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Toughest Election Call — the Senate; A Stimulus Surprise from Pelosi?

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Toughest Election Call — the Senate; A Stimulus Surprise from Pelosi?

Author: 8

October 20, 2020

A BLUE WAVE IS FAR FROM GUARANTEED: All the talk about the Democrats gaining control of the Senate overlooks the still-plausible path that Republicans have for narrowly keeping control of the upper chamber.

THERE ARE TWO WAYS TO LOOK AT SENATE RACES: First, a comfortable Joe Biden win would give Democrats control, picking up a net of three to five seats. A narrow Biden win (still the most likely scenario) could leave the Democrats one seat short. A Trump victory obviously would give the GOP a good chance of keeping the Senate.

THE OTHER WAY TO LOOK AT THE SENATE is to focus on individual races, which still gives Republicans a chance. Democrats are likely to lose their Alabama seat, which means they would need to pick up four GOP seats to take the Senate in a 50-50 tie (assuming Biden wins the White House).

BUT THE REPUBLICANS MIGHT ONLY LOSE TWO OF THEIR SEATS, in Arizona and Colorado. Where could the other two GOP losses come from? Perhaps in Maine, where Susan Collins is trailing, but she’s a good campaigner; and perhaps in North Carolina, where GOP Sen.Thom Tillis narrowly trails a Democrat who’s embroiled in a sex scandal.

IT’S ENTIRELY POSSIBLE that the GOP could lose only three of their seats, thus narrowly keeping the Senate. Another path for the GOP would be if they pick up the Michigan seat, where the Democrats’ incumbent senator may be in trouble.

BOTTOM LINE: We’re still at only 55% that the Democrats take the Senate, lower than most analysts. If Biden wins easily, the Democrats will take the Senate, perhaps picking up a couple more seats — Iowa, Montana, Georgia and South Carolina would be in play.. But we don’t think Biden will win easily, which means a Blue Wave is far from certain.
* * * * *
A NANCY PELOSI SURPRISE? We talked recently with someone familiar with Nancy Pelosi’s thinking on a stimulus bill. This source doesn’t rule out a deal today, with Pelosi taking a $2 trillion package from Steve Mnuchin and claiming credit for helping struggling Americans.

THEN, ACCORDING TO THIS SCENARIO, Mitch McConnell and the Republicans — who are distancing themselves from President Trump — would proclaim that the deal is grossly expensive and totally unacceptable. Pelosi could then say, “See, the Republicans have no interest in a stimulus bill; they have repudiated their president.”

THUS WE REITERATE — Any sign of a deal today would be a fake-out for the stock market, which clearly wants a big stimulus. Congressional Republicans would never accept a $2 trillion deal; even a $1 trillion deal is too rich for them. They want to confirm Amy Coney Barrett next Monday and go home.

PELOSI, MEANWHILE, HAS A SPIN BATTLE TO WIN, and she just might emerge with a huge deal that ultimately is killed by Congressional Republicans. The conventional wisdom is that she doesn’t want to give Trump a victory — but would it really be a victory for him if his own troops repudiate his deal?


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.

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Written by

Greg Valliere

Greg Valliere

Chief U.S. Policy Strategist

AGF Investments

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