Two Very Big Stories This Week; Plus — the Health Reform Hype
Author: Greg Valliere
April 15, 2019
BACK TO REALITY THIS MORNING after the greatest comeback in U.S. sports history, and the frenzy over Game of Thrones, incomprehensible as usual but stunningly filmed.
FIRST OF ALL, IT’S MUELLER WEEK: The special counsel’s report may be heavily redacted, but no matter — Democrats are counting on it to revive talk of White House wrongdoing. The report, due for release this week, is highly likely to question President Trump’s boast that he was totally vindicated; many of his aides are bracing for embarrassing new revelations and renewed talk of obstruction of justice.
BUT TRUMP IS INCAPABLE OF EMBARRASSMENT, and the case “is closed,” press secretary Sarah Sanders said yesterday. Nevertheless, we suspect Trump will seek to divert attention from the report; he often stirs controversies when he faces political outrage. So we expect Trump to keep up the drumbeat against sanctuary cities, the Federal Reserve, and Democrats who do not forcefully condemn anti-Semitism.
AS THE MUELLER REPORT reverberates through Washington, we will focus on three take-aways: 1. Will it change anyone’s mind as the next election approaches? Highly unlikely — both sides are rigidly dug in. 2. Will it revive speculation about impeachment? That ship has sailed, although there will be enough new material to occupy prosecutors in the Southern District of New York and elsewhere for months to come. 3. Will this have any impact on the markets? Hardly a ripple; there’s a more important story looming.
WE THINK AN AGREEMENT IN PRINCIPLE WITH CHINA IS IMMINENT: Both sides apparently have resolved the biggest remaining issue — creation of an enforcement mechanism that would allow the U.S. to re-impose sanctions if there are signs that China is violating terms of the agreement.
THERE STILL ARE A HANDFUL OF ISSUES: The dominance of Chinese state-owned companies, and their subsidies, has to be addressed, and it’s highly unlikely that Trump will agree to drop all existing tariffs. But there’s enough in the deal for Trump to declare victory on the one issue that seems to matter most to him — reducing Beijing’s trade surplus with the U.S. as China buys more more U.S. products. It remains to be seen whether there will be enough structural reform for Trump’s hard-liners to be pleased with the final deal.
WHAT TO WATCH FOR: If there are leaks by the end of this week that Presidents Trump and Xi are preparing to meet, that will be a near-certain tip-off that the deal is done; Xi will not travel to a summit without first signing off on a final pact. We anticipate a signing ceremony in May.
THE ONGOING HEALTH CARE BOMBAST: The clamor for a single payer health system — from Bernie Sanders and many Democrats running for president — has begun to worry investors in health insurance companies. This is a grossly over-rated threat, in our opinion.
WE GIVE THE FINAL WORD this morning to health care gurus Paul Heldman and Sasha Simpson, who have a sterling reputation for analyzing the complex world of health policy. “A Bernie Sanders Presidency would be no more likely to ram a single payer system through Congress than Trump being able to legislatively repeal the Obama health care law,” they wrote this weekend, adding that “a Senate majority for a single payer plan would still be unlikely even via special Senate budget rules.” A more narrow public health insurance option and federal drug price controls are greater potential threats, they conclude.
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.
