COMEY DOES NOT LIFT THE CLOUD: Former FBI Director James Comey captured the world’s attention as he testified before Senate Intelligence Committee yesterday. Alluding several times to the significance of the Russian hack of the 2016 election, Comey’s testimony compromised President Trump by undermining his understanding of the importance of the investigation and that the American people demand unbiased and independent institutions to preserve our democracy. While there was no smoking gun, we await the eventual leaks that will emerge from the closed-door briefing. The real impact of Comey’s testimony are the breadcrumbs he laid for Special Prosecutor Robert Mueller, his former C suite colleagues at the J Edgar Hoover Building as well as for House and Senate investigators - and we can’t imagine that AG Jeff Sessions is at all happy about about how some of those crumbs lead to him. While consumer confidence may fall upon the conclusion, the testimony had no effect on the market and unless a shoe drops (tweet or leak) don’t expect major volatility until investigations conclude.
IT’S NOW THE SENATE’S CHOICE: Despite all the oxygen being sucked out of Washington on the other side of the Capitol dome, House Republicans scored a big victory by passing the CHOICE Act 233 to 186 in the first salvo targeting the dismantling of Dodd-Frank. With Democrats in unison opposing the bill, it stands little chance passing the Senate in its current form. Senate Finance Committee members are beginning work on small referendums to community bank regulation as their starting point for financial reform as well as looking at other “growth” measures. The administration is floating the return of a 21st Century Glass Steagall, which was rejected from the CHOICE Act, despite mustering support from both sides of the aisle.
INFRASTRUCTURE WEAK : The unveiling of Trump’s Infrastructure package during his much ballyhooed ‘“infrastructure week” went exactly as expected, ahem, focusing on lowering permit times, rural infrastructure, private partnerships and skill based education. However, the bill does not meet the funding goals sought by moderate Democrats and Air Traffic Control reform cost it bipartisan support. The most interesting pieces to watch for are airways and the electric grid which are highly regulated by the federal government. This gives the the Trump Administration a real chance to reshape two vastly outdated industries and thus vulnerable to a security threat.
TAR HEEL TURMOIL: Governor Roy Cooper of North Carolina called a special session to force legislatures to redraw political districts, declaring the current scheme just plain “wrong,” after the Supreme Court voted unanimously this week that 28 districts were improperly distributed by race. Republican legislators despite having only 14 days to redraw the lines - or leave it to the court to draw the districts - say they are going to keep focus on the budget and not on the Governor’s political stunt. We wonder which side cares more about re-election…
ARABIAN WEB: While tensions in the Middle East remain high, the web of frenemies tangles further. Since Saudi Arabia and four other countries split ties with Qatar over Iran, Iran has suffered from a string of terrorist attacks. The president originally blamed Saudi Arabia, until ISIS claimed responsibility. Iran is the largest concern to GCC states because of its size, power, access to oil, and potential nuclear capabilities. The U.S. is supporting Saudi Arabia’s claim that Qatar must stop all funding of Islamic extremist groups, however, Trump offered time with Tillerson, someone who has worked with Qatar for years, to help resolve the matter. Qatar is making its alliances clear and when the its leader Sheikh Tamim bin Hamad Al Thani was asked about an invitation to the White House, he said, “has no plans to leave Qatar while the country is under a blockade.”
QATAR-SAUDI STANDOFF: Our Senior Energy Policy Analyst Joe McMonigle had a call with Marcelle Wahba, former U.S. Ambassador to the UAE. The Gulf crisis with Qatar is getting worse each day. But we expect Qatar to compromise to bring a resolution. You can read the replay here.
ACA REPEAL, REPLACE, REPAIR: Our Senior Health Care Policy Analyst Emily Evans writes that passage is likely by end of July; expect longer glide path for Medicaid expansion roll-back, less tax relief & more money for non-group market. You can read the full piece here.
