At yesterday's press conference, President Trump persisted in calling mainstream media reports #FakeNews. As we pointed out, these attacks are working because media trust has been in decline for 20 years.
Here's a quick look at the key issues all investors should keep an eye on from Hedgeye's JT Taylor and our team of Washington Policy analysts in D.C.
MATTIS' MILITARY ME$$AGE
#NATO #Mattis #Trump
Defense secretary James Mattis warned other NATO countries to meet their defense spending requirements or the U.S. may not be as active as before. Mattis is staying in line with one of candidate Trump’s campaign themes that other NATO countries need to pull their own weight. Currently only five countries meet the NATO military requirements.
A BRIDGE TOO FAR?
President Trump’s infrastructure plan got a boost yesterday from a report by the American Road and Transportation Builders Association. The report found that 55,710 bridges are deficient in the U.S. adding fuel to Trump’s planned ~$1 trillion infrastructure spend. With infrastructure currently taking a backseat to health care and tax reform, this could elevate the issue on the Hill, but we don’t foresee action until tax reform begins to gel.
TRUMP TALKS STOCKS
Early yesterday morning President Trump tweeted: “Stock market hits new high with longest winning streak in decades. Great level of confidence and optimism - even before tax plan rollout!” Hyperbole? Trump isn’t known for his modesty.
So will the post-Election Day stock market tear continue? Will the U.S. economy actually grow? We say yes on both. The year-over-year growth rate in retail sales hit 5.6% on Wednesday, a level not seen since March 2012 as Hedgeye CEO Keith McCullough wrote in a note.
He also points out that the core reading on Consumer Price Inflation (CPI) hit the highest level in 5 years, accelerating to +2.5% year-over-year. The U.S. economy and inflation are heating up. Based on this economic data the bull market in stocks has room to run.
RELAXING IN THE HOT SEAT
CFPB Director Richard Cordray will live to fight another day. Cordray has been on a very hot seat since Trump won the presidency, but the U.S. Court of Appeals for the DC circuit put aside a ruling that the bureau’s structure is unconstitutional.
Litigation is expected to last far into 2017 with oral arguments scheduled by the Court on May 24. Cordray can breathe a sigh of relief - for now - but the calls for his head won’t go away with House Financial Services Chair Jeb Hensarling making it his singular goal to get rid of Cordray. Hensarling has changed his mind on replacing the head of the CFPB with a bipartisan panel - perhaps so Cordray’s replacement could overturn some of his more extreme decisions.
EIGHT IS ENOUGH
SCOTUS Nominee Neil Gorsuch has spent the last few weeks going from Senate office to Senate office speaking with Senators on the merits of his nomination. Senate Judiciary Committee Chairman Chuck Grassley has now set the date for Gorsuch’s hearing on March 20th in line with the confirmations of SCOTUS Justices Sonia Sotomayor and Elena Kagan.
Now the question is can Gorsuch and Team Trump get eight Democrats necessary for confirmation in that span of time...
YELLEN ON THE HILL
Janet Yellen appeared earlier this week before both the Senate Banking and House Financial Services Committees. As expected, the House hearing provided more fireworks, mainly over questions regarding the appropriate level of financial regulation and monetary policy. At both hearings, Chair Yellen gave little indication of when and if interest rates will be raised in the coming months.
SENATE WILL CONFIRM EPA ADMINISTRATOR PRUITT AS EPA ADMINISTRATOR TODAY
Our Senior Energy Analyst Joe McMonigle writes that the White House tells EPA to get ready to quickly implement pending Executive Orders. You can read the full analysis here.
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