THE WORLD'S EYES ON THE G20: President Trump delivered his first speech in Europe in Warsaw, a very calculated signal to the Kremlin, as the U.S. hopes to supplant Russia’s market share of natural gas supplies to Poland. Leading up to Trump’s highly anticipated appearance at the G20 meeting in Hamburg, Germany, all eyes have been on his first face-to-face with Russian President Vladimir Putin. However, our eyes are on a number of other dynamics at play, particularly with German Chancellor Angela Merkel whose gripes with Trump are growing. Trump will be considered the outsider of the event given his stances on climate change, free trade, and multinational alliances making this a great opportunity for Trump to smooth the waters with the U.S.’s greatest allies and establish himself as a world leader. Find out what to anticipate from Trump and Putin’s first meeting on our call today at 10:00am, event details here.
THE ELEPHANT NOT IN THE ROOM: Senators are home for July 4th recess and their constituents are showing up in force. Senator Susan Collins (R-ME) wrote that, “people were thanking me over and over again” for opposing the Senate bill to repeal and replace Obamacare, meaning Republicans will need more time to address their concerns and get this right. Unfortunately, time is not on their side - and neither is Collins as of press time, declaring that she wants the bill “dramatically changed.” Health care needs to be resolved in the first weeks after recess in order to move on to other pressing issues like the budget, tax reform, and the debt ceiling before FY17 ends in 30 legislative working days. McConnell’s ability to pull off significant victories is legendary and we think he’ll somehow prevail again, but with mounting pressure to move through big legislative items we wouldn’t be surprised if August recess is cut short to get there.
STRANGE BEDFELLOWS: A bipartisan coalition headlined by Senator John McCain (R-AZ), Lindsey Graham (R-SC) and Elizabeth Warren (D-MA) have called for increased pressure on Pakistan and more aggressive military action in Afghanistan following their visit to the respective countries this week. They are bringing a message back to President Trump; transform the fight against radical Islam from a stalemate into a success. While they’re advocating for adding even more than the 3,000 - 4,000 troops requested to ensure victory, they acknowledged even pulling all out all troops would be a better strategy than none. This is coming at a time when emerging international struggles are plaguing the president - North Korea, Russia, Syria and China to name a few, but as Senator Graham has insisted “If we leave radical Islam alone, we will not be safe at home.”
TALK IS CHEAP, OIL IS TOO: As the G20 summit convenes, nations are pledging their commitment to cleaning up the environment, but it is mostly just a reaction to President Trump pulling out of the Paris Accord. The combined 20 countries’ investments into fossil fuels is still four times that of renewable sources. Some other countries are countering Trump a different way, competition. Following Trump’s Energy week focussing on growing the oil, gas, and coal industries, Russia says they too are not cutting production and Qatar says they’re expanding natural gas production. All of which is contributing to a global oil glut and plummeting prices. Trump will continue to push for an American dominated energy market but he must maintain the delicate balance of geopolitics that comes with price fluctuations.
NO TAXATION WITHOUT REPRESENTATION: Over a decade in the works, Prime Minister Modi rolled out a massive tax overhaul in India. While the country will take time to adjust to such a foreign system there is little doubt about the benefits it will bring. Going from 29 separate tax codes to one will make international investment a lot easier according to Modi. There is still no income tax, but the goods and services tax - spread into five categories - is expected to raise federal revenue and speed GDP growth. We think it is more about positioning themselves for better trade with the U.S. and other countries - nice timing coming on the heels of a newfound bond with President Trump.
TODAY - CALL INVITE | LOADED FOR BEAR - RUSSIAN SANCTIONS AHEAD?: Today at 10:00am ET Hedgeye is hosting a call on Russian sanctions with the Deputy Director of the Kennan Institute for Advanced Russian Studies of the Woodrow Wilson Center, William Pomeranz. We will discuss the implications on businesses in the U.S. and globally as well as what this means for National Security. Get the event details here.
CALL INVITE | THE ART OF THE DEAL - TRUMP V. NAFTA: Mark your calendar for a conference call with John Murphy of the U.S. Chamber of Commerce on July 13th at 11:00am ET on the timeline for NAFTA renegotiations, the emerging contours of the Administration’s strategy, and the implications on trade and the the U.S. economy. Get the event details here.
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