JT TAYLOR: CAPITAL BRIEF - JT   Potomac banner 2  1


  • Today is the Alabama Senate special election
  • 3 days - until year-end expirations (tax extenders, Medicare extenders, FISA)
  • 3 days - until Republican leadership’s self-imposed tax timeline
  • 10 days - until the new CR to fund the government and NFIP expire
  • Looming: DACA, debt ceiling (December 8 expiration, extended to March with extraordinary measures), and Iran deal legislation deadline

FINALS WEEK: We’re hearing staff is closing in on a draft conference report and narrowing the differences in the House and Senate bills. The draft will then be vetted by Ways and Means Committee members who will do double duty and ‘sell’ the bill to the Republican Conference. Led by Chair Kevin Brady, conferees will then hold a public hearing Wednesday, followed by ‘listening sessions’ with House members on Thursday and Friday. They currently expect to have a final report by closing bell Friday, eying votes early next week with the Senate potentially going first. We remain confident that passing Senate earlier this month was the toughest hurdle for the Tax Cuts and Jobs Act and that final legislation will hit the president’s desk by Christmas. Details they are still working through: corporate rate, corporate AMT, interest deductions, BEAT, and SALT.


NADA OR NAFTA?: Instead of moving to the sixth round of negotiations, negotiators from the three countries are holding an ‘intersessional.’ The goal is to tackle the easier and procedural negotiations without the top trade ministers. Congress is also stepping in - last week Senators from States heavily reliant on the deal met with Trump to express concerns over the Administration's negotiation tactics. Now, the Senate is holding two separate hearings on the future of NAFTA and the economic implications of the deal. Business groups in agriculture States say their exports have grown 450% under NAFTA and are worth nearly $43 Billion to the U.S. yearly.


READY TO ROLLBACK: The House Financial Services Committee will begin markup on almost a dozen bills that will have strong regulatory consequences for the housing and banking industries. The House has been working all year to rollback regulations from the Obama Administration beginning by passing Dodd-Frank reform - the CHOICE Act - to no avail in the Senate. The most notable legislation at the markup today targets consumer choice by rolling back reforms on money-market funds from 2016.

SUPERNOVA: As the president signs a declaration to make the U.S. dominant in space exploration - through sending more Americans to the moon and eventually Mars - consumer confidence in space investment rises. While investors are anticipating an uptick in technology funding for NASA, the budget fight on Capitol Hill has created hesitation in financial decisions. Venture capital firms were said to have consistently increased investments at the space expo this weekend, but mega deals like the billions in SpaceX and DigitalGlobe last year are obsolete. The Airforce has requested 20% more funding for space programs in FY18.


HEADLESS HORSE RACE: Alabama Senate Candidate Roy Moore is a wildcard for the Republican establishment of Washington, DC. His erratic behavior including a refusal to uphold the Constitution has put him in hot water (thrown out of state offices) on numerous occasions. These distractions are something Majority Leader Mitch McConnell and other Republicans wanting to focus on fiscal issues fear. STILL, if the seat goes to a Democrat (once unthinkable in Alabama), the margins for McConnell will become more difficult with a backlog of issues to address - from mandatory spending reform to Obamacare to financial deregulation. With the RNC and President Trump backing Moore, he is back tied in the polls - and don’t forget he has won several elections despite scandals in the past.


CALL TODAY | LONG TDOC | PICKING SIDES: Hedgeye’s Health team with Policy Analyst Emily Evans is hosting a call today, Tuesday, December 12th at 10:00 AM ET to review their long thesis on Teladoc (TDOC). Get the event details here.

NEW FERC CHIEF DELAYS CONSIDERATION OF DOE PROPOSAL TO AID COAL & NUCLEAR: Our Senior Energy Analyst Joe McMonigle writes that it is likely to take longer than a 30-day extension to get consensus among commissioners so we expect a final decision later next Spring. Read the full piece here.

HCA, HOLX, MD, AMN, ATHN | HEALTH CARE JOB OPENINGS -2.7% IN OCTOBER: Hedgeye’s Health team with Policy Analyst Emily Evans remain short a number of names in the Hedgeye Health Care Position Monitor related to their #ACATaper thesis. Read the full piece here.

JUDGE SETS THE DATE FOR AT&T/TIME WARNER SHOWDOWN (T, TWX): Our Senior Telecom Analyst Paul Glenchur wrote the judge emphasized he cannot wrap the case up by the April 22 expiration date and he urged the parties to extend the agreement. Read the full piece here.

REPLAY: SIZZLE, OR FIZZLE? FINANCIALS TAKEAWAYS FROM THE HOUSE AND SENATE TAX PLANS: Hedgeye’s Financial Services team featuring Josh Steiner and Jonathan Casteleyn hosted a presentation on the latest implications of the tax reform proposals on the Housing and Financials sectors. Get the replay here.

REPLAY: TAX REFORM FOR INDUSTRIALS & MATERIALS SECTOR (CAT, DE, TSLA, UAL, TXT, USG/VMC, APD, ETC): Hedgeye’s Industrials & Materials team with Jay Van Sciver hosted a black book presentation on tax reform. Get the replay here.