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March 30, 2020 at 02:00 PM
Invoking Winston Churchill, who famously said, “It is perhaps the end of the beginning,” Washington-based pundit Greg Valliere is convinced last week was a prelude to the coming turning point that will start to release Americans from the deadly grip of coronavirus.
Passage of the financial stimulus bill and signs that new COVID-19 cases in Italy are slowing, among other developments, support his optimistic view, as he tells ThinkAdvisor in an interview.
The well-connected chief U.S. policy strategist at AGF Investments provides investors with daily insight and interpretation of goings-on at the nexus of Washington and Wall Street via his popular blog, Capitol Insights.
In the interview, the veteran financial services guru provides his forecast for the recovery from the recession the U.S. seems to be slipping into, a formidable repercussion of the pandemic.
Citing the two prevalent “radical views,” he also examines the critical issue of when Americans may well break free of lockdown and return to work.
For more than 30 years, Valliere has analyzed politics and policy for institutional and retail investors. One of his specialties is the Federal Reserve.
At AGF, he is charged with providing insight into how U.S. policies are shaping global markets.
Previously, he was chief global strategist at Horizon Investments.
Turning to the 2020 presidential election campaigns — mostly muted lately because of the pandemic — in the interview, he floats two names as likely better Democratic candidates than Vice President Joe Biden to go up against President Donald Trump, particularly on the pandemic issue. He argues that these prominent high-level politicians have emerged as “the two big, big stars in the Democratic Party.”
ThinkAdvisor interviewed Valliere, by phone from Washington, on Wednesday. The frequent industry speaker deemed Federal Reserve chairman Jerome Powell a “hero” and explained why even Trump has taken to flattering him.
Here are excerpts from our interview:
THINKADVISOR: The U.S. has probably entered a recession. What do you forecast for the recovery?
GREG VALLIERE: The enormity of the stimulus bill — billions in corporate assistance and checks to individuals — accompanying what the Fed has done, increases the chance that the recession will be a “U” shape: We’ll go down sharply for a quarter and then start to come back pretty sharply in the second half.
What’s a major difference between this financial collapse and the 2008-2009 meltdown?
The banks are very well capitalized [now]. So there’s no issue of bank capitalization, and the Fed is going to make sure that won’t be a concern. We’re awash in liquidity. That’s a bigger story than taking interest rates down to zero. Liquidity is what keeps the markets lubricated. Jerome Powell [Federal Reserve chair] made it clear on Monday that he’ll do whatever it takes — that money is no object. Powell is the hero.
Is he heroic in President Trump’s eyes?
Trump, of all people, called him earlier this week [week of March 23] to congratulate him on what a great job the Fed has done. I think we’re now at a point where Trump needs Powell, and he’s become very flattering and complimentary to him.
What’s your thinking on where the U.S. is on the coronavirus pandemic timeline?
When the history of this horrible disease is written, we’ll look back on this week [of March 23] as the beginning of a turning point that’s coming for the country and the economy. As Churchill said, “It is perhaps the end of the beginning.” The stimulus bill has passed. Even conservative Republicans were convinced they needed to spend this money. Desperate times require desperate measures.
What else indicates that we’re nearing a turning point?
[New cases] in Italy have begun to level off. I think that in two or three weeks, there will be similar improvement in Spain, France and the U.K. and maybe in a month or so, in North America.
What are your thoughts about the stimulus money that is to come from the government?
One of the key questions is when do the checks get to people, and when does the aid get to companies? I fear it’s not going to be lightning-quick. It will take a while. The [Beltway] people I’ve talked to in the last 24 hours tell me it could be well into April before anybody gets a check.
What will be emphasized historically about the coronavirus pandemic?
