I recently had the opportunity to spend the morning with Greg Valliere, Chief US Policy Strategist at AGF Investments.
Greg is a regular on Fox News, CNN, BNN and the Wall Street Journal.
If you know anything about Fox News and CNN, it is likely that they hate each other, this speaks volumes to the neutral stance that Greg takes in politics, as both networks are happy to have Greg’s insights.
He and I discussed some interesting points. I was happy to hear a few positive notes from him, and also not overly surprised to hear others – I will let you determine which is which.
Monetary Policy is positive for the USA at the moment – the Federal Reserve is not raising interest rates aggressively and is quite content holding rates at the current level. The supply of money is also being managed well and is increasing. This is a positive note for those fearing a recession.
Fiscal Policy and stimulus is also positive for the USA, taxes are low and the government is spending. The government is in a position to take on more debt by spending and they are open to doing so. Another positive for those fearing a recession.
The US unemployment rate is at an all time low since the early 70’s, Greg mentioned that when he speaks with business owners they are finding it hard to keep employees - they are being poached by other businesses. This is a new challenge for business owners and one that may drive wages higher. This goes without saying, but another positive for those fearing a recession.
Election years for the most part do not have recessions, the current government will do what it takes to ensure a recession does not take place to keep votes headed their way. Eventually they will have to pay the piper so to speak, and 2021 will be a year to watch.
Overall he sees no indication of a recession and feels 2021 is what we should keep our eyes on.
Speaking of Elections, he believes the Republicans (Trump) will retain control of the November 2020 election. Not because they should or have the best platform, but because the Democrats have not put fourth a candidate that can put up a fight, they all seem weak in comparison.
A Democratic leader in the polls is Elizabeth Warren, she has been labeled as “Anti-Business and Anti-Wall Street”. If she wins this could mean very bad things for the markets as a whole.
Being Canadian I was interested to hear about Oil, the question came up what he thinks will happen with oil and how that impacts Canada and the US now that we recently completed our election. He said that he wouldn’t be surprised to see another attack from Iran on the Saudi oil fields.
Noting that there has been no backlash from their first attack, and Iran can then use the attack as leverage to reduce the sanctions USA has on them - to call a “truths”. If that happens, we can expect to see oil prices rally, likely more than last time, which would be a positive for Canada.
John Christofilos, Senior Vice-President, Chief Trading Officer at AGF Investments was also present and he noted that cash continues to enter the global markets. USA is leading, then Japan, Emerging Markets, followed by Europe and Canada.
John touched on all time high levels of “cash” sitting on the sidelines both in personal accounts and investment banks. This is because sentiment is low, and we all feel the same way likely.
It has been 10 years+ now since the last recession and it sure feels like we are due, which has made us take risk off the table and move to cash or more secure items.
It will only take another peak of the market to drive that cash back in for fear of missing out. Human nature…
John echoed Greg’s view that a recession is not likely in 2020, too many positive things are happening.
Overall a very informative morning spent with Greg and John.
This meeting was informal and neither Greg or John have not been quoted, these are their personal views at the time and should be taken as such. If you would like to discuss further please feel free to contact me.