MIDDLE CLASS MIRACLE: House Republicans met at an offsite retreat yesterday afternoon and into the evening to discuss the policy, process, and politics of advancing their crown jewel - tax reform - following the Big Six’s release of their tax plan. Republicans on the Hill have not always seen eye-to-eye with the president, but are the ones responsible for writing and passing these tax bills. So far no significant Republicans have come out against it and even the Freedom Caucus issued a statement of support. We’re hearing that Freedom Caucus members also agreed to let the budget move forward and Budget Chair Diane Black (R-TN) is expected to take it to the full House for a vote as early as next week. We will gauge their reaction, prospects for passing the critical FY18 budget, and what the road ahead for Congressional leaders will entail on a call TODAY @ 8:30AM with David Hoppe, former chief of staff to Speaker of the House Paul Ryan. Get the event details here.
LIFTING THE JONES ACT: The Jones Act was passed in 1920 to do two things: protect seamen by allowing them to file claims when injured on ships and protect U.S. shippers from foreign competition. Restricting where ships and their crews come from between U.S. ports can make the cost of transporting goods double, which is what is happening to Puerto Rico. Senators from both sides of the aisle are arguing for it to be lifted in this time of crisis to ease the process of getting relief supplies to the territory. President Trump said he was thinking about it, but also stressed the importance of the Jones Act to the U.S. shipping industry.
WHAT'S NEXT: The president is set to visit the island next Tuesday to view the damage and get an on the ground briefing on the burgeoning crisis. Congress has tried using carryback taxes as a means of relief for small businesses after crises in the past. The Small Business Administration has implemented programs that allow businesses to pause payments on their loans interest-free and offers disaster loans. But most significantly - the ad hoc group of funds which holds Puerto Rican bonds is offering to lend another $1 billion as bridge financing.
BACK TO BIPARTISAN: Senator Lamar Alexander (R-TN) is resuming his efforts to come up with a bipartisan solution to stabilize insurance markets. Now that the rush through repeal and replace effort failed, he and Senator Patty Murray (D-WA) are returning to regular order. They say they are making real progress on their committee to get consensus, however, other Senators want to stay squarely focused on repealing and replacing Obamacare. President Trump swore yesterday that they had the votes on Cassidy-Graham and will address it again at some point in January/February.
BUT THEN: Trump also repeatedly said that they would pass health care reform through reconciliation, which means Senators would have to tie it to the rules designed for tax reform in 2018. This could be a major divider within the party and a hurdle for tax reform.
THE GREAT WALL: The House Homeland Security Committee is scheduled to mark up the Border Security for America Act next week. The Act includes $10 Billion in funds related to the president’s border wall, including the wall, fencing, and surveillance. While this would take a lot of muscle to pass the House, Senator John Cornyn (R-TX) has already introduced similar legislation. The wall is a hard no for Democrats, but even leaves many Republicans skeptical.
EVENT: TELECOM LUNCHEON IN NEW YORK TODAY: Our Senior Telecom Analyst Paul Glenchur will be hosting a telecom and media policy luncheon in New York City highlighting the FCC outlook following their meeting on September, 26th.
ENERGY DEPT LAUNCHES PIPELINE PERMIT STUDY WITH EYE TO "MORE, NOT LESS" APPROVALS: Our Senior Energy Analyst Joe McMonigle writes that Secretary Perry raises possible national security considerations to override state permit denials; citing NY’s denial of Constitution Pipeline. Read the full piece here.
FCC SAYS WIRELESS MARKET IS COMPETITIVE (TMUS, S, VZ, T): Our Senior Telecom Analyst Paul Glenchur writes - the FCC sets a more open tone to potential wireless deals, but clearing a T-Mobile/Sprint deal is still a close call. Read the full piece here.
EPA SIGNALS POTENTIAL CUTS IN PROPOSED BIOFUEL MANDATES: Our Senior Energy Analyst Joe McMonigle writes that reduced biofuel volumes mean lower RINS prices boosting refiners hit by costly compliance. Ethanol producers & blenders see lower profits. Read the full piece here.
EXAS | FEE SCHEDULE INDICATES STABLE REIMBURSEMENT: Our Senior Health Policy Analyst Emily Evans wrote - we remain LONG EXAS in the Hedgeye Health Care Position Monitor. Read the full piece here.
BOMBARDIER DECISION PORTENDS BIG WIN FOR LMT: Our Senior Defense Analyst Emo Gardner wrote the U.S. decision to support BA with tariffs on Bombardier will result in Canadian backlash against F/A-18E/F and restart plan to buy 65 F-35As. Read the full piece here.
EVENT: HEDGEYE GOES TO AUSA OCTOBER 10th: Hedgeye’s Senior Defense Analyst Lt. Gen Emerson “Emo” Gardner is hosting a defense day in DC followed by a reception. Join Emo in a “booth walk” of the largest land warfare exposition in North America. View over 720 of the world’s most important military hardware suppliers escorted by the man former Secretary of Defense Bob Gates called, “my go-to guy on the budget.” By invitation only.
EVENT: DEPUTY ENERGY SECRETARY & FORMER OPEC PRESIDENT HEADLINE OCTOBER 11 HEDGEYE ENERGY CONF (NYC): Our Senior Energy Analyst Joe McMonigle is hosting a Hedgeye energy conference in New York City. Topics include regulating pipelines, grid reliability and energy infrastructure in the Trump Administration - as well as an OPEC meeting preview. Get the event details here.
