Joe Biden Meets #Me Too; NAFTA Replacement in Trouble; Kudlow and the Fed
Author: Greg Valliere
April 1, 2019
THE BIG STORY IN WASHINGTON this morning is that Joe Biden’s campaign may be in trouble before it begins. There are literally hundreds of accounts of Biden fondly caressing women’s shoulders, hugging and kissing in a manner that he felt was benign and comforting. But some of the recipients do not agree — they thought it was creepy, to say the least — and now this former Vice President from another generation has met #MeToo.
THERE’S MORE: Biden has repeatedly apologized for his shabby treatment of Anita Hill when he chaired the Senate Judiciary Committee’s hearings on Clarence Thomas, but he has never apologized to her personally. And there are reports that his son Hunter had extensive relations with Ukrainian oligarchs. This could nullify some of the criticism Democrats plan to level against Trump, even though it seems like Biden’s transgressions are small potatoes compared to Donald Trump’s bragging about groping women, and his ties to oligarchs.
BIDEN HAS BEEN THE SHAKY FRONTRUNNER for the Democrats’ nomination, based on the belief that he has the best chance of beating Trump in states like Pennsylvania. But as more pictures surface, showing Biden rubbing women’s’ backs, it will be a field day for late night comedians. Tellingly, the Democrats running for president offered tepid support — or no support — for Biden this weekend. There’s a new generation running, mostly female, and this may be the break they needed.
NAFTA REPLACEMENT IS IN TROUBLE: Lost amid the Mueller report and China negotiations is the growing likelihood that the new USMCA may not win ratification; an August deadline seems far-fetched. Leaders in both parties are skeptical of the deal because it doesn’t lift aluminum and steel tariffs; at a minimum Trump will have to lift these tariffs but his advisers want to keep quotas. Without lifting the tariffs, the shaky Trudeau government may not ratify the deal, either, and U.S.-Mexico relations are strained.
DEMOCRATS HAVE OTHER USMCA ISSUES: They want to toughen the trade deal’s environmental and labor standards, they want strict enforcement standards, and they want to strike a provision that would benefit prescription biologics. But it’s highly unlikely that the participants will agree to re-open the negotiations. The next key date is April 19, when the International Trade Commission will report on the deal’s economic impact. What if there’s no ratification? Trump has vowed to return to the pre-NAFTA days, which would be a calamity for trade between the three countries.
LARRY KUDLOW SPINS OUT: There are signs that the winter freeze is over; today’s retail sales report and Friday’s jobs data will be crucial. China reported surprisingly strong manufacturing data this morning. Western Europe is a mess, but if the U.S. and China are growing, there may not be a need for more stimulus — yet Larry Kudlow, who is President Trump’s chief economic adviser, has demanded an immediate a 50 basis point rate cut from the Federal Reserve. We think Larry should know better than to rip the Fed in public.
KUDLOW’S COMMENTS, along with a disingenuous assurance that he wants an “independent” Fed, reinforces the deepening split between the White House and the central bankers. We think it’s unlikely that the Fed will cut rates this year, largely because the economy is poised to snap back in the second quarter; growth of 2% or better for the rest of the year seems very do-able, with inflation inching higher.
THIS IS NOT ACCEPTABLE FOR TRUMP, whose bitter rhetoric will continue; he wants much better than 2% growth, and he wants lower rates and a weak dollar ahead of the election, and if he doesn’t get it, we suspect he will seek Jerome Powell’s departure. We don’t think he has the authority to fire Powell, and we don’t think the Chairman would leave voluntarily, but a daily Twitter drumbeat against Powell will — at the least — lead to a market perception that he’s vulnerable.
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.