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There’s a Far Greater Threat to Trump Than Mueller

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Insights and Market Perspectives

There’s a Far Greater Threat to Trump Than Mueller

Author: Greg Valliere

July 25, 2019

DEMOCRATS WERE DELUSIONAL to anticipate a breakthrough in yesterday’s hearings; if they want to make a case for impeaching Donald Trump, they will have to do it, not Robert Mueller. Trump, gloating as usual, now sees a clear path to re-election, but a new issue is about to emerge that will pose a greater threat to him than Mueller.

IT’S THE ECONOMY STUPID: That famous mantra, coined by James Carville, may resurface as early as tomorrow, when GDP data for the second quarter is likely to confirm a deceleration of economic growth. A figure below 2% is possible (the closely watched Atlanta Fed forecast is for growth of 1.6%).

WE DON’T ANTICIPATE AN IMMINENT RECESSION, but clear signs of an economic slowdown will complicate life for Trump, who wants growth of 3% or better. He will blame Fed Chairman Jerome Powell, of course, but a major reason the economy isn’t growing by 3% is Trump’s trade war; U.S. business leaders and farmers are uncertain about tariffs, which are likely to persist for many months to come.

THE LIKELIHOOD OF A GLOBAL ECONOMIC SLOWDOWN seems to be growing, especially in Europe, where yields continue to fall. U.S.yields are slipping again, as the Federal Reserve prepares for a rate cut next week, but that’s a mixed blessing for the economy. More monetary and fiscal stimulus should delay a recession, but the savers — primarily senior citizens — want higher yields.

RATHER THAN OBSESS OVER IMPEACHMENT, the Democrats have a more potent argument, in our opinion — GDP is softening, economic uncertainty is growing, and there’s a persistent belief within Trump’s blue collar base that tax cuts largely helped corporations and the wealthy. The economy, in our opinion, may not be an enormous plus for Trump in 2020.

TRUMP SURELY MUST REALIZE that a 2% GDP growth path will erode his assertion that this is the strongest economy in U.S. history — that’s why he will leave no stone unturned: higher spending, Fed bashing, jawboning against the dollar, an eventual trade deal with China, and even a proposed tax cut. He knows his re-election depends on more economic stimulus.

THE DEMOCRATS HAVE AN OPENING on the economy, starting tomorrow; whether they will seize that opening remains to be seen. If they do, Pennsylvania, Michigan and Wisconsin will be in play, as Trump struggles to win 270 electoral votes. If the Democrats continue to play the impeachment card, that will backfire, allowing Trump to assert that there’s a “witch hunt” against him.

* * * * *
ONE LAST COMMENT ON YESTERDAY: Our main take-away (other than the cringe-inducing decline of Robert Mueller) is that there still is no serious effort to curb foreign interference in the 2020 election. This was the real scandal in 2016, and — incredibly — that scandal has not produced any policy changes.


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

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