Update on the Intersecting Worlds of Wall Street and Washington, DC
Ric Edelman: I want to introduce Andy Blocker. He is the Head of U.S. Government Affairs at Invesco. He's closely engaged with policymakers and has dealt not only with policymakers in Washington, but he was a VP of government relations for the New York Stock Exchange. He worked in the White House as special assistant to the president for legislative affairs, and he holds an economics degree from Harvard and an MBA from Georgetown. Andy, thanks for joining us on the show today.
Andy Blocker: Thank you. Great to be with you, Ric.
Ric: Well, I really appreciate your taking the time. You know, there is no question that more than ever we have been putting Wall Street and Washington in the same conversation. You know, decades ago, one had nothing to do with the other. But everybody today, when they're trying to figure out what's going to happen in the stock market, what's going to happen in the bond market, they turn to Washington. You have the question answered.
Andy: On the macro basis, I think there's a definite connection. I mean, what the Fed does definitely impacts the markets. And we've seen it over the last few decades with low interest rates and the Fed really pumping up the economy with their spending. And then post COVID or during COVID, you saw fiscal stimulus from Congress and the President signing bills, whether it's President Trump or President Biden signing into law, I think $6 to $8 trillion in fiscal stimulus. So those things actually do impact the economy, definitely do impact the markets in a great way. And the question is, going forward, what are those macro things going to be?
Ric Edelman: We all know that the story of the day regarding the economy is, of course, inflation. And the big question is, will inflation fall, and would it even matter in terms of the midterm elections, even if that were to happen?
Mid-Term Elections: Where Will the Rate of Inflation Be in September?
Andy Blocker: I think the key is going to be looking how people feel in September. So if by September, by miracle, we have inflation fall in half from eight plus to four plus, maybe there's a big impact. But if it just goes to seven or six, it's still pretty high and no one will really feel that impact. So, I think as far as inflation and its impact on people's minds, I think the bake is caked on that. The question is, are there other issues which rise up to compete with inflation? And that's what we're watching.
Ric: And what are you seeing so far?
Andy: So, there's a lot of volatility, as you can say, in the macro world. First, geopolitically, you have the Russia-Ukraine situation, you've got the supply chain issues with China and their no tolerance programs. You've got the abortion ruling, Roe v Wade. Three months ago, when we polled that, it was about 6% of the American people were actually going to vote primarily about abortion rights. We've seen a dramatic movement to about 20% having that as a top issue. But to put that in perspective, you have concerns about inflation and the economy running at 60% to 70%.
Ric: So, at the end of the day, people vote their pocketbooks.
Andy: Exactly. And I think the January 6th impact is more going to be seen in 2024 and the viability of Trump as a presidential candidate as opposed to impacting the 2022 election.
2024 Presidential Election: Who Will the Candidates Be?
Ric: So, you mentioned 2024, so I have to ask what your guess is, what's going to happen in the 2024 race? I'll make it a little bit easier. Who are the nominees going to be?
Andy: Oh, this is really easy. It's not going to make any of your viewers happy, but it's Trump v Biden again. To me, that's the default. And the reason I say that's the default case is because today, if Trump wants the nomination, he gets the Republican nomination today. If Biden wants the nomination, he gets the nomination. He's the President of the United States. He's the leader of the Democratic Party. Now, the election is not today, and things can change. And we've seen just a little bit of weakness for both candidates going in within their party. So, Trump is still 80 plus percent popular within his party. Some polls show him 70%, but he's still by far, in a way, the most popular candidate. But you see these little spot polls. You see a poll up in New Hampshire where last October, I believe DeSantis was trailing Trump by a sizable margin, but now he's now up two points, a 27-point move. Now that's a snapshot and it's just New Hampshire. So, I'm going to caveat that. But you can't discount a 27-point move. And then some other polls are showing where you have a matchup between Biden and Trump. Some are showing Biden beating Trump but losing to DeSantis. And what I think is going on here and what's going to go on for the next few years is Republican voters are going to have to make a choice. They're going to have to decide, hey, I might like Trump and his policies, but he's got a lot of baggage. And do I want to just continue to support Trump, or do I want to support the Republican candidate who has the best chance of getting Democrats out of power? And that's what they're going to have to weigh in, which is what Democrats had to weigh in 2020. You know, was Biden their first choice? All his policies? Maybe not, but he was the most viable candidate to beat Trump. And the Democratic voters are right on that.
Ric: Now, you began your comments by saying that while you think the election is going to be Trump versus Biden, you preface it by saying no one's going to be happy with this. So why is it that I'm going to conclude or interpret your comment to meaning the Republicans are not happy it's Trump and the Democrats are not happy it's Biden. So, explain yourself, please, Andy Blocker.
Andy: So, I explained a little bit on Trump that there's a lot of discontent and a lot of uncomfortability with a lot of the baggage he's taken on with the January 6th hearing and other things. And they like his policies, but they'd rather do without his tweets. So that's the Trump side. The Biden side is kind of the same thing, but from a different perspective. His poll ratings right now are hovering around 40%. If you do the Real Clear Politics compilation of polling, that's a very low number. And he's being seen as a drag on the Democratic Party in some ways. And so, there's an uncomfortability. Is he our best candidate going into whoever the Republicans put up? And, you know, from the left side, from the more liberal side of the party, there's discontent about not getting certain things through, like Build Back Better provisions and things. But at the end of the day, each party and their voters are going to make a calculated decision - okay, I might not like everything about this person, but who's my best chance to win the White House then?
Ric: Well, it's going to be very dynamic environment, no doubt for sure. We'll be paying a lot of attention to it. And I'll likely bring you back to get your most current views as we count down the clock to the midterms and then ultimately to 2024. That's Andy Blocker. He's head of U.S. Government Affairs for Invesco. And I really appreciate your spending time with us here, Andy.
Andy Blocker: Thank you.
Ric Edelman: You can learn more about the work the Invesco is doing in all of this. Just visit Invesco.com. We actually spoke with Andy for nearly 10 minutes. You can hear and see the entire interview on our video cast at TheTruthAYF.com.