LATER LAMAR: Within hours of declaring their agreement, President Trump flip-flopped his support for Senator Lamar Alexander’s (R-TN) bipartisan health care deal. The agreement Alexander and Senator Patty Murray (D-WA) came to would continue payments to insurers while offering States greater flexibility on Obamacare guidelines. Senators do not have the votes for repeal and replace or Obamacare would be gone and most of those reform bills (Graham-Cassidy) don’t change current markets until the out years. Alexander and other committee members want to keep markets stable in the interim. While the deal is receiving a lot of push back - it’s not dead. Alexander and Murray are some of the best compromisers in Senate and other Republicans such as Senator Ron Johnson (R-WI) and maybe even President Trump (if he flips back) are willing to work to change the bill to be more conservative.
BRING ON THE BUDGET: While health care and AG Jeff Sessions provided a nice distraction in Washington yesterday, the Senate was still on the floor debating their FY18 budget. They are expected to vote later today on a bill that would unlock the path to tax reform by allowing for $1.5 trillion to be added to the deficit. It is still uncertain if Senate Majority Leader Mitch McConnell has the votes, but we think he’ll find them. Additionally, Democrats are giving McConnell a headache by attempting to block the provision for reconciliation language in the Energy Committee. They believe this will lead to Arctic drilling in Alaska. However, that sweetener may be locking in the moderate Republican vote of Senator Lisa Murkowski (R-AK). Other Senators on the fence were tight-lipped yesterday, but McConnell can afford to lose the one sure threat, Senator Rand Paul (R-KY).
TIMING IS EVERYTHING: Treasury Secretary Steve Mnuchin is campaigning for the landmark tax reform package. Yesterday, he said that the market would suffer if Congress does not pass something because optimism around tax reform is already baked into prices. Just as important to the market as if a tax package will happen is when it will happen. Speaker Paul Ryan (R-WI) remains confident the House Ways and Means Committee will get a package to the floor by early November targeting a House vote the first week of November. Senate Majority Leader McConnell and President Trump are sticking to the end of 2017 deadline - giving themselves some breathing room. Getting a package to pass on that timeline will be very difficult and will likely bleed into the first quarter of 2018, but Republicans intend on passing something.
EASIER EXPORTS: The Department of Energy (DOE), run by Texan Rick Perry, has changed their guidance for the approval process of smaller scale liquefied natural gas (LNG) exports. Secretary Perry is doing so in tandem with Senators Bill Cassidy (R-LA) and Marco Rubio (R-FL) who have introduced a bill allowing for exports up to 51.1 billion cubic feet to be approved “without modification or delay.” Right now the approval process at DOE is long and costly for LNG companies in the Gulf Coast. As energy prices suffer from oversupply - easier access to exports can help manage that balance from the U.S.
AN IMPORTANT STOCK MARKET CHART: What’s helped launch stocks to all-time highs in 2017? In one word? Profits. S&P 500 companies have seen four straight quarters of year-over-year earnings growth, peaking in Q1 2017 at 14.5%. Beware: This makes for an increasingly tough earnings setup heading into 2018. Earnings “comps” – the numbers against which year-over-year growth is measured – get difficult in coming quarters. Key investing takeaway? As Hedgeye CEO Keith McCullough put it: “I would not want to be as long as we’ve been, or as aggressively bullish as we’ve been on all stock market pullbacks, ahead of Q1 reporting season in 2018.” 
CALL REPLAY | CANARY IN A COAL MINE | 4Q17 HEALTH CARE THEMES PRESENTATION: Our Senior Health Analyst Emily Evans invites you to watch the replay here.
AT&T/TIME WARNER ON TRACK (T, TWX): Our Senior Telecom Analyst Paul Glenchur writes that the deal seems on track despite new criticism from lawmakers. Attacks on the new antitrust chief appear more desperate than constructive. Read the full piece here.
