“I’m either middle of the road or a shameless opportunist,” Greg Valliere said to laughter when noting his dual role as a political commentator for both CNN and Fox News.
Valliere, Chief U.S. Policy Strategist with AGF Investments, delivered a rapid-fire Washington update on to attendees of GRPAA’s Finnovation Conference in San Diego on Saturday morning, touching on the economy, politics in general and—of course—the current impeachment controversy gripping D.C.
“The media is doom and gloom on the economy, but I don’t see it, and we just received strong job numbers on Friday,” he began, referencing the 50-year unemployment low that the U.S. experienced in December.
The reasons are twofold; action from the Fed and spending levels by the government.
“I have never seen as much spending as I do now,” he marveled. “Trump, Larry Kudlow and Democrats are suddenly all Keynesians.”
Noting that running a $1 trillion deficit with employment at 3.5% “is amazing, it will have a stimulative effect in the short run, but the long-run debt servicing costs will be enormous.”
“I think it’s the height of naïveté to think Fed doesn’t listen to Trump and read his angry true tweets. I think inflation has ticked up just slightly, and the Fed only has seven or eight bullets in its arsenal to deal with it.”
Valliere thinks Trump will not necessarily try fire Chairman Jerome Powell in the coming year but will instead try to demote him.
Looking across the country, he said there are major areas that can’t find labor, pointing to Seattle and Nashville specifically. He also warned that many young people are finding it increasingly difficult to pass drug tests, which is an issue with which the county will eventually have to deal.
There is big growth, but …
“The election is coming,” Valliere explained. “The biggest dark cloud is the trade issue with China. There is anxiety and worry from Midwest farmers and businesses that need parts from China must decide whether or not to raise prices. There is no deal With NAFTA or Europe, so I don’t think a deal with China is imminent.”
Surprisingly, many Democrats are playing tough with China as well, with Chuck Schumer being the first to congratulate Trump after the latest round of tariffs.
“The biggest elephant in the room Is impeachment,” he noted. “Odds are greater than half that he will be impeached in the House, but it will be very difficult to convict in the Senate. They need 20 Republicans to defect and they will most likely not get it.”
However, he added, Trump is doing himself no favors with calls for China to investigate Joe Biden.
“So, my fearless forecast is that in late winter or early spring there will be an impeachment trial. I don’t think he will be ousted, but it will cause paralysis in Washington.”
It will also cause reelection problems for the president, as it could cause Democrats to flip Michigan, Pennsylvania and Wisconsin, which would make for a tight race even if Trump were to win Ohio, Florida and Texas.
‘While Real Clear Politics’ poll averages show tremendous deficits for the president among college-educated women, minorities and other groups, what he has going for him is an amazing ability to find a foil.”
Additionally, Valliere noted, “the Democratic field is not that impressive. This is not the 1927 Yankees.”
He mentioned a few alternatives to the current choices that Democrats might try, mentioning Michelle Obama and even Hillary Clinton (!).
As for the current frontrunners, “Let’s be honest, Elizabeth Warren hates our industry she will want higher taxes and regulation. She is an incredible demagogue and electrifying younger audiences. She has had an amazing rise and now has a real shot at being a nominee.”
Nonetheless, if it’s a Warren-Trump matchup the president has the advantage, he concluded, but if it’s a Biden-Trump matchup, “I like Biden’s electoral college chances.”
With more than 20 years serving financial markets, John Sullivan is the former editor-in-chief of Investment Advisor magazine and retirement editor of ThinkAdvisor.com. Sullivan is also the former editor of Boomer Market Advisor and Bank Advisor magazines, and has a background in the insurance and investment industries in addition to his journalism roots.
