JT TAYLOR: CAPITAL BRIEF - JT   Potomac banner 2  1

IT ONLY TOOK 31 YEARS (AND 86 DAYS): The House is expected to vote on the final tax package today with the Senate as early as this evening. The House has garnered an even larger majority and the Senate does not have a single Republican opponent to date. Even with the absence of Senator John McCain (R-AZ) who will be home undergoing treatment, we expect the Conference Report to breeze through both Chambers. Republicans are on the verge of pulling off a much-needed win within the timeframe they laid out after Labor Day. The Conference Report runs closer to the Senate’s proposal, but with some significant differences. We compared the costs below:



SPENDING BOOMERANG: The House has drafted spending legislation and is expected to vote Wednesday to extend government funding until mid-January while funding the Pentagon for a full year. However, the Senate has to agree and so far it looks like they have a different vision for year-end spending. The Senate plans to include two bipartisan health care measures to stabilize insurance markets, much to the chagrin of House conservatives. Additionally they are considering adding “paygo” waivers, the FISA extension, and supplemental funding for hurricanes - something necessary to win over Senators from Texas and Florida. The House unveiled an $81B disaster bill last night, that they plan to pass separate from spending. If the Senate includes such provisions, the bill will need to go back to the House and be passed with the help of Democrats.

ECONOMIC AGGRESSION: President Trump presented a new national security doctrine and it sounds almost exactly like his campaign promises. One big theme was economic fairness in the U.S. He specifically called out China for their unfair trade practices and attempts at economic dominance and dismissed the importance of trade deals such as NAFTA. The strategy is based on U.S competitiveness beginning with tax reform and stretching all the way to energy security. International leaders are worried this will dampen relationships, especially with multinational alliances that are vital to the U.S. economy: NATO, the UN, and APEC.

TRUMP TOUTS TAX: With the finish line in plain sight for tax reform, the president and other Republicans are beginning to sell the benefits of their leadership. And compared to a month ago when they could only shout Neil Gorsuch from the mountaintops, Trump and his allies on Capitol Hill can now tout: lower taxes, less regulation, no ACA mandate, and opening the ANWR for oil drilling. While we are still months away from midterm elections, heated primaries and campaigns will begin early next year and the Republicans need to prove they can govern - especially in light of recent anti-Trump election waves.

CALL INVITE TODAY: BRINGING HOME THE BACON: REPATRIATION DEEP-DIVE: We are teaming up with Hedgeye's Macro team to discuss repatriation and international taxation today at 2:00 PM ET. Get the event details here.

CALL INVITE TODAY: THE UPSIDE CASE FOR TXT: Our Senior Defense Policy Analyst LtGen Emo Gardner will join industrial analyst Jay Van Sciver in his long thesis call on TXT today at 12:30 PM ET. Get the event details here.

CALL REPLAY | TAX REFORM AND RETAIL: We joined Hedgeye’s Retail team featuring Jeremy McLean and Daniel Biolsi on tax reform and its impact on the retail ecosystem. Get the replay here.

GOVERNMENT REVIEW OF DISNEY-FOX DEAL (DIS, FOXA, NFLX, AMZN, GOOGL, T, TWX): Our Senior Telecom Analyst Paul Glenchur writes we expect ultimate approval by either the DOJ or FTC despite asset divestiture pressures. Read the full piece here.

ENERGY WINS BIG IN TAX REFORM BUT CHALLENGES REMAIN FOR CLEAN ENERGY: Our Senior Energy Analyst Joe McMonigle writes winners include oil and gas, utilities and MLPs. Potential losers are wind and solar on BEAT provision. Read the full piece here.