JT TAYLOR: CAPITAL BRIEF - JT   Potomac banner 2


  • 2 days - until NFIP and CR to fund the government expire
  • 6 days - until the Alabama Senate election
  • 9 days - until Christmas Congressional recess
  • 9 days - until the end of year expirations (tax extenders, Medicare extenders, FISA)
  • 9 days - until Republican leadership’s self-imposed tax timeline
  • Looming: DACA, debt ceiling (December 8 expiration, extended to March with extraordinary measures), and Iran deal legislation deadline

DELAY OF GAME: Speaker Paul Ryan pushed back a planned vote to extend the CR from December 8 to December 22 while he works to get the votes after the Freedom Caucus used the procedural vote on the tax bill Monday to gain leverage in the spending-fight. The far-right group is pressuring him for an additional week extension, but Ryan is sticking to the two-week deal. He may be using the short-term extension to get the language ready for a late January extension attached to one full year of funding for the Pentagon. Meanwhile, Democrats are saying they are not afraid to stay through Christmas to get a DACA deal and Ryan will likely need help from them when it comes to spending-deals. If the Democrats force a 2017 vote they are much more likely to secure DACA legislation. The new CR extension vote is expected Thursday and then the Senate will vote to pass whatever the House does.

AT THE TRADE TABLE: President Trump’s trade policies do not align with those of traditional Republicans, however, Republican Senators Lamar Alexander (R-TN), Joni Ernst (R-IA), Deb Fischer (R-NE), Cory Gardner (R-CO) and Lindsey Graham (R-SC) ventured to the White House to discuss American economic dominance. Trump used the U.S deficit with China (which has grown this year as consumers increased their purchasing power) as a reason to rethink our trade policy. His Administration has also made it clear that they feel no need to preserve NAFTA and have made negotiations difficult if not impossible. The Mexican Trade Ambassador still thinks they can reach a deal by next year, and these Senators are going to make sure it happens - their State economies are heavily reliant on the deal.

TAX TRAIN DIVERSION: After rushing through the past month, the Senate has hit pause on tax reform to focus on government spending. Majority Leader Mitch McConnell still needs to call a vote to select their conferees. The chambers are still working behind the scenes to gap the holes between the two bills. House Republicans are eager to put in surprisingly conservative measures from the Senate such as the Obamacare individual mandate repeal, but they will have work to do surrounding simplification and permanency such as with repealing the corporate AMT. The Senate is expected to move to Committee tonight, though rumors are swirling that Speaker Ryan could dissolve the Committee and vote on the Senate version - then focus on changing any provisions they don’t like next year.

ROLLBACK TIME: It has been months since the House passed sweeping legislation to dismantle Dodd-Frank, but the Senate is finally making progress on a bipartisan measure to rollback some of the regulations in the measure. The bill passed the Senate Banking Committee, rolling back the SIFI threshold and regulations on community banks and rural credit unions. All Republicans and a handful of moderate Democrats came up with the legislation after Chairman Mike Crapo (R-ID) and Sherrod Brown (D-OH) failed to reach a deal earlier in the fall.


CALL INVITE: SIZZLE, OR FIZZLE? FINANCIALS TAKEAWAYS FROM THE HOUSE AND SENATE TAX PLANS: Please join Hedgeye’s Financial Services team featuring Josh Steiner and Jonathan Casteleyn tomorrow, December 7, 2017 @ 10:00 AM EST for the latest on implications of the tax reform proposals on the Financials sector. Get the details here.

TWOFER! TAX REFORM BECOMES HEALTH CARE REFORM | HCA, THC, SBRA, HCP, SYK, MRK, PFE, HOLX, CRL, CERN: Our Senior Health Policy Analyst Emily Evans and JT Taylor write merging tax reform with ACA reform has extensive implications for all corners of the health care sector. Read the full piece here.

ODDS OF LEGALIZED SPORTS BETTING JUST IMPROVED (MGM, WYNN, LVS, CZR, DIS, FOXA, CMCSA, CBS, TWX): Our Senior Telecom Analyst Paul Glenchur wrote from inside the Supreme Court that SOCTUS will probably rule that existing federal law does not prevent states from lifting bans on sports betting. Read the full piece here.

10 THINGS HEARD AT REAGAN NATIONAL DEFENSE FORUM: Our Senior Defense Analyst Emo Gardner writes that the invitation-only National Security forum at Reagan Library is a premier event for government, industry, and analysts. Read what he heard at the event here.

CALL REPLAY: OPEC – THE DAY AFTER AND WHAT'S NEXT: Our Senior Energy Analyst Joe McMonigle hosted a flash call from Vienna to go over OPEC’s decision and other outcomes from the week. Listen to the replay here.