Hassan Rouhani, the incumbent president, is ineligible to run for re-election because he has served two terms; relations with the U.S. will be a major issue in the voting.
THERE ARE MANY OBSTACLES: Iran wants all sanctions imposed by the Trump Administration lifted immediately, but the U.S. wants incremental steps. And Iran seems unwilling to show much transparency in its nuclear enrichment program, while the U.S. insists on aggressive inspections.
THE BOTTOM LINE is that Iran may refrain from rocket attacks and other provocations in the Persian Gulf as long as the negotiations continue. If both sides keep talking, the region might enjoy relative calm, and oil prices could soften.
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.