Market bull Tony Dwyer sees more wild swings as the year’s second half kicks off due to a spike in coronavirus cases and growing odds of a Joe Biden presidency.
But it’s not weighing on his optimism.
“The resurgence of the virus in the southern states and the lead by Joe Biden in the polls is probably pulling forward some of that volatility that may have happened later in the year,” the Canaccord Genuity chief market strategist told CNBC’s “Trading Nation” on Tuesday. “We want to use that to add a little bit of risk incrementally.”
Near-term, Dwyer believes stocks are in the consolidation phase within a new bull market.
He contends the market is in a much better position than it was in March when the virus began raging. According to Dwyer, the big difference now is the Federal Reserve’s unprecedented policy support.
“The Fed has made it very clear they are going to continue to print money to support the credit market until they get their dual mandate of full employment and 2% core inflation,” he said. “That’s not going to be for a while.”
As for politics, Dwyer believes the market will adjust. If Biden wins the White House, he speculates the Fed will offset potential tax cut rollbacks by getting even more aggressive.
The backdrop drove Dwyer to upgrade his S&P 500 12-to-18-month target to 3,300-plus from 3,000 this week. The move reflects a 6.5% minimum gain from Tuesday’s close, as the index wrapped up its best quarter since 1998.
“It sounds kind of weird. What does plus mean? The reason is I have no idea what valuation to use when I have an unlimited printing press,” he said.
His bull case reflects successful efforts to contain the coronavirus and the continued extreme Fed support.
“On weakness as we see as volatility, we want to be buying those economic reopening areas because of this Fed stimulus,” he added. “Once you turn the light switch on, once there is a vaccine, it’s going to create an environment where you’re going to have rapid economic activity.”
And, that’s why Dwyer is targeting cyclical areas of the market.
“It’s simply the post-recession trade,” Dwyer said. “What typically happens coming out of a recession is that you want to be long [in the] the economic reopening areas like the financials, the industrials, the materials [and] the consumer discretionary.”
When American Politics Turned Toxic – The New York Times
BURNING DOWN THE HOUSE
Newt Gingrich, the Fall of a Speaker, and the Rise of the New Republican Party
By Julian E. Zelizer
When did American politics take the wrong turn that led to our present era of endless partisan warfare and hyperpolarization? According to the Princeton University history professor Julian E. Zelizer, politics went pear-shaped in the period from January 1987 to March 1989, when the maverick Republican representative Newt Gingrich rose to power, which culminated in the forced resignation of Democratic House Speaker Jim Wright. Zelizer makes a convincing case that Gingrich not only “legitimated ruthless and destructive practices that had once been relegated to the margins,” he also helped to degrade Congress’s institutional legitimacy and paved the way for the anti-establishment presidency of Donald Trump.
Although “Burning Down the House” is not the first history to cast Gingrich as lead assassin in the murder of bipartisanship and effective governance, it is an insightful if deeply unflattering portrait of Gingrich himself, highlighting his signature traits of arrogance, ferocity, amorality and shoulder-shrugging indifference to truth. It’s not surprising that Gingrich declined the author’s interview request. And the book’s narrow time frame, which stops well short of Gingrich’s leading the House Republicans to their 1994 electoral triumph and his subsequent elevation as speaker, supplies a detailed and nuanced historical context that makes Gingrich’s actions more understandable if not excusable.
Gingrich first won election to Congress in 1978, representing a district based mainly in the northern Atlanta suburbs. It was a transitional moment when an older generation of Southern Democrats was being displaced in Congress both by reform Democratic “Watergate babies” and a rising wave of conservative Republicans like Gingrich. Zelizer’s masterly 1998 work, “Taxing America,” focused on one of those old Southern Democrats, Wilbur Mills, who chaired the powerful House Ways and Means Committee from the 1950s through the 1970s.
[ Read an excerpt from ”Burning Down the House.” ]
Gingrich’s adversary, Jim Wright, was a Texan born in 1922, from a political generation between Mills (born in 1909) and Gingrich (born in 1943). A protégé of Sam Rayburn and Lyndon Johnson, he was sufficiently a part of the old Southern Democratic tradition that he voted against the 1964 Civil Rights Act. But he soon regretted that vote and supported the Voting Rights Act the next year.
