AGF Logo
  • Home
  • Industry and Expert Views
  • Investing and Market Views
  • Capitol Insights
  • Français
  • AGF.com
Skip to content
AGF logo
Insights and Market Perspectives
  • Industry and Expert Views
  • Investing and Market Views
  • Capitol Insights
  • Contributors
  • Français
  • Search
Search
Close
Persistent Inflation Dooms Democrats’ Election Prospects

  • Industry and Expert Views

For Print Only Logo
Insights and Market Perspectives

Persistent Inflation Dooms Democrats’ Election Prospects

Author: Greg Valliere

October 14, 2022

YESTERDAY’S TERRIBLE INFLATION REPORT virtually guarantees a 75 basis point rate hike from the Federal Reserve on Nov. 2 — and it also is the last straw in the election outlook. Republicans are headed for a very good night on Nov. 8.

THE MOMENTUM IS CLEARLY TILTING toward the GOP, as polls show that anxiety is rising again among voters over stubbornly high inflation. A solid election outlook for Republicans may have been one of the reasons for the puzzling stock market rally yesterday.

IT SURELY WASN’T THE INFLATION REPORT, which has raised a fundamental concern — the Fed’s aggressive tightening hasn’t worked yet, which means another big move is likely after a 75 basis point hike on Nov.2. Tightening could persist well into the winter.

DEMOCRATS WE TALKED WITH yesterday were dismayed, and were largely annoyed that President Biden hasn’t ruled out a recession this winter; it could be mild, he said, but his confusing message this week was the last thing Democrats needed. “Why didn’t he just say the jobs market is great and the economy is not in recession?” one Democrat told us.

THE MOOD IN WASHINGTON is that the House is lost; Republicans only need a net gain of five seats, and something like 12-to-20 seems likely. And some key Senate races are moving away from Democrats in Pennsylvania, Wisconsin and Nevada. A one-seat net Senate pickup for the GOP is increasingly likely, potentially giving Republican control of both houses.

THIS COULD BE A MARKET PLUS: Even if they just take the House, that would be enough for Republicans to thwart any activist legislation; no significant tax hikes would be likely in 2023-24, and spending (except for defense) would be restrained.

AS WE WROTE EARLIER THIS WEEK, Democrats are bracing for a furious post-mortem, with a focus on overly liberal prescriptions and poor messaging. A house-cleaning is likely by Thanksgiving.

NO ONE EVER SAID POLITICS IS FAIR, and the Democrats were stuck with making policy after the worst pandemic in 100 years. Hindsight is 20-20, and it’s now clear that fiscal policy was way too stimulative and monetary policy was way too loose. The payback is coming on Nov. 8, with the Republicans poised to easily capture the House and perhaps the Senate as well.


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.

For further information, please visit AGF.com.

©2023 AGF Management Limited. All rights reserved.

Written by

Greg Valliere

Greg Valliere

Chief U.S. Policy Strategist

AGF Investments

Also Read

  • Investing and Market Views

Why Some Market Participants Are Worried About “Zero Day to Expiry” Options Trading

March 16, 2023

  • Investing and Market Views

What The Collapse of Two U.S. Banks Could Mean for Markets

March 14, 2023

  • Investing and Market Views

Why It’s Too Early to Claim Victory Over Inflation – Or Recession Concerns

March 9, 2023

  • Investing and Market Views

Seeking Balance Following Market Extremes

March 9, 2023

Get perspectives straight to your inbox.

Subscribe now

More articles like this

Greg Valliere, Chief U.S. Policy Strategist

  • Industry and Expert Views

Donald Trump Hits the Wall

Greg Valliere | March 28, 2023

Timely insights from inside Washington.

Read More
Greg Valliere, Chief U.S. Policy Strategist

  • Industry and Expert Views

May Madness — Debt Ceiling Timetable is Shifting

Greg Valliere | March 27, 2023

Timely insights from inside Washington.

Read More
Greg Valliere, Chief U.S. Policy Strategist

  • Industry and Expert Views

Joe Biden Finally Gets to Canada — What’s on the Agenda?

Greg Valliere | March 24, 2023

Timely insights from inside Washington.

Read More
AGF Logo
  • Industry and Expert Views
  • Investing and Market Views
  • Capitol Insights
Follow AGF

AGF Web Site Pages © 2023 AGF Management Limited. All rights reserved.

  • Terms & Conditions
  • Privacy
  • AGF.com