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 JT TAYLOR: CAPITAL BRIEF - JT   Potomac banner 2

ANOTHER BANK SHOT?:  President Trump hasn’t yet signed the bipartisan banking bill S.2155 (he is scheduled to sign later today) passed by the House on Tuesday and the Senate back in March  - and House Republicans are already forging ahead with new rollbacks targeted to the financial services community.  With Congress grinding through the annual Appropriations process, the House measure funding the Department of the Treasury contains policy provisions (aka riders) that aim to roll back additional rules and regulations impacting the capital markets. A number of these measures were floated by House Financial Services Chairman Jeb Hensarling during the debate over S. 2155, but they were non-starters to Democrats on the Senate side of the Capitol who already took on friendly fire from the progressive wing of their party.  We don’t think an effort by Hensarling to expand on S. 2155 will come to fruition nor do we anticipate the financial services riders will remain in the Appropriations measure given the focus on thorny issues such as the Volcker rule as well as funding for the Consumer Financial Protection Bureau - among others.

IMMIGRATION THREATENS RYAN’S GRIP: Speaker Paul Ryan has set a date of June 7 for a two-hour Republican conference to discuss and debate the issue that has handicapped his ability to pass his remaining priorities for the year – the latest victim being the farm bill.  With centrist Republicans forcing his hand by joining with Democrats to support a discharge petition and an internecine war brewing, Ryan is out of options with the House slated to take up the issue later in the month. While his hold on the Speaker’s gavel may appear weak resulting from this turmoil, we don’t think anyone else can get to 218 to supplant him at this juncture. We know that this is not how Ryan expected his finals months to play out and it’s about to get harder for him with Trump reentering the fray with calls a “whole package” with additional funding for his border wall and a veto threat looming.

APPROPRIATIONS MOVING: The House Appropriations Committee released the highly-anticipated FY 2019 spending allocations (aka 302 (b)’s)  for government agencies yesterday including $606 billion for the Defense Department - $17 billion more than FY2018.   The Senate meets today and will release their allocations shortly.

FY 2019 totals in the House:

Defense: $606.5 billion — $17 billion more than fiscal 2018.

Financial Services: $23.4 billion — no change from fiscal 2018.

Homeland Security: $52.5 billion — $4.8 billion more than fiscal 2018.

Labor-HHS-Education: $177.1 billion — no change from fiscal 2018.

State-Foreign Operations: $46 billion — $4 billion more than fiscal 2018.

Interior-Environment: $35.3 billion — no change from fiscal 2018.

Legislative Branch: $4.9 billion — $180 million more than fiscal 2018.

Agriculture-FDA: $23.3 billion — $14 million more than fiscal 2018.

Commerce-Justice-Science: $62.5 billion — $2.9 billion more than fiscal 2018.

Energy-Water: $44.7 billion — $1.5 billion more than fiscal 2018.

Military Construction-VA: $96.9 billion — $4.9 billion more than fiscal 2018.

Transportation-HUD: $71.8 billion — $1.5 billion more than fiscal 2018.

U.S. SANCTIONS PDVSA + VENEZUELA CENTRAL BANK DEBT SALES: Hedgeye's Senior Energy Analyst Joe McMonigle writes that the Maduro election raises the risk of future sanctions on Venezuela crude but high oil prices mean other measures come first.  His piece here.