I've got big shoes to fill. This is my chance to do something. I have to seize the moment.
- Andrew Jackson
RESETTING THE RESET BUTTON: President-elect Donald Trump has made it clear that he plans to alter the adversarial relationship between the U.S. and Russia. First it started with Trump touting Vladimir Putin as a much better leader than President Obama and taking Putin as one of his first calls following the election. Trump plans to nominate ExxonMobil CEO Rex Tillerson today and he’s no shoe-in for the post with resistance from both Democrats as well as vanquished Republican primary antagonists Senators Marco Rubio, Lindsey Graham and John McCain. Secondly, after reports of Russian interference in the election, Trump dismissed the intel as ridiculous. A bipartisan group of senators are calling for an investigation into the Russian hacking which will pit Congress and the president-elect against each other. Even Senate Majority Leader Mitch McConnell, who was originally skeptical of the intelligence reports, has now backed calls for a Congressional probe into Russia’s interference.
THE BULL WHO CARRIES AROUND HIS OWN CHINA SHOP: While Trump appears to want to improve U.S.-Russia relations, the U.S.-China relationship seems to be hitting a rough patch. It started with Trump’s call with the Taiwanese president but the relationship took another hit when Trump said the U.S. doesn’t have to be bound by the One China Policy. This has raised concerns in China as the One China principle has been the pillar of relations between our two superpowers, and China has officially warned Trump to continue to stick to the policy. Given the dealmaker he is, Trump is likely trying to knock the Chinese on their back feet to try and get some sort of trade concession...
TWEETER-IN-CHIEF ROUND TWO: Following last week’s direct assault on Boeing for the apparent high cost of the Air Force One replacement program, President-elect Trump took a shot at the largest program in DoD, the F-35. Calling the program “out of control,” he promised that billions can and will be saved on military and defense. Following the tweet reports of the program being over budget and delayed were overblown as it has been on track since a 2010 restructuring. However, investors took the bait and stock prices for prime contractor Lockheed Martin and suppliers, Northrop, BAE, et al quickly dipped nearly 5% before ending down 2.5% for the day. Ironically, at the same time SecDef Carter was in Israel delivering the first two of 50 F-35s being bought by Israel, the Canadian Prime Minister started walking back his up-until-now total rejection of the F-35 as a replacement option for Canada’s aging F-18 fleet. Trump’s latest comments should be viewed as a warning to defense companies not to get too greedy and as a sop to fiscal conservatives not to worry as the defense budget seems on track for a Trump bump of 5-10% with the F-35 almost certain to get some of that growth.
TRANSITION TRACKER: President-Elect Trump gets high marks for the pace at which he is announcing his nominees for top Cabinet posts and is certainly on a faster track than President Obama was eight years ago. Unfortunately the transition is not only comprised of the top jobs at the agencies. Many of the agencies are considerably behind schedule with appointments to key sub-Cabinet posts lagging while lower profile agencies are still waiting for more contact from the transition team. USAID hasn’t heard from anyone on Trump’s team and the EPA has had contact only once. Maybe they should keep an eye on their Capitol Hill counterparts who are are advocating speedy consideration of their colleagues who have been nominated to the Trump Cabinet to avoid gumming up the legislative process so they can hit the ground running in January.
TEARING DOWN THE WALL, MAYBE?: The Republicans landing the right policy on immigration seems to get harder by the day. During the campaign it appeared as if immigration was one topic where conservatives would not budge. Now Trump is backing off his deportation plan hoping that he can work on something that will make people “happy and proud” with support potentially coming from Speaker Ryan who doesn’t want to pull the rug out from under the Dreamers. If one thing is clear over this transition - Trump has no fear of reprisals when it comes to doing the opposite of what he promised on the campaign. Just ask Al Gore.
OPEC’S NO COMPLIANCE PRODUCTION CUT: MARKET LOVES THE OPEC DEAL BUT MANY REASONS TO BE WARY: Our Senior Energy Analyst Joe McMonigle writes that Saudi comments that it may go further below its ceiling are designed to support the shaky non-OPEC deal and other real concerns on cheating. You can read the full analysis here.
FCC RJECTS AT&T’s DATA-FREE PRCING (T,VZ, NFLX, DISH): Our senior Telecom and Media Policy Analyst Paul Glenchur writes about the FCC opinion that AT&T’s DirectTV data-free wireless plan violates net neutrality and that it should have limited impact. You can read the full piece here.
