Conservatives Mock Shutdown Deal; Trump and Xi at Mar-a-Lago?
Author: Greg Valliere
February 12, 2019
THAT’S IT ?? After weeks of feverish negotiations to avoid a government shutdown, a congressional committee could only agree to a limp $1.38 billion package of border “barriers?” This is a far cry from the $5.7 billion demanded for a wall by President Trump, and it generated mockery from the right wing.
SEAN HANNITY ON FOX called the deal a “garbage compromise,” the head of the Freedom Caucus said Trump is unlikely to accept the deal, and Ann Coulter — who called Trump a “wimp” earlier this winter — can be expected to chime in today. Trump can’t enrage his conservative base — so now, in all likelihood, it’s on to Plan B.
IT HAD BEEN WIDELY ASSUMED that Trump would resort to a declaration of a national emergency, but that has encountered strong opposition from Republicans. So now there’s a new Plan B — Trump may use executive authority to take funds from, say, the Army Corps of Engineers and use the money for a wall.
ONE WAY OR ANOTHER, TRUMP SAID LAST NIGHT, a wall will be built, and this transfer of funds may be his preferred route, even though it will encounter immediate litigation. But it might avoid a shutdown, which has been a disaster for the Republicans; actually, no one in either party wants to deny paychecks to 800,000 workers once again.
SO OUR GUESS THIS MORNING is that some type of Plan B will become likely, but we’re so close to the Feb. 15 funding deadline that an old Washington standby — kicking the can down the road — could emerge, extending the deadline for another few weeks.
THE BOTTOM LINE is that another long shutdown — harming the economy and crippling the airports — still looks unlikely. But the border fight will drag on and on, with the courts soon getting involved. We think Trump could accept some type of border barriers, but he will view $1.38 billion as a pittance, an insult.
TRUMP-XI IN MAR-A-LAGO? Axios and other insiders are reporting that aides to Trump are proposing a splashy ceremony — a made for TV ratings bonanza — at Mar-a-Lago this spring between Presidents Trump and Xi, announcing an agreement in principle to end the trade war. We think this is a likely scenario.
FIRST, HOWEVER, WE THINK THERE WILL BE the inevitable ups and downs as the toughest issues near resolution — intellectual property rights, state-sponsored monopolies and, of course, an enforcement mechanism. There’s virtually no way these issues can be resolved before the March 2 deadline, which will have to be extended (if there’s little progress, Trump could ratchet up the pressure with higher tariffs in early March).
BUT BOTH SIDES NEED A DEAL: Xi has a weakening economy and, potentially, a restive work force. Trump needs a happy stock market as he begins his re-election campaign. So a deal is likely, probably by late spring, which will disappoint Trump’s trade hawks but please his political advisers.
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), Highstreet Asset Management Inc. (Highstreet), 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 and Highstreet are registered as 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.
© 2019 AGF Management Limited. All rights reserved.