Zelizer’s portrait of Mills made clear that many of the old Southern Democratic committee chairmen were inclusive dealmakers concerned to reach bipartisan agreements and move legislation forward — with the glaring exception of any issue involving race. Zelizer doesn’t quite spell this out, but while Wright clearly was not a racist of the old stripe, neither was he a dealmaker of the same caliber as they were. That was partly because the post-Watergate reforms prevented the kingpins from negotiating behind closed doors, and partly because of ideological sorting within the parties. But it was also because House Democrats by the 1980s, convinced that Republicans would be permanently in the minority, regularly abused their majority power.
Democrats denied minority legislators adequate staff, excluded them from committee deliberations, gerrymandered their districts and even, Republicans were convinced, stole elections. Wright piously recorded in his diary that Republicans were making it impossible to “rely upon the gentlemen’s rules which have prevailed for all of my 30 years in Congress,” but the speaker broke plenty of norms himself with his parliamentary rule-bending. And despite the Watergate babies’ desire to remove money from politics, the Democrats did little to halt the stream of funds from lobbyists, private money and special interests that flowed principally to the majority party.
Those to whom evil is done do evil in return. Democratic bullying made moderate Republicans willing to empower Gingrich — their support was critical to his election as minority whip in 1989 over a more conciliatory candidate — and to tolerate his scorched-earth tactics. Gingrich insisted that the only way to end the Democrats’ four-decades-long majority was for Republicans to destroy Congress in order to save it. They would have to “put aside their concern for governance until they regained power,” according to Zelizer. They would seek to persuade the public that Congress had become “morally, intellectually and spiritually corrupt,” in Gingrich’s words, and to overthrow Speaker Wright as the embodiment of that illegitimate establishment. In pursuit of these ends all means were permissible, including the shattering of traditional customs, the destruction of opponents’ reputations and the embrace of maneuvers long held to be off-limits, like shutting down the government.
Zelizer argues that Gingrich made the media unwitting accomplices to his partisan crusade, just as the unscrupulous anti-Communist demagogue Joseph McCarthy had done in the 1950s. “The number-one fact about the news media,” Gingrich observed, “is they love fights.” By provoking confrontations with the Democrats, Gingrich would gain media attention — even more so when he succeeded in goading the Democrats into retaliation, which he portrayed as further evidence of their tyranny. The Woodward-and-Bernstein-inspired influx of young investigative reporters into Washington, most of them educated and well intentioned but ignorant of the practical operation of politics, offered a decisive opportunity for Gingrich, who “instinctively grasped the possibilities for taking advantage of their idealism.”
Zelizer sees Gingrich’s “masterstroke” as the co-option of reform-oriented institutions that, in Watergate’s wake, were supposed to make government more accountable and progressive. The ethics charges that Gingrich brought against Wright were, in Zelizer’s view, mostly spurious. But scandal-seeking journalists served Gingrich’s cause by churning out so many thinly sourced stories about Wright’s supposedly shady involvement with Texas oil executives and bankers that the leading good-government organization, Common Cause, felt compelled to call upon the House Ethics Committee to investigate him. This instantly transformed what otherwise would have seemed “a shabby partisan coup” into a respectable campaign, giving cover to Republicans who previously were reluctant to enlist in Gingrich’s vendetta and undercutting Wright’s Democratic defenders. From then it was just a matter of time until Wright was forced out.
Zelizer provides a moving description of Wright’s farewell address, in which the resigning speaker decried the “mindless cannibalism” that had overtaken politics, and he delivers an eloquent indictment of all those responsible for Wright’s downfall. These include Gingrich, of course, along with the journalists and good-government organizations he made his patsies. But they also include the Democrats who failed to stand by Wright, thus incentivizing Republicans “to ramp up their efforts and engage in even more brutal fights,” and Wright himself, who couldn’t adapt to a new era of partisan warfare.
Zelizer reserves some of his harshest verdicts for the Republican Party leaders who naïvely believed they could harness Gingrich’s insurgency. He acidly observes that while Republican gatekeepers of the early 1950s used McCarthy to attack their opponents, they never made the renegade senator their leader. Many, perhaps most of the Republicans of the Gingrich era deplored what the minority leader Bob Michel called “trashing the institution.” But Republicans who upheld reasoned opposition, bipartisan compromise, civil discourse and mutual respect deceived themselves about their ability to control the revolution and ended up being devoured by it. To quote the Talking Heads song that shares the title of this book, “Watch out — you might get what you’re after.”
