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.
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