After Tuesday night’s election losses in Virginia and Kentucky, Republicans, and especially President Donald Trump, should be very worried, said Greg Valliere, chief U.S. policy strategist for AGF Management, who spoke this morning at the Schwab Impact conference in San Diego.
Tuesday night’s results were “ominous” for Trump, Valliere said.
The Washington insider provided his view on current political events and how these could affect markets going forward.
“It’s naïve to think the Fed isn’t aware of Trump’s tweets, at least there might be a subliminal effect,” Valliere said, adding that Trump may believe he can fire Federal Reserve Board Chairman Jerome Powell, but the language is vague. “He does think he can demote him to just a governor, but he can’t fire the entire [Federal Open Market Committee],” he said.
The big story is spending, Valliere said, which has pushed the deficit to $1 trillion and will weigh on the economy. He said GDP growth will be between 1-1.5% in 2020, which “isn’t what Trump wants but he’ll have to live with it.”
Trump will be impeached by the U.S. House of Representatives, Valliere said, but it’s doubtful the Senate will vote to convict.
He also said that Trump was Wall Street’s favorite to win the next election, but “people are going to waver today as they analyze the fact that in the state of Virginia, both houses went Democrat, overwhelming support for Democrats in suburbs, moderate voters, female voters. And in Kentucky, a very conservative state, the controversial governor lost, [even though] Trump campaigned for him and said this would be a referendum on impeachment.”