The Fed Speaks This Week; Who is Beto O’Rourke?
Author: Greg Valliere
March 18, 2019
WITH THE ATLANTA FED projecting GDP growth of only 0.4% this quarter, it’s now clear that the government shutdown and frigid weather contributed to an economic stall-out this winter. Fed officials, meeting Tuesday and Wednesday in Washington, surely will maintain their dovish stance, perhaps even considering a worst-case scenario: what if the economy does not bounce back, as expected, in the second quarter?
COULD A RATE CUT BE ON THE TABLE? Not yet, in our opinion, because there’s plenty of fiscal and monetary stimulus in the system — enough to lift growth back into the 2-1/2% neighborhood in the second quarter. But with inflation still tame and signs of an economic uptick probably weeks away, Chairman Jerome Powell faces a challenge in his press conference on Wednesday.
POWELL WILL OFFER ASSURANCES that a recession is not imminent, with better growth coming soon; that will probably be the headline on Wednesday afternoon. But he and the FOMC statement will have to acknowledge the current soft patch — sending a signal that a rate hike is months away, maybe late this year at the earliest. But a rate cut, unthinkable last fall, can no longer be ruled out if the economy doesn’t snap back from this miserable winter.
WHO IS BETO O’ROURKE? His positions are evolving. He’s a moderate on some issues and a progressive on others. He’s not an ideologue. He backtracked last week on a single payer health insurance plan. He’s a free-trader. He has strong support from young people and should raise millions in fundraising. He’s a charismatic enigma, and the press loves him.
THAT ADULATION IS GENERATING A BLOWBACK ALREADY: Acidic New York Times columnist Maureen Dowd roughed him up this weekend, focusing on his ego and O’Rourke’s belief that he has a calling to be president. “The world is bathed in the mystical glow of a messiah,” she wrote, adding that he “floats above the fray, staying vague on nettlesome issues.”
OUR TAKE IS THAT O’ROURKE is haphazard on issues and details — and maybe a little too cool for his own good; he’s a 46-year- old rich guy, and he’s a relative rookie (rookies make rookie mistakes). He’s about to receive a smackdown from the left, and he needs to tighten up his rambling answers that often don’t reveal where he stands. To his credit, O’Rourke proclaimed that he’s a capitalist, a smart move if he’s the nominee.
WE HAVE O’ROURKE IN THIRD PLACE, behind frontrunner Joe Biden and Sen. Kamala Harris, and we concede that he’s difficult to handicap. O’Rourke obviously is intriguing, with his hair and teeth and good looks, and he could catch a wave, as Barack Obama did. Biden has a fight on his hands, but Biden has enormous experience and support from blue collar workers; O’Rourke does not. The great unknown: is Biden’s extensive track record a blessing or a curse?
BIDEN STILL APPEARS TO HAVE THE BEST CHANCE of beating Donald Trump, who spent much of the weekend reiterating his obsessive hatred of the iconic war hero, John McCain. Trump has suffered through a horrible winter; the economy is soft, there was no deal with North Korea and now Trump’s planned trade victory with China has been pushed back well into the spring. Trump will come up with abusive nicknames for O’Rourke and the other candidates, but nicknames may not be enough.
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