US political drama is likely to intensify - BBH

In view of the research team at BBH, the US political drama is likely to intensify as the congress returns from its two-week recess, and there is expected to be a flurry of announcement about intentions and plans as President Trump's 100th day in office approaches (April 29).  

Key Quotes

“There are three issues, the most important of which is the federal government's current spending authorization that expires on April 28.  This is different than funding it, which relates to the debt ceiling, for which the Treasury Department has already taken steps to minimize the disruption while waiting for Congress to lift it.”

“The other two issues, health care reform and tax reform, are not as pressing and there have been conflicting signals from the White House and Congress.  Ahead of the 100-day anniversary, there was some suggestion that a new vote on replacing the Affordable Care Act could be held, but this seems unlikely.  The Freedom Caucus and the Tuesday Group may have been talking, but there is a fundamentally different set of interests.  The split also is evident in discussions about tax reform.  Around mid-week, President Trump indicated there would be an announcement on tax reform.  It is difficult to envision more than a wish list at this juncture.  Recently, Treasury Secretary Mnuchin pushed out expectations for tax reform from the August recess to the end of the year.”

“Trump is right, as was Obama, that the 100-day bogey is of little significance.  It is the next 1000 days that are important.  As a campaign device, Trump had offered a "contract with the American voter" over what he would do in his first hundred days.  The importance attached to the fact that practically nothing outside of some executive orders has been achieved beyond the scope of this analysis.  However, the important point for investors is that many market participants appear to have downgraded the chances that Trump's legislative agenda will be delivered, and this seems to be an important factor in what the media has dubbed the unwinding of "Trump trade."

“It is not the media, which the White House says it is at war with, whose judgments are key.   The 2018 midterm elections loom on the horizon yet are very much present.  There is only so much that can be accomplished by executive orders that for the most part call for an investigation of this, or a check on that or study there.  A stymied legislative program could weaken the Republican hold of both the House of Representatives and the Senate.  This would force the White House to work with the Democrats if it were to pass legislation.”