AGF Management : U.S.-China Thaw Is Not Imminent; Stimulus Progress; Trump is Running Again

Insights and Market Perspectives

Author: 8

December 3, 2020

THE MOOD IN THIS CITY toward China is still leery at best, hostile at worst. Any
chance that a Washington-Beijing thaw is coming was dismissed this week by President-elect Joe Biden, who clearly will go slow on any warm-up.

WE CONSISTENTLY POINT OUT that the U.S. antipathy toward China is bipartisan; it's not just a Donald Trump crusade. Most Democrats, including Bernie Sanders and Chuck Schumer, are China hawks - which is a major reason why Biden will go slow. His own party would not support a trade liberalization.

IN A MUST-READ INTERVIEW with Tom Friedman in the New York Times, Biden made it clear this week that he will seek a global consensus on how to deal with China before taking any any action; the Trump tariffs will remain. And Biden stressed that the U.S. will ramp up industrial policy to encourage U.S. production of goods that are now made in China.

THE U.S. NEEDS 'LEVERAGE' over China, Biden said - sounding a little like
Trump. The president-elect condemned China's stealing of intellectual property, dumping products, illegal subsidies to corporations and forcing 'tech transfers' from American companies to their Chinese counterparts.

BIDEN ADDED: 'I want to make sure we're going to fight like hell by investing in
America first.' He cited energy, biotech, advanced materials and artificial
intelligence as areas where he will support major government investment in
research. 'I'm not going to enter any new trade agreement with anybody until we have made major investments here at home and in our workers,' he told Friedman.

IN ANOTHER SIGN OF CHILLY RELATIONS, the House voted yesterday - unanimously - to eventually bar Chinese firms from listing their stocks on U.S. exchanges unless there's transparency. The measure would require stock exchange auditors to examine the business practices of listed Chinese firms, which could face expulsion from exchanges if they don't cooperate.
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STIMULUS PROGRESS: More Senate moderates are signing on to a package of pandemic relief, even though congressional leaders still disagree on key points. Mitch McConnell wants no more than $500 billion, with liability protection for firms
that face covid-19 lawsuits, while Nancy Pelosi wants more than $1 trillion, with
generous aid to state and local governments.

BUT THE DIFFERENCES ARE NARROWING, with members of both parties strongly asserting that they can't leave town without doing something, as Covid deaths surge.

CONGRESS MAY GET AN EXTRA WEEK: The mammoth budget deal that would be the vehicle for pandemic relief may not get finished by the deadline of midnight on Dec. 12. This entire process then would be extended for several more days.
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DONALD TRUMP, RUNNING FOR PRESIDENT: There can be no logical explanation for Trump's extraordinary 46-minute rant yesterday - other than the growing likelihood that he's fine-tuning his narrative for a 2024 presidential run.

VIRTUALLY EVERY CLAIM TRUMP MADE has been debunked; his assertions of massive fraud have been laughed out of several courts (by judges he appointed), and Attorney General Bill Barr faces dismissal for his assertion that there was no widespread fraud.

BUT A WIDE MAJORITIY OF REPUBLICAN VOTERS believe that the election was stolen from Trump, and they would enthusiastically support him in 2024 (if Trump gets indicted in the Southern District of New York in the next year, that would simply make his base more adamant that there's a witch hunt against him).

OUR SENSE IS THAT 90% OF REPUBLICAN members of Congress agree that Trump lost the election, but only about a third of them will say that in public, despite getting cover from Barr. A four-year campaign now looms, with dozens of angry tweets a day from the president in exile.

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.

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