Here are the four things you need to know before your coffee gets cold, the Mardi Gras, 2017 edition:
Trump’s Semi-State of the Union
At a little after 9pm this evening, the President will address a Joint Session of Congress (we recommend watching on C-SPAN to avoid the commentary and the pundits). This is, basically, a State of the Union Address, but, given that he’s only been in office for a little over a month, there’s little in the way of progress and development to report to the House and Senate. Rather, this First Address will be a policy outline for the President’s agenda and his legislative goals. Given that, stylistically, it is basically the same as a State of the Union, expect cheers and jeers. Remember that there was the Joe Wilson “You Lie!” moment with President Obama at one Address to Congress, so there very well could be some Democrats heckling or walking out. It’ll be political, it’ll be a spectacle, get ready for it.
The President is expected to outline his budget proposals, or at least the top-line figures that he will be sending to Congress. This involves a major increase in military spending (to the tune of about $54B, or 10%) and commensurate cuts in discretionary spending. This budget outline does not include “policy” issues like tax reform, healthcare, or entitlements. Rather, it is focused on funding from top-line figures. Director of the Office of Management and Budget Mick Mulvaney addressed the press yesterday to unveil some of these figures and to note that the President was working to fulfill his campaign promises to roll back regulations and increase military funding.
It’s important to note that the military funding increase is being touted as necessary to repair gaining military infrastructure and hardware. Rather than, at least at the outset, growing the size of the military, the new outlay of funds seems to be focused on modernizing bases, repairing and updating the Navy, and working to bring networks up to higher standards. This increase has been, already, criticized by the Left for being too large of a boost and from hawks like John McCain who see it as too small. As Director Mulvaney quipped: then, perhaps, it’s just right.
The President will have several guests at the Address (and this is a good indicator of the direction of the speech). The first is Megan Crowley, a survivor of a childhood disease whose father founded a pharmaceutical company to search for a cure. The company went from five people to over one hundred and Megan has survived into her 20s. The President has also invited two widows of slain California police officers. Bother were killed in the line of duty in 2014 by illegal aliens. Another guest is a woman who benefitted from a tax credit scholarship in Florida. Finally, the President has also invited the widow of Justice Antonin Scalia and Jamiel Shaw, Sr. whose son was killed by an illegal immigrant.
Generally, from the guest list, it’s pretty clear that the President will be addressing his signature immigration reform efforts and the goal of cracking down on illegals who commit crimes in the United States. He will also be looking at companies that hire Americans and “big pharma.” Obviously the confirmation of Neil Gorsuch to replace Justice Scalia will figure into the speech as well as protecting law enforcement officials. It also seems that he will be focusing on reforms in education, including tax breaks and voucher programs.
Expect the Address to be “Trumpian” and full of ad-libbed moments. It’s unclear exactly how combative the President will be with Members of Congress, especially those who are planning to do some kind of disruption. If nothing else, it will likely be the President’s longest outline of policy objectives in a speech and will give considerable insight into his team’s thinking going forward.
For the first time since 1987, the Dow has notched 12 winning days in a row. Given that we are at all-time highs in the market, the Dow has, obviously then, hit 12 new record highs in as many days. Some of the gains aren’t major jumps, but the market is up over 10% since the election of President Trump.
While it’s dangerous to assert a causal relationship between the White House and Wall Street gains, the markets’ reactions to the political arena are an important barometer for the direction of the economy. The cautious optimism of businesses towards the new Administration has led to increases in investment and moderately higher liquidity. Sure, there’s always the chance that things will go poorly or that unexpected events could cause a sell-off, but, for the moment, businesses do look to be banking on, at least for now, an upswing in economic conditions.
The big things to watch in the coming days and weeks (again, outside of an unexpected event) will be the way in which the President deals with healthcare, tax reform, and rolling back regulations. All of these items, along with a rollout of a budget blueprint, will be scrutinized by the market, and it will react accordingly. The bigger concern, of course, is whether Congress will be able to act on the President’s directives, or whether reform efforts will wither. The biggest potential market-mover, tax reform, is being touted by the President as the biggest change to the tax code since the Reagan Administration. This would certainly be a boost to the economy and businesses, but if reform efforts stall in Congress, the rally could also sputter-out.
DOJ and Texas ID
The Department of Justice, under newly-minted Attorney General Jeff Sessions, has issued guidance in Texas that the DOJ will no longer be defending an Obama-era lawsuit that challenged the constitutionality of Texas’ voter identification law. The Obama Administration argued that having to show identification to vote was potentially racially discriminatory. The Texas law allows for drivers’ licenses, military ids, passports, and weapons permits to be used to prove identity. Obama’s attorneys argued that not accepting school ids or other privately-issued forms of identification could impact people’s ability to vote.
The lawsuit against Texas will continue through private claims regardless of the decision by the DOJ. Outside of liberal activist groups, the decision to pull back from the Texas challenge has been met with wide-spread approval especially given concerns across the nation about potential voter fraud. It’s interesting that states which prevent verifying and confirming voter identity at the polls vote Democrat. Perhaps this is the reason they want to prevent the enacting of laws that properly identify who is voting.
Ross Confirmed at Commerce
Billionaire business-fixer Wilbur Ross was confirmed easily to lead the Commerce Department. Despite Democrats dragging their feet on even non-controversial nominees (Ross got over 70 votes), Ross will take over Commerce today. It’s completely unprecedented for a President not to have his Cabinet officials confirmed in quick order (outside of the one or two nominees who have the occasional problem). Democrats in the Senate are forcing procedural delays to every one of the President’s nominees for no good reason (except for the fact that the President is Donald Trump). They are playing to their radical left-wing base and think that, somehow, mollifying the loudest voices in the room will translate into wins in 2018. We think not.
Ross, who at one time navigated Mr. Trump’s own corporate bankruptcy, is an expert in turning companies around from loss to profit. He shares many of the views of the President with regard to renegotiating America’s trade deals and expanding opportunities abroad. Ross made a fortune being extremely successful in the turnaround enterprise. The President expects that Mr. Ross’ leadership at Commerce will result in major profitability for the country and an increase in America’s competitiveness abroad.
Reminder: Lent begins tomorrow with Ash Wednesday.
Of course, there are more things going on in the world, but these should be enough to get your day started.