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Why the Markets May Breathe Easier About November

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Insights and Market Perspectives

Why the Markets May Breathe Easier About November

Author: Greg Valliere

January 15, 2020

AFTER LAST NIGHT’S INCONCLUSIVE DEBATE, it strikes us that only three candidates have a plausible chance of winning the general election in November — either Donald Trump, Joe Biden, or Mike Bloomberg — and all of them are generally acceptable to the markets.

MORE ON THIS IN A SECOND, but first a few comments on the Iowa debate. Pete Buttigieg is the most articulate candidate in the race, but he broke no new ground last night. Elizabeth Warren had the strongest performance and may have 
ended her slide. Bernie Sanders didn’t help himself much. Joe Biden made no glaring errors but frequently stumbled. Amy Klobuchar was good but probably will stay in single digits. And we reiterate — what is a lightweight like Tom Steyer doing on the stage?

THE MARKET IMPACT: The biggest political story for investors this winter is the bitter Warren-Sanders feud, which threatens to tear the left apart. Neither has a great chance of winning the nomination — and they have a very slim chance of winning in the general election. We think only three candidates have a path to victory in November:

Trump: He’s the early favorite, well ahead in Las Vegas betting odds. We think Trump is far from a lock in the Electoral College; his major risk is overconfidence and self-inflicted wounds. As for Trump’s market impact, the S&P 500 is up by about 50% since his inauguration, with low interest rates and moderate economic growth. Most professional investors we talk with don’t like Trump personally, but they’ll gladly take those results for another four years. 

Biden: He sure didn’t look dynamic last night, but Biden may be calculating that after four years of Trump, the electorate wants to lower the temperature. Biden is the safest bet to win the Democrats’ nod, and while he would raise some taxes and toughen regulations, he’s hardly an anti-business radical. 

Bloomberg: We get emails from readers who are incensed that a candidate could buy the presidency, but Bloomberg has a decent chance — he’s a serious challenger, willing to spend well over a billion dollars. His ads are excellent and he’s methodically assembling a top-notch campaign machine, the best that money can buy. As for the market impact, Bloomberg unabashedly loves Wall Street and he scolds against huge spending programs; he’s a moderate Republican at heart.

BOTTOM LINE: The great market fear — a sharp policy shift leftward a year from now — appears to be increasingly unlikely. All the hype about socialism and dramatically higher taxes seems exaggerated; the November winner is unlikely to rock the boat. 


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.

©2021 AGF Management Limited. All rights reserved.

Written by

Greg Valliere

Greg Valliere

Chief U.S. Policy Strategist

AGF Investments

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