The Most Important Development Today for the Markets Had Nothing To Do With Mueller
Author: Greg Valliere
April 18, 2019
— Special Edition
THE MUELLER REPORT WILL BE DEBATED for years, an endless political distraction, but our focus is always on market implications — and there was a really huge development this morning: a red-hot retail sales report that not only rules out a recession but boosts our belief that the economy could over-heat.
THE 1.6% JUMP IN MARCH retail sales raises the possibility that first quarter GDP growth could approach 3%; minutes ago, the Atlanta Fed just hiked its forecast to 2.8%. With the labor market still exceptionally tight, there’s virtually no chance of a Fed rate cut any time soon — and a rate hike in the second half is now back on the table. Donald Trump and the Fed will remain at odds.
WITH ENORMOUS MONETARY AND FISCAL STIMULUS in the pipeline, we think 2-1/2% GDP growth this year is a low bar to clear, which is more than enough to absorb new entrants into the labor force. The biggest theme of the year for the markets? The economy surprises to the upside.
AS FOR MUELLER’S REPORT, this saga is far from “game over,” as Trump proclaimed this morning after his extremely loyal Attorney General seemed to absolve him of all wrongdoing. There’s plenty of “excitement” ahead, as our spell proof failed to convey earlier this morning. The next big development, by far, will be Mueller’s public testimony before Congress later this spring.
LET’S NOT FORGET MUELLER’S MANDATE: He was supposed to investigate Russian interference in the 2016 election, and he found that it was blatant. His probe, like everything in Washington, became a partisan brawl — but no serious person can deny that interference in our elections occurred and is an outrage.
THERE’S STILL A FLICKER OF LIFE for impeachment advocates in the House, who will look at far more than obstruction of justice. But Trump won’t get convicted in the Senate. His bigger vulnerability is that countless allegations — and his furious tweets — will persist ahead of the 2020 election, and that could become a political liability for him.
BUT TRUMP HAS THE BIGGEST MEGAPHONE in Washington, a fanatically loyal base, and remarkably compliant Republicans in Congress. And he can boast about a strong economy. The Mueller report may wound Trump, but it’s not a fatal blow.
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.