So we’ve been … how should we put this? … “amused” at Donald Trump’s inability to log any notable legislative achievements during his first nine months in the Oval Office.
While some of the blame certainly lies with lawmakers and while it’s true that the dictionary should probably just go ahead and replace the entry for “gridlock” with a picture of the Capitol Building, we have a President whose face is on the cover of a book called “The Art Of The Deal”.
So even if he hadn’t made shrieking about “making the best deals” part of his campaign pitch, America would be well within its rights (assuming we still have any rights, an open question after last weekend) to ask why Trump hasn’t been able to get anything done. That goes double when you consider that Republicans control the entire government.
Well with “repeal and replace” dead and with fiscal stimulus having been reduced to something that approximates a pipe dream, about the only thing anyone is still moderately optimistic on is tax reform and even there, the optimists have been met with disappointment after disappointment.
As noted earlier today while presenting some estimates for overseas cash repatriation, Wednesday is supposed to be the day when America gets a look at something concrete on taxes (and to think, just 9 “short” months after Trump promised something “phenomenal” within “two to three weeks”).
Some folks are optimistic and some folks are not, but it is worth noting that with the dollar only having recently started to recover from a truly abysmal, months-long downward spiral, and with yields just now clawing back from the Treasury rally that followed “fire and fury” and at one point took yields on the 10 below 2.02%, there’s an argument to be made that unless the GOP completely bungles the announcement, all the bad news has been priced in. Consider this out on Monday from Deutsche Bank:
As the Washington agenda shifts to tax reform, with congressional leaders and the administration expected to release the parameters of a framework shortly, we gauge little or nothing as having been priced in. This is understandable given the uncertainty on specifics and what eventually passes. But with little or nothing priced in, we see the risk-reward of being long tax reform as being asymmetric in trading elements of the agenda–a cut in the corporate tax rate and a widening of the base; and foreign cash repatriation.
So there’s that and again, barring some kind of truly epic boondoggle, it’s probably the most realistic way to assess this situation.
Well assuming things do start looking up from here, we thought we’d take this opportunity to show you the following chart which is, simply put, a monument to legislative incompetence.
As Deutsche details:
At the stock level, a basket of the highest- versus the lowest-tax paying companies is below pre-election levels. The high/low tax basket peaked a week after the election and fell below pre-election levels by the end of December. But it has remained sensitive to the ebb and flow of market expectations around announcements of tax reform, continuing to rebound strongly this month following President Trump’s speech though it remains below pre-election levels.
Will this time be different? Or will the “hope” inherent in the latest spike on the purple line fade away just like it has before?
Tune in tomorrow to find out.
