Wall Street Scrambles To Change The Trump Narrative Again
by Tyler Durden
ZeroHedge.com
Mar 1, 2017
As a result, the world’s best paid strategists have again – just like after the election – revised the “Trump narrative” after the fact, and now the prevailing analyst sentiment is that markets will like Trump’s address to Congress as he cooled his rhetoric and likely gained political capital. As Bloomberg adds, the reflation trade, which has been boosting financials, held, even as the speech was short on details, forcing the U-turn in the plotline. Still, while turning tactically bullish overnight, there is an agreement that efforts on tax reform and infrastructure spending are likely a long, uphill slog, as those priorities may get squeezed by other agenda items, like health care.
Here is a recap of some of the most prominent notes flying around this morning, virtually none of which to Mark Cudmore chagrin, suggest – if only for now – that the “emperor is naked.”
KBW (Brian Gardner)
Markets likely to react positively to Trump’s less confrontational, more optimistic tone; may like cooler rhetoric on trade; speech may play well among voters outside of Trump’s base, buying him some political capital
Possible to read speech as implicit endorsement of border adjustment tax (BAT), though will be “uphill fight” to include BAT in tax reform even with Trump’s support
No direct impact on financials as didn’t mention Dodd-Frank or changes to financial regulations; seemed warmer to legal immigration, which may be good for sectors that rely on immigrant labor, like homebuilders; infrastructure spending may get “squeezed out” by competing agenda items like health care, tax reform
COMPASS POINT (Isaac Boltansky)
Speech was positive market signal, though presidential honeymoon is “very nearly over,” must be legislative progress in next 60 days to “sustain and swell” market optimism
Watch for health care progress by March 15; tax reform language by April 10 recess; deal avoiding April 28 govt shutdown
Top takeaways:
Trump comments “intellectually supportive” of BAT; Compass Point sees BAT as “central pillar” of tax reform effort, with far more staying power than market reflects
“Notable” Trump highlighted Harley-Davidson given its deep roots in Speaker Paul Ryan’s home state of Wisconsin
Trump’s call for $1t infrastructure spending probably won’t translate into legislative language in 2017 amid political, procedural hurdles
Implied support for health care tax credits is “mile marker” as House GOP hardliners worried about swapping ACA subsidies for new tax credits; turns down the heat on ideological schism
Didn’t address Dodd-Frank or mortgage finance reform
The Rest…HERE
