Friday, January 20, 2017

Will Pro-Business Policy Pass? 'Throw It Up Against The Wall And See If It Sticks'

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*Republicans were surprised when PE Donald Trump knocked down their tax plans.

*Those tax plans involved lowering corporate tax and taxing imports. That's not so dissimilar to PE Trump's plans.

*The lead up to the presidency appears to be a preview for the next four years. The first month or two will be our cue for the next four years.

*Getting funded policy passed will be bullish. Not getting funded policy passed will be bearish. We'll explain.

"I Don't Love It."
Republicans had been moving to pass a tax plan that would involve taxing imports and reducing corporate taxes. They had been in touch with the Trump team and were working quickly.
That is until they saw PE Trump say in an interview:
"I don't love it."
"Too complicated."
Many on Wall Street have been excited for a pro-business administration. PE Trump is a businessman himself, and Republicans are of course known to be pro-business. Republicans also have a majority in Congress.
If Republicans can band together and agree with PE Trump, we are going to see a lot of pro-business legislation get passed, which should help markets. That's why markets jumped after the elections. PE Trump's initial pro-business speech after being officially elected helped markets go up.
Keep in mind we said above "if republicans can band together and agree with PE Trump."
That is turning into an unknown.
The fast way that PE Trump knocked down tax legislation as well as healthcare legislation brings the next four years into question. Republicans work to agree and write up documentation to soon find out that PE Trump says he will not pass it.
Two things happen.
1. Either Republicans learn to be incredibly fast and flexible or
2. Toughen up and become stubborn.
Highly popular among Republicans, House speaker Paul Ryan had regular run-ins with PE Trump during the election campaign. It's very likely that their relationship will not be perfect. For legislation to pass, that connection between Speaker Ryan, Congress and PE Trump will need to work.
Reagan's Tax Took Time
Source: Macrotrends
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