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On Two Key Fronts, the Coronavirus Becomes a Bitterly Partisan Issue

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On Two Key Fronts, the Coronavirus Becomes a Bitterly Partisan Issue

Author: Greg Valliere

April 16, 2020

WASHINGTON’S DISGRACE: Medical personnel are heroic, the Federal Reserve has been bold, and the American public has largely complied with draconian restrictions. But only in Washington could a pandemic become a bitterly partisan brawl.

Here are the two key issues that have Washington gridlocked:

1. Fiscal policy: Money for small business aid will run out today. Efforts to add $250 billion to the fund have stalled, as Democrats insist on $250 billion more for state and local governments, hospitals and food stamps. Republicans want only the $250 billion for small businesses, and neither side has budged.

It’s possible that Treasury Secretary Mnuchin will eventually iron out a compromise, but a lone dissenter could block unanimous consent, requiring members of Congress to return to Washington. Incredibly, funding for small businesses will run out, and state governments face a dire revenue shortage. If you’re hoping for a V-shaped recovery, this is a major concern.

2. Reopening the country: The politicization of this issue was clear yesterday in Lansing, Michigan, as mostly right-wing protesters demanded an end to the lockdown and the re-opening of businesses. Gov. Gretchen Whitmer, a Democrat, was the target.

Virtually all of the nation’s Democratic governors are leery of re-opening on May 1; they agree with Dr. Anthony Fauci that more testing is necessary. But the White House response is that testing is up to the states — and if the country doesn’t open up in May, the governors and the scientists will will get the blame.

Yet even most of the business executives who joined conference calls with the White House yesterday insisted on more testing before they re-open their companies — and the White House reaction yesterday evening was that testing is the governors’ responsibility.

Slightly less than 1% of Americans have been tested, and the disease clearly has not peaked in some regions, but that won’t stop some states like Nebraska from opening up by May 1, even though rural America is suddenly experiencing clusters of infection.

BOTTOM LINE: Volatility may persist not just in the markets but in the country generally as May approaches, with Democrats warning of a second wave of infections and Republicans insisting that businesses have to re-open. If there are new infections, Republicans will get the blame; if the economy languishes, Democrats will get the blame.

THERE’S A MIDDLE GROUND that would rely on social distancing and face masks — and prompt new aid from Congress — but as with every issue in this gridlocked city, the middle ground is thinly populated.


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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