Many social scientists believe that the partisan polarization that now afflicts us was all but inevitable, a byproduct of geographic and ideological sorting that led to more consistently ideological parties. If Newt Gingrich hadn’t pursued no-holds-barred partisan warfare, according to this line of thinking, someone else would have. But Zelizer forcefully counters that this view “denies agency to the politicians and leaders who pushed partisan combat into a deeper abyss at very specific moments.” The battle to overthrow Wright, he concludes, was one of those critical turning points “from which Washington never recovered.”
China-Africa: Its the politics, stupid! – The Africa Report
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Why Guyana’s political stalemate matters – The Washington Post
No, this isn’t Venezuela, but neighboring Guyana, which is entering its fifth month of political paralysis since the results of a March 2 presidential election were thrown into question by allegations of vote-rigging and fraud.
A lengthy recount of the ballots, which found a narrow victory for the opposition, only intensified the standoff. The ruling multiparty coalition led by President David Granger has latched on to an observations report by the country’s chief elections official, which said that as many as 115,000 of the approximately 400,000 votes cast in the election should be invalidated and that emigrants and the deceased were registered as having voted. Granger’s opponents reject the accusations as “baseless” and say their presidential candidate, Irfaan Ali, should be allowed to take the oath of office. The bulk of the international community, including Caricom, the Caribbean’s main regional bloc, and the Organization of American States, or OAS, appear eager for Granger to concede.
But he isn’t quite ready to do so. In a recent interview, Granger said his country and its interim government was abiding by a constitutional and legal process to manage its elections. Injunctions and appeals have taken the dispute to the Trinidad-based Caribbean Court of Justice. “Guyana is not a rogue state,” Granger told Today’s WorldView. “We are on a path, albeit a slow one.”
Nevertheless, Guyana is being increasingly viewed as a troublesome actor. The OAS issued a statement in June calling on Guyana “to begin the process of transition, which will allow the legitimately elected government to take its place.” Both OAS and Caricom observers certified the recount results and say there is enough evidence to justify Granger conceding defeat.
U.S. Secretary of State Mike Pompeo last week urged the Guyanese to “get on with it” and threatened potential punitive measures on Guyana or its leading officials if the country’s democracy remains deadlocked.
“Recent reports suggest questionable maneuvers by interested parties designed to continue forestalling a final declaration of results, which members of the press say indicates a defeat for the incumbent government,” read a bipartisan statement from members of the Senate Foreign Relations Committee, including Sens. Marco Rubio (R-Fla.) and Robert Menendez (D-N.J.). “President Granger should honor the will of the Guyanese people and concede.”
They added that, for the sake of “the future of democracy and the rule of law in our hemisphere, the ongoing uncertainty and gamesmanship must end.”
Granger urges outside patience. “I’m not a gamesman,” he said, insisting that the alleged rigging of the March election remained the real issue. “I don’t see any corruption, any fraud, delay,” Granger said of the impasse. “If there’s any fraud, it went into the boxes when the ballots were cast March 2.”
“The election is considered the most important since Guyana became independent from Britain in 1966, given the recent discovery of major oil and gas deposits near its coastline,” the Associated Press reported last month. “But the impasse has largely paralyzed life in the country of some 750,000 people. The Finance Ministry warned it’s unable to access funds amid the coronavirus pandemic because there is no functioning Parliament, which was dissolved in December.”
The delay has chilled investor enthusiasm in Guyana, where ExxonMobil has taken the reins of cultivating its oil industry. The U.S. company recently announced that the political stalemate and the challenges posed by the coronavirus pandemic were complicating its plans to ramp up oil production this year.
“The lure of petroleum revenue made these elections more exciting, perhaps more contentious than ever,” Granger admitted. But it also fueled a divisive election campaign that played largely along ethnic lines. The opposition People’s Progressive Party (PPP), once the dominant ruling faction, is heavily backed by Guyana’s Indian-origin population. Granger’s party draws its strength from Afro-Guyanese voters, though it is in alliance with a smaller faction that champions multiracialism. He and his allies point to the proliferation of “fake news” on social media and have accused the PPP of bringing in Cambridge Analytica, the notorious (and now defunct) British political consultancy, to weaponize racial grievances.
“International business headlines discuss investor confidence in this small South American country on the brink of political disaster,” wrote Guyanese academics D. Alissa Trotz and Arif Bulkan. “But for Guyanese, the fundamental issue is how vulnerable our ongoing polarization makes us to this latest chapter of multinational resource extraction and exploitation.”
Granger appeared less perturbed. “We don’t have race riots or religious riots. We don’t have terrorism,” he said. “It’s a question of political competition, and I’m very confident it can be resolved in a peaceful way.”
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