Jobs Report Won’t Kill Next Stimulus; Defund the Police — a Life Preserver for Trump
Author: Greg Valliere
June 8, 2020
LAST FRIDAY’S STRONG JOBS REPORT will not derail still another stimulus package. We expect enactment of a $1 trillion-plus bill by early August, despite grumbling from some deficit hawks that it isn’t needed.
FIRST OF ALL, THE REPORT wasn’t quite as strong as the headline number, which showed unemployment fell to 13.3%. The Bureau of Labor Statistics said there was a “misclassification error” in the data which would have produced a rate of 16.3%. That’s still better than the 20% jobless rate that many economists expected.
AFTER TALKING THIS WEEKEND with experts in both parties, our sense is that the two most important players — Donald Trump and Jerome Powell — are still on board for another bill that would provide aid to state and local governments, still another shot of assistance to small business, and perhaps some type of tax bonus for people who return to work.
ONE REASON WHY MOST REPUBLICANS will grudgingly accept another bill is their desire to address a flood of lawsuits targeting businesses; some type of liability protection is increasingly likely. Whether Trump will get a payroll tax cut is still doubtful but no longer out of the question.
THE WHITE HOUSE REACTED TRIUMPHANTLY to the jobs report, but our sources think it’s premature to declare victory. Most economists think this is no time to tap on the brakes because the recovery is so tentative — and covid-19 cases seem to be rising again.
THE GOOD NEWS, IN OUR OPINION, is that the worst of the recession may be over — with even more fiscal and monetary stimulus available. No one wants to derail that scenario, certainly not Trump, who now trails Joe Biden on betting sites and in key states like Michigan, where one poll shows Biden suddenly ahead by 12 points.
* * * * *
A LIFE PRESERVER FOR TRUMP? With public opinion overwhelmingly in agreement that African-Americans are mistreated by the police, progressive activists are determined to abolish or defund the police. A campaign to defund the police would be a gift for the reeling Trump, who will proclaim that Democrats are veering sharply leftward.
TRUMP DESPERATELY NEEDS AN ISSUE that could improve his standing with moderate voters, and it might be this (along with an improving economy). Mayors in New York and Los Angeles are talking about shifting resources away from police to community projects, and the city council in Minneapolis may defund the police. That’s too radical for most moderates.
THIS WILL BECOME A POLITICAL LITMUS TEST for Biden, who will urge police reform, not defunding. He and virtually all Democrats will embrace a bill that will be introduced today that would target racial profiling, ban chokeholds and no-knock warrants, and make it easier to prosecute and sue for police misconduct.
THERE’S NO QUESTION THAT A BILL like this will win enactment, but Biden will have to do more. Former Orlando police chief Val Demmings, now a well-regarded House member, is rising fast as a contender for Biden’s VP pick.
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.
©2021 AGF Management Limited. All rights reserved.