AGF Management : The Democrats Have a Messaging Problem

Insights and Market Perspectives

Author: 8

January 11, 2022

THE AMERICAN PUBLIC is nervous about inflation and confused by mixed signals from Washington on Covid - yet the tone-deaf Democrats are determined to plunge into a debate this week over Senate filibuster rules.

WE UNDERSTAND WHY PROGRESSIVES want to change the rules, which could open up debate on voting reform legislation. Joe Biden will embrace the cause today in Atlanta, but his message may get drowned out by last night's football win by Georgia.

EVEN THE FALLBACK - making modest tweaks to existing filibuster laws - is likely to fail, amid growing animosity in the party toward Sens. Kyrsten Sinema and Joe Manchin, who aren't on board. Their increasing alienation could derail the Build Back Better bill.

THE MESSAGE TO BIDEN SHOULD BE CRYSTAL CLEAR: He ran as a moderate, and his embrace of the progressive agenda has backfired spectacularly. There simply isn't public support for defunding the police or spending another $2 trillion on social spending; fairly or not, the public believes that amount of spending exacerbates inflation.

IN FACT, A MAJORITY OF AMERICANS may not support the expanded child tax credit. In a stunning article in yesterday's New York Times, it was clear that even beneficiaries of the tax break are lukewarm, fearing it would reward people who won't work.

THE FILIBUSTER ISSUE SIMPLY CANNOT COMPETE with the public angst over inflation, which will put Fed Chairman Jerome Powell on the hot seat today as his confirmation hearings begin. Powell needs to talk tough on inflation, even as his rhetoric worries the markets.

COULD POWELL BE IN TROUBLE? The last thing he needed was another trading scandal at the Fed, which Sen. Elizabeth Warren pounced on yesterday. She'll go for the jugular in today's hearing. We think Powell will win re-confirmation, but it could be a surprisingly close vote later this month.

THE COVID EXPLOSION has caught the Biden Administration off guard, even though a winter surge was predicted months ago. Donald Trump was mercilessly blamed for his failure to speed up testing, and now Biden faces the same criticism as U.S. fatalities climb to about 1,500 per day.

IT'S ALL ABOUT MESSAGING IN THIS CITY, and it's been dismal - is inflation really caused by greedy companies? What's the official stance on quarantining? Yet these two issues, which most worry the public, will take a back seat this week as Chuck Schumer attempts - unsuccessfully - to ram filibuster changes through the Senate.

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.

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.