Investors across the globe have been exuberantly celebrating Donald Trump's historic election victory. The benchmark S&P 500 index is up 10% year-to-date (almost 6% since Election Day). A little reality check may be in order. Here's a look at key Washington to Wall Street issues which may have significant investing implications.
DON’T CALL IT A SHUTDOWN
The continuing resolution (CR) passed the House by a large margin with House members making a customary beeline for Washington-area airports. But their friends over in the Senate are not so lucky. A group of Democrats have slowed up the CR over a provision regarding a healthcare and benefits extension for coal miners.
Three of the Senators - Sherrod Brown, Joe Manchin, and Joe Donnelly - are not only up for reelection in 2018, but also serve states that Trump won and are appealing to him to support their cause. A short-term CR will be needed at midnight tonight to avoid a government shutdown and Senators will likely be working into the weekend unless a deal is struck beforehand.
BILLIONAIRE BOYS CLUB
Donald Trump’s billionaire-to-president story has inspired a new crop of wealthy Democrat donors who are looking to replicate the model. FL attorney John Morgan, Hyatt scion and IL businessman J.B. Pritzker, and CA hedge fund manager Tom Steyer, may all try their hands at running for governor of their respective states.
Dems are still shell shocked from their losses in the national elections, but worse for them is the fact that they now hold just 18 Governor’s mansions down from 29 in 2008. While the influx of new faces will give the party some new light, the fact that more young guns aren’t coming out of the woodwork has to be sounding alarm bells with national Democrat leaders.
CONSERVATIVE DREAM TEAM
The positions in Trump’s cabinet are filling up fast and it's shaping up to be a conservative's dream. The president-elect named Andrew F. Puzder, CEO of Hardee’s and Carl’s Jr., as his Secretary of Labor. Democrats will now have a tough decision to make in choosing to oppose Pudzer, who opposes the expansion of overtime pay and increases in minimum wage increases, or Scott Pruitt, conservative nominee for the EPA. Pruitt, who currently serves as the Attorney General of OK, is very close to the fossil fuel industry and a climate change denier, will also give the Dems plenty of heartburn during the confirmation period.
FROM RUSSIA WITH SUBPOENA
Republicans in the Senate are now pushing back against Russia as John McCain, Chairman of the Senate Armed Services Committee, plans to launch an investigation into Russia’s role in hacking the DNC and cyber attacks during the election. He has the backing of Senators Lindsey Graham and Bob Corker as well as U.S. military officials concerned about Russia’s ability to steal military secrets and operational plans. While garnering support from their Democratic brethren, it does put them at odds against President-elect Trump who doesn’t believe there was any meddling by the Russians during Campaign 2016.
TO FILIBUSTER OR NOT TO FILIBUSTER?
As Senate Minority Leader Harry Reid bade farewell to the Senate after 34 years - he warned Congress to try not and bid farewell to the filibuster. But, let’s go back to 2013 where Reid curtailed the use of the filibuster after Senate Republicans blocked several of President Obama’s judicial and executive nominees lowering the threshold for confirmation from 60 to a simple majority - with the exception of SCOTUS nominees.
Reid believes that the filibuster has been used far too much in recent years and thinks the “nuclear option” will be used for SCOTUS nominees and even legislation in the not too distant future unless Senators stop obstructing routine proceedings.