The rights of persons, and the rights of property, are the objects, for the protection of which Government was instituted.
-James Madison
FINDING THEIR BACKBONE: Republicans on the Hill are starting to gain their footing on when and how to push back on President Trump. Following the president’s criticism of a Republican appointed federal judge and his praise of Russian President Vladimir Putin, Republicans including Majority Leader Mitch McConnell, have begun distancing themselves from the president - short-lived as it may be. Expect maverick Senator John McCain to continue to be the most outspoken - especially on the heels of yesterday’s back and forth with the White House over the success of the raid in Yemen. After Ed Secretary Devos’s close confirmation vote, it’s clear that Trump has a fine line to walk and can’t afford to lose any three Republican Senators especially when the stakes get raised over the coming months.
IN CASE OF EMERGENCY, CROSS PARTY LINES: President Trump will reach across the aisle today to meet with Democratic Senators Heidi Heitkamp, Joe Manchin, Jon Tester, and Joe Donnelly - all from red states Trump won by a healthy margin. With the potential for Republicans on the Hill to push back against the president, Trump needs a little wiggle room and may have to rely on some Democrats to help get his agenda moving at his #Trumpace. Couldn’t have come at a more critical time as he’ll need eight Democrats to support SCOTUS nominee Neil Gorsuch - unless Majority Leader Mitch McConnell invokes the nuclear option.
FLY THE FRIENDLY SKIES: The CEOs of the major U.S. airlines, except American, are meeting with the president to discuss economic growth and job creation. A major focus of this meeting will be the relationship between the U.S. government and foreign carriers as U.S. based airlines have asked the Administration to block additional flights from state-owned Emirates, Etihad and Qatar who combined received an alleged $50 billion in subsidies over the last decade. Might be a good opportunity for Trump to dust off his America first policy.
CHINA COLLAPSE? NOT SO FAST: Some say China’s credit boom will perpetuate a collapse in its debt markets, the yuan, and its stock market. This misses the mark. China’s economy has a closed capital account, meaning it controls the flow of money in or out of the country. As our analyst Darius Dale writes, instead of boom turned bust, policymakers will continue throwing cold water on the economy, specifically the overheated property market. In January 2015, the People’s Bank of China pumped 1.235 trillion yuan into the economy. This January, it was a mere 350 billion, a -72% decline. A centrally planned slowdown of this magnitude has never been attempted before in modern economic history. While we’re not calling for collapse, it is safe to assume the glide path down will be less linear than Beijing hopes. Steer clear of Chinese large-cap stocks.
BREXIT ON COURSE: The House of Commons passed legislation that will allow Prime Minister Theresa May to officially begin the process of exiting from the EU. There is one legislative hurdle left with the House of Lords deciding later this month. Once this hurdle is cleared, May can continue on with her plans to invoke Article 50 by the end of the March.
Call Invite | Coleman Tackles Tax Policy on Manufacturers Under the Republican Congress + Trump : Hedgeye is hosting a call TODAY at 1:00 PM with Dorothy Coleman, Vice President, Tax and Domestic Economic Policy at the National Association of Manufacturers, to discuss tax policy on the manufacturing sector with our Industrials and Macro Policy Analysts Jay Van Sciver and JT Taylor. Please find dial in information here.
