Donald Trump, the Isolationist Populist
Author: Greg Valliere
June 24, 2019
DONALD TRUMP MAY HAVE LOOKED ERRATIC THIS WEEKEND — he called off air strikes on Iran and he temporarily delayed mass deportations — but there’s a consistency to his policies: he’s doing what his base wants.
TRUMP READS THE POLLS CAREFULLY, and he knows his base wants no more Mideast wars; his base wants hard-line solutions on trade and immigration; and his base doesn’t like big corporations. So we expect Trump will continue to avoid a fresh Mideast conflict, he will hang tough against China on trade, he will seek an immigration deal (slamming Democrats if there isn’t one), and he will criticize big mergers, such as the Raytheon-United Technologies deal.
FIND A BLUE COLLAR VOTER in Pennsylvania without a college degree and you’re likely to find a Trump supporter who’s sick of Mideast wars. Trump knows how unpopular these endless wars have become — over 5,000 U.S. troops have died in Iraq and Afghanistan, while another 50,000 were wounded. Hundreds of thousands of civilians have been killed and maimed. Trump is openly disdainful of “my generals” and is determined to avoid another war; his deterrent is spending nearly $750 billion on defense by next year.
TRUMP AND HIS BASE are united in their belief that others have taken advantage of the U.S. — his base is populist and isolationist, especially on the issue of trade, which will be in the limelight this week . . .
WON’T GET FOOLED AGAIN: The legendary anthem by the Who seems fitting as trade talks resume between the U.S. and China at the end of this week. Most analysts — including us — expected a deal by late spring, largely because negotiators on both sides predicted an agreement. We got fooled by the hype from Larry Kudlow and others who predicted a deal, but it wasn’t tough enough for Trump.
THE MOOD IS MUCH MORE CAUTIOUS heading into the June 28-29 G20 summit but we think trade negotiations are about to resume. A genuine breakthrough is unlikely when Presidents Trump and Xi meet and shake hands, a nice photo op for the markets. We still anticipate a trade deal, perhaps by the fall, but there’s a sense of reality — it will take months to resolve all of the outstanding issues.
* * * * *
WALL STREET, THE PROGRESSIVES’ PIGGY BANK: It’s increasingly clear that the ambitious progressive agenda — student loan forgiveness, Medicare for all, the Green New Deal, etc. — would be paid for by taxes on investment transactions. The latest plan, from Bernie Sanders, would forgive the entire $1.6 trillion in student debt, with the bill going to Wall Street.
SANDERS WOULD IMPOSE A O.5% TAX on stock transactions, a 0.1% tax on bond trades and a .005% tax on derivatives transactions.Other big-ticket proposals from Democrats running for president would impose similar tax hikes on Wall Street. The threat isn’t imminent, in our opinion — the Senate surely would block these new taxes — but this is a looming threat to markets later in the next decade as Congress scrambles to pay for more spending.
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.