Inching Toward a China Trade Deal; Elizabeth Warren’s Fuzzy Math
Author: Greg Valliere
November 4, 2019
THE STOCK MARKET HAS RALLIED to near-record highs on lots of positive news: no recession, decent earnings, an accommodative Fed, etc. So what’s the next development that could sustain the rally? A trade deal with China, which looks increasingly likely before Christmas.
WE’VE BEEN DOWN THIS ROAD BEFORE, only to stall. But there seems to be a strong desire on both sides to avoid new tariffs on Dec. 15, and intensified talks have led to speculation about where (probably in the U.S.) a phase one deal will be signed by presidents Trump and Xi.
THE HEAVY LIFTING over issues like intellectual property theft will be left to phase two negotiations that could drag on through 2020, but an initial deal — with the likelihood of reduced tariffs — would be a tremendous plus in the U.S. Farm Belt and for American manufacturers. The uncertainty that has gripped both sectors would ease; plans to hire and expand would finally proceed.
CHINA TRADE HAWKS — from Chuck Schumer to Peter Navarro — probably will scoff at a modest phase one deal, but they’re not running for a second term. Trump would boast (regardless of what’s in the pact) that it’s the greatest deal of all time. And the markets soon may have still another
reason not to worry.
* * * * *
NOT PASSING THE SMELL TEST: Elizabeth Warren’s Medicare for All plan immediately hit a wall of criticism — even derision — for its absurd explanations of how to pay for it. Even Saturday Night Live mocked it this weekend, but we recommend the sobering editorial in the Wall Street Journal this morning, which made it clear that Warren can’t credibly pay for it.
THIS MAY GIVE JOE BIDEN the opening he’s been looking for. His aides immediately pounced on the Warren plan, rejecting her assertion that only billionaires would be forced to pay higher taxes. Actually, it contains many higher taxes, including a transaction tax on stock trades.
WE THINK BIDEN’S PLUNGE may have leveled off. He now has an issue — far-left health plans will scare centrist voters in all-important swing districts. Biden’s advocacy of expanding Obamacare may resonate with voters who primarily want a nominee who can defeat Donald Trump (Biden can, and this is still his strongest argument). Of course, Biden has to contend with another moderate, the fast-rising Pete Buttigieg.
OUR SENSE IS THAT MOST DEMOCRATS would be happy to expand on Barack Obama’s Affordable Care Act; the Warren and Bernie Sanders plans have such extreme pricetags — with the threat of higher taxes — that they could become juicy targets. And to complicate Warren’s prospects, Sanders hasn’t gone away; his very loyal base still looks rock-solid, so she will have to fight for his constituents.
IT’S A VERY FLUID field in Iowa, with three months to go before the Feb. 3 caucuses. Is there someone who could emerge from the pack and peak at just the right moment, as Obama did in 2008? Buttigieg has become the insiders’ favorite but maybe he’ll peak too soon, in December. Meanwhile, a very very long shot lurks — a candidate who young people increasingly and passionately support: Andrew Yang, who speaks their language.
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.
© 2020 AGF Management Limited. All rights reserved.
