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November 04, 2019 at 02:20 PM
Sen. Elizabeth Warren’s proposal to help fund her $20.5 trillion Medicare for All plan with big tax increases on business and wealthy individuals, as well as other radical spending plans the left advocates, give President Donald Trump a ready-made foil to run against in 2020, argues Greg Valliere, veteran Washington-based pundit whose blog, Capitol Insights, is a must-read for investing pros and aspirants alike.
In an interview with ThinkAdvisor, the well-connected strategist, who specializes in how politics are shaping global markets, contends that “the lust on the left for aggressive tax hikes” will only make Trump’s reelection easier.
Valliere also discusses “an October surprise” that he expects the president to spring next year and what Washington Republicans really think of him.
Valliere is chief U.S. policy strategist at asset management firm AGF Investments. He moved there this past February from Horizon Investments, where he was chief global strategist and penning his blog, then called Capitol Notes.
In the interview, Valliere cites the financial services industry’s nervousness over Warren, who considers it “corrupt and greedy,” he says. As part of the funding for her Medicare for All plan, she wants to impose far higher taxes on stock transactions and tighter standards on business overall.
As for the impeachment inquiry, Valliere is confident that, as long as the securities markets continue to be convinced that Trump will be acquitted, the impact will be slight.
More important than listening to “all the crazy background noise coming out of Washington” is, he says, focusing on fundamentals: the country’s moderate economic growth, low inflation, very low interest rates and strong labor market.
In the interview, Valliere, who will speak Tuesday at Schwab’s Impact 2019 conference in San Diego, also discusses a market sector he favors, his opinion based on a key Trump policy.
ThinkAdvisor recently interviewed the strategist, who was on the phone from a home he maintains in Southern California. “Ignore the noise of Trump’s tweets, who’s getting fired at the White House and all the other internal chaos, which has made many investors skittish about the market,” he advises. “Instead, focus on what’s really important.”
Here are excerpts from our interview:
THINKADVISOR: What are your thoughts about the excessive taxes that Elizabeth Warren’s Medicare for All plan would require to cover its costs?
GREG VALLIERE: It’s becoming increasingly apparent that not even confiscatory taxation can pay for all the ambitious spending plans that Elizabeth Warren and the left are advocating. This radical agenda gives Trump an easy foil to run against in 2020.
“There’s a lust on the left for aggressive tax hikes everywhere,” you wrote in Capitol Insights. Please elaborate vis-a-vis Trump’s reelection.
Trump is a master at framing issues by exploiting foils. He’s going to have an argument that Democrats have veered way too sharply to the left. When you combine Elizabeth Warren’s and Bernie Sanders’ [tax proposals], this is a party that’s moved aggressively to the left. And it gives him a great foil to run against. He’ll continue to argue that the Democrats are socialists. He’s going to keep saying: “If you elect the Democrats, the U.S. is going to look like Venezuela!”
What does the financial industry think of Warren?
In the financial industry, there’s tremendous anxiety over Elizabeth Warren, who, I think, hates the industry and feels it’s corrupt and greedy. Not only does she advocate breaking up the big financial firms but she would impose much higher taxes on Wall Street transactions to pay for her very ambitious agenda. And she would undo a good deal of the Trump regulatory reform and impose much tighter standards not just on the financial sector but on business in general.
How do Washington Republicans feel about Trump?
Most are sick of him. But they’re paralyzed: They can’t openly criticize him because it would cause them great political harm. The majority are [attacking] Trump in private, but in public they’re very timid because they know that Republicans who speak out against him run the risk of losing their next primary.
Why are you so certain that Trump will be the Republican nominee in 2020?
Because of his extraordinary support in the Republican base. It would be futile for Mitt Romney or John Kasich to challenge him for the nomination. Trump’s approval rating is in the high 80s among Republicans [74%, as of Nov. 1]. His base is rock solid. So looking at 2020, you have to begin with the premise that he’ll get re-nominated.
“An October surprise next year is a virtual certainty,” you write. What do you mean?
Trump will throw everything but the kitchen sink at his reelection. He’ll talk about new spending for infrastructure; I expect that he’ll pressure [Treasury Secretary Steven] Mnuchin to weaken the dollar. He’ll do anything to get reelected. And I would include as a possibility, an October surprise — some kind of geopolitical event that might take attention away from any controversies. Knowing his style, you have to expect a surprise. One of the reasons Trump could plausibly win reelection is his ability to create publicity for Donald J. Trump.
So are the Democrats wasting their time with their impeachment inquiry?
