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KILL QUILL?Quill v. North Dakota prohibits states from forcing out-of-state retailers to collect sales taxes absent a physical presence in the state.  Amazon no longer dodges sales taxes now that it has massively expanded its warehouse and order fulfillment infrastructure across the nation. But other online retailers lack the physical presence to trigger taxing obligations. The Supreme Court tackled the issue yesterday and it looks like a very close call, according to our Legal Policy Analyst Paul Glenchur. The Justices seemed to agree that the physical presence test was obsolete given the rapid growth of e-commerce, but several members are worried that overturning the Court’s prior Quill decision will prove disruptive as more than 12,000 local jurisdictions could impose diverse sales tax burdens. Glenchur gives a slight edge to online sellers, but the vote will very likely produce a narrow majority, perhaps 5-4. Maintaining the status quo would benefit pure online retailers like Wayfair and Overstock. On the other hand, a “Kill Quill” ruling would benefit large anchor retailers like Target, Wal Mart and Home Depot that favor sales tax burdens on competing remote Internet sellers.  A decision is due by the end of June. You can read his note here.

Meanwhile, in another courthouse on Constitution Avenue...Glenchur is closely monitoring the AT&T/Time Warner merger trial before Federal District Judge Richard Leon. It seems to be going pretty well for AT&T, he says, as it hammers the factual and economic assumptions of the government’s primary expert. The Justice Department claims the merger will mean higher prices for Turner Networks (TNT, TBS, CNN), driving up consumer pay-TV bills. AT&T says that won’t happen and has agreed to arbitrate programming contracts with rival distributors with no blackout threats.The big guns will testify this week, including the CEOs of AT&T and Time Warner. Glenchur is closely tracking a number of market-impacting court decisions and brings a unique perspective to the cases from inside the room. If you aren't signed up for his Legal Catalysts vertical, then you're missing out - so please email us here or contact sales@hedgeye.com.

RESCISSION COLLISIONWe wrote a few weeks back that the Trump Administration and conservative Republicans in the House were developing a rescissions package targeted to cutting billions from a number of programs from the recently-passed $1.3 T Omnibus spending bill. In the event that President Trump wasn't watching Fox News last night, someone will need to tell him that Senate Majority Leader Mitch McConnell effectively killed that effort setting the stage for a potential showdown with Trump and his comrades-in-arms in the House. We're not sure why Republicans are pursuing this route other than to score points with their base, but it also sends a message to voters that they can't shoot straight in the majority. 

DENT IN THE ARMOR: We hope you aren't sick of hearing about Pennsylvania because it's likely to be the keystone (along with California) for the battle to win the House this fall...On that front, Rep Charlie Dent - the centrist Republican from the eastern part of the state - announced yesterday that he will resign his seat next month leaving the decision to fill the vacancy to Democratic Governor Tom Wolf. Wolf will need to decide within 10 days of Dent’s departure when to schedule what would be the second special election in the state this year - and it would have to be at least 60 days after Dent’s departure. That puts the date for a special election well after Pennsylvania's primary in May leaving fewer than six months left in the term. Given that the state just footed the bill for a rather expensive race in PA-18, the Governor could opt to leave the seat vacant and hold the special election "concurrently with November's special election." 

MORE SCOTUS: Justice Neil Gorsuch provided the tie-breaking vote in a Supreme Court ruling supported by liberal justices that said a federal immigration law requiring deportation for certain crimes was unconstitutionally vague. The 5-4 ruling marked the first time that Gorsuch, who was appointed by Trump, broke from his conservative colleagues. 

XI FOR LIFE: General Dan Christman writes on two ground-shifting events that have taken place over the last months that have the potential to fundamentally alter U.S. relations with the Sinic and Muslim worlds. You can read his note here.

TRUMP ADMINISTRATION ON TRACK TO OUTSPEND REAGAN BUILDUP:  General Emo Garder writes that DoD's topline for FY2019 is a foregone conclusion but breathtaking in its aspiration. Read his insight here.