Donald Trump Abhors a Vacuum — What Will He Do Next?
Author: Greg Valliere
July 30, 2019
THE EXODUS HAS BEGUN out of this steamy city; the House has left town and the Senate will depart in a couple of days, after agreeing to the budget-busting deal that raises the debt ceiling. This six week vacation will create a vacuum — and if there’s one thing Donald Trump abhors, it’s a vacuum.
TRUMP WILL ALSO GO ON VACATION, to his golf club in New Jersey, although he insists he will work every day. This raises the issue of his tweets — increasingly divisive and angry, the tweets are Trump’s method of getting an unfiltered message to his base. Addicted to publicity, we anticipate daily Trump tweets (a dozen or more) that will keep his name on the front pages. Here our best guess on just a few of his August tweets:
A resumption of Jay Powell bashing: There’s no way Trump will be satisfied with a measly 25 basis point cut in the federal funds rate this week. He wants 100 basis points by winter, which isn’t going to happen. So the drumbeat will continue, which will increase speculation that Trump will find a way to oust — or demote — the beleaguered Fed chairman.
Let’s tax French wine: Trump, who doesn’t drink, proclaims that California wines are better than French wines (we disagree). More importantly, a wine dispute could become a big August story, with Trump retaliating against French taxes on U.S. tech companies. A tweet firestorm directed against Emmanuel Macron is guaranteed to please Trump’s nativist base.
Fixing the highways: Eager for more stimulative spending ahead of the 2020 election, Trump is likely to push hard for a new bill that’s emerging in the Senate. The measure would increase spending on highways by 25%, according to an article in this morning’s Roll Call. How to pay for this increase is unclear, not that anyone in Washington cares about paying for anything.
More personnel changes: What better way to get the media buzzing than stirring the pot on still more firings? Commerce Secretary Wilbur Ross is on very thin ice, and acting White House staff director Mick Mulvaney just lost a huge battle over spending; they could be gone by Labor Day. Then there’s the new proposed National Intelligence Director, Rep. John Ratcliff, who has not been properly vetted and has generated a tepid reaction from Senate Republicans. Anyone who opposes Ratcliff will face a furious Trump tweetstorm.
Ambiguity on China trade talks: We think Trump will continue to bash China’s trade practices, which would increase market concerns that a deal is still months away. Trump is in no hurry for an agreement — the longer there isn’t one, the longer the Fed will have to stay accommodative.
Butting in on the Democrats: Trump can’t resist taking shots at the Democrats, which will be a major tweet topic this August. The steady rise by Elizabeth Warren, a populist who actually agrees with Trump on issues like trade, will prompt Trump to dust off the “Pocahontas” epithet. Tweet-fueled racial tensions will persist.
Hoping for impeachment: Trump will provoke congressional Democrats with tweets and stonewalling, daring them to impeach him. He’s convinced that an impeachment drive would backfire on the Democrats, since the public is lukewarm at best on the idea of a trial. House Democrats, intimidated by their angry base, are inching closer to impeachment, which could give Trump the best of both worlds: a highly motivated GOP base, which will turn out in record numbers to protest a “witch hunt,” while demoralized Democrats may not turn out in big numbers because their party failed to impeach.
THERE ARE DOZENS OF OTHER ISSUES that could intrude on the August break, from hurricanes to North Korea. The one constant will be Trump’s tweets, which allow him to dominate the news cycle, filling vacuums unlike any president in recent memory.
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.
©2022 AGF Management Limited. All rights reserved.
