Policy Paralysis Grips Washington
Author: Greg Valliere
May 23, 2019
NANCY PELOSI’S WAR AGAINST THE PRESIDENT: The diminutive 79-year-old Speaker of the House is determined to deny Donald Trump a second term, and she may succeed. Sources we talk with believe she wants to portray Trump as unstable and incapable of cutting deals, his alleged strong suit. Her strategy is to bait Trump, which she did yesterday — and, predictably, he rose to the bait.
TRUMP IS TRAPPED: The courts are closing in on him, and Robert Mueller will be heard from soon. Trump would welcome an impeachment inquiry in the House, in our opinion, which he could point to as proof of a “witch hunt” against him and his followers. But Pelosi won’t give him that foil; she prefers to let events unfold in the courts, which have ruled against Trump on his greatest vulnerability — his finances, where many smoking guns lurk.
THE LIKELIHOOD OF ENDLESS HOUSE INVESTIGATIONS has infuriated the president, so he hit back yesterday with a self-inflicted wound: a pledge to halt negotiations on all legislation until the investigations cease. They won’t cease,and Trump’s reaction was just what Pelosi wants — policy paralysis, bolstering her narrative that Trump is incompetent and incapable of negotiating deals.
THIS HAS IMPLICATIONS FOR THE MARKETS: The image of a flailing and weakened president, bogged down by numerous investigations, surely must make the Chinese think they can gain the upper hand in trade talks; at some point, Trump will need a deal — any deal — to bolster his shaky re-election prospects.
AS FOR LEGISLATION, ALL BETS ARE OFF after yesterday’s ugly confrontation at the White House. A budget deal, which looked so promising just 24 hours ago, needs a sign-off from Trump and Pelosi, but that’s not coming soon — and she has the ultimate leverage: agreeing to raise the debt ceiling, something Trump needs from her. As for an infrastructure deal, you’ve got to be kidding . . .
THE AMERICAN PUBLIC DOESN’T CARE MUCH ABOUT THIS: We were in the Midwest this week, where the Pelosi-Trump chess game generates little attention, and the Mueller report is old news. There’s an uneasiness, however, about the economy and the deepening recession in the Farm Belt, where anxiety persists over a trade war.
THE WILD CARD, AS USUAL, is Congressional Republicans. There have been very few defections from Trump in public, but in private many GOP veterans are whispering to each other that Trump is more trouble than he’s worth. Everyone wonders: who will defect next?
A PUBLIC PERCEPTION OF POLICY PARALYSIS could prompt voters to conclude that the far right and the far left are both part of the problem — a scenario that could be perfect for an affable moderate like Joe Biden, who’s now the front-runner to win the presidency in 2020, which of course is Nancy Pelosi’s ultimate goal.
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.
©2022 AGF Management Limited. All rights reserved.