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Election Results Tonight Will be Memorable; Revising GDP Sharply Lower

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Insights and Market Perspectives

Election Results Tonight Will be Memorable; Revising GDP Sharply Lower

Author: Greg Valliere

February 11, 2020

A TRANSFORMATIONAL ELECTION TODAY: The New Hampshire primary has come down to a one-two race between a brash 78-year-old socialist from Brooklyn who is not a Democrat, against a 38-year-old gay mayor of a modest-sized Midwest city. And that’s not even the biggest story.

THE HEADLINE TONIGHT may be the beginning of the end for Joe Biden, who could finish fourth — or, incredibly, fifth — which surely would dry up his campaign contributions. A similar fundraising crisis could confront Elizabeth Warren. Here’s our quick forecast —

First — Bernie Sanders, the likely winner by several percentage points. Sanders
should emerge from tonight as the highly improbable frontrunner for the nomination, and if he wins California on Super Tuesday, Donald Trump may get his fondest wish — a “Communist” to run against, as he refers to Sanders.

Second — Pete Buttigieg, who is prepared to proclaim that tonight’s results
are a victory. Buttigieg’s path is cloudy as the primary season heats up, and his
electability in November is improbable, but this is a remarkable candidate who continues to exceed expectations.

Third — Elizabeth Warren, a disappointing finish for the summer favorite. We doubt
she’ll get close to 20% of the vote, and she could finish lower than third.

Fourth — Amy Klobuchar, a surprise showing for the likable moderate, who’s an increasingly likely vice presidential nominee, at the least.

Fifth — Joe Biden, who made one of the worst campaign blunders in recent memory when he declared last Friday that he probably would lose tonight. That took all the air out of his campaign and demoralized his dwindling volunteers.

THE LIKELIHOOD OF SANDERS AS THE FAVORITE is such a nightmare for establishment Democrats — who fear a November blowout that would doom their House, Senate and gubernatorial candidates — that the once-unthinkable may happen: the party will eye a marriage of convenience with Mike Bloomberg as their only hope to beat Trump. Bloomberg will be the dominant political story as winter turns to spring.
* * * * * *
AN INCREASINGLY SICKLY FIRST QUARTER: We were at a conference yesterday where one topic dominated the conversation — the coronavirus, which most definitely has not peaked and is now producing sharply lower GDP growth estimates for the first quarter. Something close to zero percent growth is possible; and a few economists think GDP could be negative this quarter as the virus shuts down entire industries and cripples the world’s second largest economy.

THE BUBBLY STOCK MARKET apparently is looking past the virus, to the “make-up” growth that could arrive by summer, once the disease has ebbed. And Wall Street can count on accommodative monetary policy for months to come, as Jerome Powell surely will indicate in congressional testimony today.

BUT WE REITERATE, the coronavirus has not peaked. One fellow at our conference yesterday said that 500,000 people may eventually be infected in Wuhan alone, with thousands of deaths in the region.

ENORMOUS FISCAL AND MONETARY STIMULUS in China should be sufficient to prevent a recession; the same applies to the U.S., which is awash in stimulus and is growing modestly. But with much of the world teetering on the edge of recession, the recent stock market rally is puzzling — unless it reflects the expectation of more rate cuts, more spending and a subsequent economic revival.


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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Written by

Greg Valliere

Greg Valliere

Chief U.S. Policy Strategist

AGF Investments

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