TIMING IS EVERYTHING: Markets are trying to stay on top of the timeline for tax reform, which is why yesterday’s rumor about a five-year phase-in dropped stocks so quickly. The House Ways and Means Committee is weighing dropping the corporate rate three percentage points each year until 2022 from 35-20%. Chair Kevin Brady made it clear no decision was final. While phase-ins may slow any addition to the deficit, leadership has been emphasizing immediate economic growth - they want the benefits up front. Considering political terms that makes sense, no one wants to pay for a benefit for the next guy to realize it. Mark your calendars - we will be hosting a call tomorrow with David Hoppe, former chief of staff to Speaker of the House Paul Ryan, when the first draft of the tax reform package is released by House Ways and Means Committee Chairman Kevin Brady. Stay tuned for the invite and call details later this morning.
THE REPLACEMENTS: President Trump is set to pick the next Fed Chair. He plans to make the announcement this Thursday and all early signs point to Federal Governor Jerome Powell. But the president may be looking at more replacement nominations before he knows it. CFPB Director Richard Cordray has lasted through this Administration much longer than expected, but with Congress and the White House gunning to reduce the CFPB’s reach - many believe he won’t stick it out much longer. Cordray wrote a letter to President Trump pleading for him to save the arbitration rule. But, Trump and Cordray clearly don't align on this issue (and almost everything else) sending Veep Mike Pence to be the deciding vote on the arbitration legislation.
MIXED MANDATES: One of the top tax reform influencers, Senate Finance Chair Orrin Hatch (R-UT), says he is not ruling out eliminating the Obamacare individual mandate with the tax package. Senator Tom Cotton (R-AR) is pushing to use tax legislation to remove the mandate as a way to pay for tax cuts. Hatch said he was going to talk with Cotton on the matter, but knows it would be difficult for moderate Republicans to agree to include. Meanwhile, moderate Republican Senator Susan Collins (R-ME) is more concerned about what the package does for the middle class. Yesterday, she said there is no need to eliminate the estate tax as it doesn’t affect the majority of family-owned properties and businesses - she also said she doesn't believe millionaires should have their taxes reduced. Accommodating those two goals could help Republicans pay for the cuts and change the messaging away from “favoring the wealthy.” Collins did emphasize a new level of outreach from leadership - a very positive change from the irregular order that led to their failures in repealing and replacing Obamacare.
PARTNER IN QATAR: Qatar is not just home to some of the largest natural gas production in the world; it is home to one of the largest U.S. military bases in the Middle East, putting the U.S. smack dab in the middle of the Gulf States crisis. Saudi Arabia led other Gulf countries to economic sanctions and embargos on Qatar for their assumed role in financing terrorist organizations. The Administration gave Qatar mixed signals after Saudi Arabia announced the blockade on the country, but only followed through with diplomatic action. Treasury Secretary Steve Mnuchin visited the country this week on the heels of Secretary of State Rex Tillerson and established a partnership aimed at stopping the financing of terrorist groups. Qatar's agreement is the first step in building back relationships in the Gulf region - and with it their LNG exports.
SMELLS LIKE OLD FISH: As if the FBI doesn’t have enough on their plates this week, they are opening an inquiry into the Whitefish Energy contract secured from PREPA to rebuild Puerto Rico’s electric system. The Governor of Puerto Rico, Ricardo Rosselló, announced over the weekend that they would be stepping away from the contract. This came over concerns of FEMA’s ability (or desire) to pay back the costs. Members of Congress, as well as FEMA, were worried that a company with just two full-time employees may have a hard time handling the emergency recovery for the territory. It is believed the FBI is looking into the procurement of the contract - mostly because the company comes from Interior Secretary Ryan Zinke's hometown.
CMS FINALIZES MEDICARE CY 2018 OUTPATIENT DIALYSIS PAYMENTS | KEEPING AN EYE ON OUTLIER PAYMENTS: Our Senior Health Analyst Emily Evans writes that the final number was lower than expected; outlier thresholds lowered - something CMS may regret. Read the full piece here.
WHO NEEDS CONGRESS? HHS PROPOSES RELAXING CY 2019 ACA-MANDATED BENEFIT DESIGN: Our Senior Health Analyst Emily Evans writes that more State flexibility in meeting EHB requirement won't change covered services; could reduce generosity & increase affordability of plans. Read the full piece here.
UNREQUITED EXAS BEARS: SORRY, TRUMP ADMIN APPROACH TO INSURANCE MANDATES NOT YOUR CATALYST EITHER: Our Senior Health Analyst Emily Evans writes that the Trump Administration’s efforts to relax the insurance mandates in the individual and small group markets not likely to affect coverage of EXAS. Read the full piece here.
NOC BEGINS TO SHOW IMPACT OF BOMBER AND GBSD WINS: Our Senior Defense Analyst Emo Gardner writes that NOC is the dog that caught two cars with an $80B bomber contract and this year's ICBM Tech Maturation downselect. It must focus on execution. Read the full piece here.
T-MOBILE/SPRINT PROBLEMS? FCC INFRASTRUCTURE PUSH GAINS IMPACT (TMUS, S, AMT, CCI, SBAC, ZAYO): Our Senior Telecom Analyst Paul Glenchur writes that if reports are correct that T-Mobile/Sprint talks have collapsed, the FCC's wireless infrastructure push gains added significance. Read the full piece here.
ANNOUNCING OUR NEW LEGAL CATALYSTS VERTICAL WITH PAUL GLENCHUR: We are pleased to announce the launch of our new Legal Catalysts vertical, highlighting key cases and legal developments with significant potential impact across multiple sectors. Paul Glenchur, our longtime telecom and media analyst, but also a former federal appellate court law clerk, attorney, and member of the Supreme Court Bar, will lead this research offering. Check it out here.
