THE SKINNY ON REPEAL: Yesterday, we held a flash call with our Senior Health Policy Analyst Emily Evans to discuss what form the final Senate bill will take, who’s willing to play ball in debates, and if and when the bill passes, what procedurally happens next. As we anticipated, Senate adjourned last night with their skinny-repeal bill gaining real traction. They are expected to take up the measure this morning; it would eliminate the individual mandate, the employer mandate, and the medical device tax. Senate Majority Leader Mitch McConnell is more than eager to pass something and so far his first two tallies failed: a full repeal only had 45 yays and a repeal and replace only had 43 yays. To catch the full replay of yesterday’s presentation click here.
SANCTIONS SIGNING CEREMONY?: A hold up in the Russia/Iran sanctions bill yesterday has been resolved. Senator Bob Corker (R-TN) said the Senate would like to remove the House’s amendment adding sanctions to North Korea, requiring the bill go back and forth between the chambers again. But late last night Corker reached a deal with House Majority Leader Kevin McCarthy (R-CA); the Senate will vote on the House’s bill and send it to the president’s desk by Friday and the House will take up a new bill which enhances sanctions on North Korea. International leaders are pressuring President Trump to veto the bill, but that would put him in a precarious position with a Congress itching to overturn a veto on the heels of the drama he’s created with AG Jeff Sessions.
WHERE'S THE BUDGET?: The House is no closer to holding a vote on the 2018 budget resolution, which typically sets topline numbers for the Appropriations Committee as well as dictates for other key measures. House Speaker Paul Ryan (R-WI) said they plan on pushing the Appropriations bills simultaneously to the budget bill when they return in September. They are still expected to pass four of the 12 Appropriations measures this week, which have been rolled into one package called a “minibus.” The four defense spending measures are usually easiest to agree on; however, this year they include funding for the border wall. House Republicans have been debating and amending the “Make America Secure Appropriations Act” and are expected to vote today.
#CHINASLOWING: Within China’s comically static Q2 GDP release last week was an apparent slowdown in China’s manufacturing sector. While GDP held steady at +6.9% year-over-year growth, the sector decelerated from its Q1 cycle-peak of +14.2% year-over-year to +12.7% year-over-year in the Q2 of 2017. While this seems trivial, the manufacturing sector’s trailing twelve month contribution to broader Chinese economic growth remains at an historically unsustainable rate of 46.5%, versus a trailing 10-year average of 34.8%, writes Hedgeye Senior Macro analyst Darius Dale. The sector’s recent strength was fueled by the People’s Bank of China, which pumped a staggering net 1.727 trillion Chinese yuan into mainland financial markets in 2016. This year, PBoC Open Market Operations are down -246% year-over-year. So expect the Chinese manufacturing sector to continue to fade alongside Beijing stimulus. Investing implications? We say sell Metals & Mining stocks (XME). China consumes about half the world’s production of refined copper, iron ore, aluminum and smelted and refined nickel.
BIX SIX TAX BLUEPRINT: Republican leaders have been meeting for months behind closed doors to come up with a tax overhaul and all eyes will be on the ‘big six’ and their release of a six-prong tax plan this Friday. If they are able to unveil it before recess, they hope the conversation will change from health care to tax reform, which House Speaker Paul Ryan plans to legislate as soon as they return in September. This will be perfectly timed with President Trump’s nationwide lobbying efforts, giving outside conservative groups a push to spend millions during August recess to build momentum for the tax overhaul. While the plan will likely be a shell of the reform, we’re hearing they want to keep charitable donations and moving towards a territorial system is a “very, very, very high” priority, according to Treasury Secretary Steve Mnuchin.
EVENT REPLAY | U.S. ENERGY SANCTIONS & VENEZUELA: IS IT TRUMP'S RED LINE? White House raises the stakes for Maduro if he goes through with July 30th election. Big impact for Gulf refiners, oil markets, and bond holders. If you missed our black book style call, watch the replay here.
STILL WAITING FOR DISH NETWORK COURT RULING: Our Senior Telecom Analyst Paul Glenchur writes DISH hopes a federal court will uphold bid credit eligibility from the AWS-3 auction, cutting potential FCC liability. Read his full piece here.
AT&T/TIME WARNER: THE CLOSING EPISODES (T, TWX): Our Senior Telecom Analyst Paul Glenchur writes AT&T is reportedly discussing merger conditions with the DOJ. We continue to anticipate likely approval with limited, if any, conditions. Read his full piece here.
CMS RELEASES PROPOSED HOME HEALTH PAYMENT UPDATE | NEW PAYMENT SYSTEM INCLUDED: Our Senior Health Policy Analyst Emily Evans wrote that CMS is proposing to adopt a new payment system in a non-budget neutral manner; shift to HHGM will reduce reliance on therapy. Read the full piece here.
