TURNING THE CORNER: The House will vote on the Tax Cuts and Jobs and Act today with leadership continuing to be confident in their vote count. Of the 239 Republicans, only 22 can defect - and there are still holdouts from blue states who remain opposed to the legislation. They wanted a better deal from Ways and Means (W+M) Chair Kevin Brady on the SALT deductions. With small business groups now supporting the bill, leadership has been talking to moderate Democrats to cushion their margin - but we think they’ll band together and oppose the bill. Speaker Paul Ryan has promised to satisfy budget concerns and add in other provisions (repealing Obamacare mandate) during Conference Committee, and that has convinced many ultra-conservatives to vote for it. All signs point to passage. The Senate, however, is a different story as Senator Ron Johnson (R-WI) already became the first Republican to come out against the package. Majority Leader Mitch McConnell will be working around the clock with Finance Chair Orrin Hatch (R-UT) to make sure they get a bill out of Committee tomorrow.
THE HOUSE BILL: So far the Rules Committee has made very little changes to the bill. As it passed out of W+M, it contained all the major provisions with some last minute revisions from Chair Kevin Brady. It lowers the corporate rate, pass-through rate (including a special 9% rate), and individual income rates. It repeals AMT, most itemized deductions, and the estate tax after six years. It benefits working families by doubling the standard deduction, increasing the child tax credit, and preserving the adoption credit. Tune into our call today with Hedgeye’s Macro Team to hear more about the provisions and compare them to the Senate bill at 12:00 PM ET. Get the details here.
DEFENSE BILL SOARS: The House passed a $700 B defense spending bill 356 to 70 - in a rare show of bipartisan support. The bill is significantly more than the president asked for and exceeds current budget caps. With Senate expected to easily pass it after Thanksgiving satisfying the military build-up requirements of defense hawks, Congress will need to agree to a budget deal that raises the caps in the future. Our senior defense analyst Emo Gardner believes that the continuing resolution expiring on December 8th will get a short extension and that Congress will repeat what it has done in the past and make a two-year deal to raise the BCA caps for FY 2018 and 2019 to a level somewhat short of the total NDAA level.
TRUMP’S TRADE TRIP: It’s no secret that President Trump has a very different approach to trade than other Republicans, especially with China. When traveling Asia Trump focused on the unfair trade practices of these countries, telling China he doesn’t blame them for taking advantage of the system. Trump at a speech yesterday touted the progress he made in terms of relationships and says that other world leaders now understand what fair trade means to the U.S. He also boasted the near $300 B in sales he secured while overseas.
BACK AT THE TABLE: The fifth round of NAFTA negotiations are underway as Trump returns from an Asian trade tour and Prime Minister Justin Trudeau announced Canada’s work in negotiating a new Trans-Pacific Partnership. The two leaders’ perspective on trade could not be further apart. However, everyone thinks it is time to compromise if they are going to get a deal done - and while the Administration doesn’t seem to think NAFTA is necessary, Congressional Republicans disagree. Mexico has said they will compromise on the sunset date, but only if other provisions are in the bill - they have been fighting the new auto origin provision. This week may be the last chance to gauge whether or not the countries will be able to work out a deal - leaving many U.S. economists on edge.
EXIT STAGE LEFT: With the Administration dealing a fatal blow with the arbitration rule, CFPB Director Richard Cordray saw the writing on the wall (belatedly to some) and announced his retirement. His retirement gives Trump a chance to put his imprimatur on the agency and appoint his own director to reshape the Bureau widely criticized by Republicans since its inception for its overreach.
CALL INVITE TODAY 10 AM: UPDATE FROM THE FORMER U.S./UN COMMANDER IN KOREA: On the heels of President’s Trump trip to Asia, our Senior Defense Analyst Emo Gardner invites you to join us today, November 16th at 10 AM ET to hear the four-star former commander of U.S./UN forces in Korea provide an up-to-date assessment. Get the details here.
CALL INVITE TODAY 12 PM: MACRO TAX REFORM UPDATE: Join Darius Dale of the Macro team, JT Taylor and Emily Evans for our latest update on Tax Reform today, Thursday, November 16th at 12 PM ET. Get the details here.
EVENT: HEDGEYE AT OPEC – JOIN US FOR A PANEL & RECEPTION IN VIENNA ON OPEC’S NEXT STEPS: Our Senior Energy Analyst Joe McMonigle is hosting a panel in Vienna on November 29th on OPEC’s next steps, geopolitical risks and oil markets. Get the details here.
GENERAL DAN CHRISTMAN: TRUMP AND CHINA'S NEW LEADERSHIP: TO THE FUTURE AND BEYOND!: Our Senior Advisor General Dan Christman writes that President Trump’s two-day visit to Beijing last week was, as expected, high on pomp, but low on substantive deliveries. Read the full piece here.
TELECOM-MEDIA POLICY CATALYSTS THROUGH YEAR END (T, TWX, VZ, CMCSA, CHTR, TMUS, S, CCI, SBGI, TRCO): Our Senior Telecom Analyst Paul Glenchur writes that the T/TWX deal, net neutrality, wireless infrastructure rules and media ownership deregulation highlight a busy end of the year. Read the full piece here.
SINCLAIR BROADCAST GETS AN FCC BOOST (SBGI, TRCO, NXST, FOXA): Our Senior Telecom Analyst Paul Glenchur writes that the FCC will adopt new rules helpful to Sinclair, but the deal for Tribune still has issues. Read the full piece here.
