AT LONG LAST: A gentleman's version of the House health care bill, Senate Majority Leader Mitch McConnell has unveiled what the Senate will include in the replacement of Obamacare. Medicaid expansion will be slowly rolled back until 2025 when spending rates become even stricter, pre-existing conditions are covered, subsidies will be repealed after 2019 but tax credits will remain, and individuals and states will have much more flexibility in the insurance market. The bill, as expected, is a moderate version of the House’s and is garnering the support of the Administration and moderate Senators. Four far-right Senators who feel part of the ACA is left intact are rebelling, some of whom were part of the closed door sessions, some of whom care too much about what the next ad is that will run against them. Our Senior Health Policy Analyst Emily Evans has all the details you need to know here.
SORRY, WE’RE CLOSED: Moving towards the “extreme vetting” President Donald Trump says is necessary for U.S. security, he signed an executive order (EO) on visas. Updating a 2012 Obama EO with the goal of increasing travel to the U.S., Trump removed the requirement that the State Department must address requests from short-term visitors and business travelers within three weeks. While Trump says this will give State the discretion it needs, it will likely cause a decrease in international travel. Coincidentally, this happened the same day the Department of Homeland Security said it would increase the number of visas available for short-term, non-agricultural workers at the request of businesses who are preparing for a busy summer season.
OFF THE GROUND: The Paris Air Show revealed how keenly interested the aviation industry is in cyber security. With increased terror threats and outdated infrastructure, the airline industry is taking new measures to protect themselves. The latest and greatest in aircraft technology was unveiled, with Boeing’s 737 MAX stealing the show with every new product emphasizing the future of cyber technology, from new satellites increasing in-flight wi-fi capabilities, to monitoring hacks and attempted hacks alongside new live tracking notification systems for pilots. Expect airlines, aircraft companies, and the government to beef investments into this modernization.
THE WORLD’S GREATEST FLYERS FLY...QUATAR?: Qatar’s state owned airline is attempting to acquire ten percent of American Airlines. Not only are we watching how the international community will react given recent tensions between Qatar, the U.S., and U.S. allies, but we are waiting to see how other major domestic airlines respond. This is an ironic conflict of interest for American who actively lobbies against gulf carriers alongside Delta and United given the fact that Qatar Airways and other gulf carrier airlines are said to have an unfair advantage over U.S. airlines because they are heavily subsidized by their governments. The big three (Delta, United, and American) have been advocating against their use of domestic airports and airways for this reason. Reaction by the president to this deal will be a key indicator on where the debate for gulf carriers access sits with the new Administration.
REFLATION’S ROLLOVER: Energy stocks are the biggest losers among S&P 500 sectors this year. The sector is down -15% year-to-date, lagging behind the S&P 500 by a staggering 23 percentage points. Energy’s severe underperformance has everything to do with our #Reflation’sRollover call. In early April, our Macro team said U.S. inflation had reached its crescendo and would begin falling. The components of inflation, especially Energy prices, were lapping bombed out levels from the first quarter of 2016, making for easy year-over-year comparisons. It’s happening. The CRB commodities index, crude oil, and breakeven inflation rates all put in their 2017 tops and have been falling. And finally, so has the Consumer Price Index, which has slowed for the third consecutive month in May, decelerating -32 bps to +1.87% year-over-year, the slowest rate in 7 months. We see continued weakness in inflation and strength in the broader U.S. economy. Want a winning recipe for 2017? We say, short Energy stocks on strength and buy consumer-oriented Tech stocks on weakness.
FLASH CALL TODAY: SENATE VERSION OF ACA REPEAL RELEASED: Join our Senior Health Policy Analyst for a rundown of the latest effort to repeal the ACA and the implications for hospitals, mental health, and insurers, today at 9:00am ET. Get the event details here.
THE DOGS THAT DIDN'T BARK: KEY SENATORS SILENT IN NEW AT&T/TIME WARNER ATTACK: Our Senior Telecomm/Cable Analyst Paul Glenchur writes that The usual suspects in the Senate have attacked the deal, but key Democrats charged with DOJ oversight have remained on the sidelines. You can read the full piece here.
SAUDI SPECIAL ELECTION, MBS ELEVATION TO CROWN PRINCE MAY BRING BIG OIL MOVES: Senior Energy Analyst Joseph McMonigle writes 2018 Aramco IPO, CP Salman’s signature proposal, needs higher oil price for success. More aggressive posture with Iran also expected. Read the whole story here.
