JPM: "Market Patience Could Quickly Run Out If Obamacare Repeal Stays Deadlocked Into April"

Tyler Durden's picture

The morning wrap by JPM'sAdam Crisafulli notes the ongoing theme of a "patient" market, which however is growing increasingly impatient with the lack of visibility from DC.

J.P. Morgan Early Look at the Market

It’s a pretty quiet morning so far. Asian stocks were mixed (Japan was closed for a holiday). Eurozone equities and US futures are trading off small. Nothing major occurred on the macro front – the G20 communique was a small net negative in that prior disavowals of protectionism were removed although this doesn’t appear to be altering the present market narrative dramatically. Eco data was pretty minimal (other than solid China home prices and Taiwan export order numbers).

The tone of the press remains skeptical and cautious w/the WSJ noting small-cap underperformance and how 10yr TSY yields are now ahead of the SPX dividend yield (although this phenomena has been in place for a few months at this point). The biggest event by far for equities will be the House floor vote on Ryan’s HC bill (scheduled for Thurs 3/23) – failure to advance this legislation would likely materially undermine market confidence in the GOP tax reform agenda. The fact Ryan even scheduled a vote suggests some confidence on his part in being able to secure passage although this is by no means guaranteed.

Even if Ryan manages to get his bill out of the House, passage in the Senate appears very unlikely which raises the larger issue of how much time and political capital Republicans wind up devoting to this issue at the expense of more market-friendly initiatives (namely tax reform).

Investors are staying calm but patience could quickly run thin if repeal/replace stays deadlocked into Apr.

The Bottom Line for US stocks remains the same: ~$133-135 is still being penciled in for Washington-neutral SPX 2018 EPS and on that number the PE at ~2400 (~18x) is rich but not ridiculous (although to sustain prices north of 2400 Washington will have to add at least a few dollars to the $133-135 range which is why tax reform confidence is so key to justify further gains).

Calendar for Mon 3/20 – the big events on Mon include the Eurozone fin min meeting (3/20-21), Gorsuch’s Senate confirmation hearing, the House Intelligence Committee’s public hearing focused on Russia’s involvement in the US election, Fed speakers (Harker interview on CNBC and Evans speaks in NY), and the French presidential debate.

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VinceFostersGhost's picture

 

 

Could probably use a little "time out".

 

If you want your bloated market........you can keep your bloated market.

 

Word.

 

 

BullyBearish's picture

Running out of fuel for next leg up...

 

M   U    S    T          L     O       A      D         U      P           T       H      E          S     H      O      R      T      S

 

for the next squeeze higher!!

NidStyles's picture

JPM pretending that we have markets... LOL!

TAALR Swift's picture

All is true if you replace the word Market with Casino in the headline.

It's standard word substitution encryption by bankers and politicians.

philipat's picture

Sorry but again those are NOT GAAP earnings. On a GAAP basis, P/E ratios are at present around 26X; very high by historical standards.

VinceFostersGhost's picture

 

 

Molly geez.......I thought we agreed not to bring up GAAP!

philipat's picture

Wall Streeet agreed never to bring up GAAP...

gatorengineer's picture

Bullshit on a GAAP basis, earnings are a fuckton lower than that closer to probably 40 to 1....  What they are doing is mixing GAAP and one time charges still....take of those recurring every quarter restructuring charges....

philipat's picture

A realistic projection of GAAP earnings for 2017 is $90, hence P/E of about 26X. Your figure of 40X may come true but only as a temporary figure after the inevitable equity collapse and only if it comes late in the year.

Grandad Grumps's picture

JP Morgan could be exposed as a criminal organization if they are not allowed to continue to bribe politicians.

Seasmoke's picture

Is the debt ceiling now a retractable roof ???

gatorengineer's picture

whats a debt ceiling?  As long as the control Key and P are still present on the keyboard (they are looking a little worn), then the rest is just kabuki theater

Yen Cross's picture

 Ever since Trump was elected , Dimon and Blankfein have crawled back into their "hyperbaric ~chambers".

 PS~ Fuck Buffett

Arrest Hillary's picture

Obama cruely taxed the middle class .... so, the FSN (free shit niggers) would feel .... like they were actually paying for their own health care ?

Whoa Dammit's picture

JPM must be long on health insurers. 

gatorengineer's picture

They leave obozo care in place, healthcare wins.

they "fix" obozocare, healthcare wins.

not sure i see the issue

Vardaman's picture

Riiiiiiiight.  So.  When obumblecare was good for healthcare and insurance stox, Wall $treet loved it.  Now not so much.  Don't piss down my back and call it a warm rain.

hootowl's picture

The Repugnicans are, once again, trying hard to get themselves thrown back into the cesspool of history.  Ryan and McConnell are nothing but Sorosian/Liberal/progressive/mudpuppets.

Arrest Hillary's picture

Remember the brand new MLK medical center in LA ..... the whites were afraid to work there .... the blacks were too stupid and corrupt to run it .... they had to shut it down .... NOW, Obamacare took that stupid business model .... and applied it to the whole country .... FAIL !!!

gatorengineer's picture

except with million dollar a hospital CEOs, and CFOs, in all those non profit hospitals doing it for the Chitren....

Raging Debate's picture

The GOP isnt going to repeal the mandate portion of O-care before April 18th. They need the tax revenue. I suspect we will see a replacement plan in general in May including repeal of the mandate. 

Publicus's picture

So, basically, stock will keep going up.

William Dorritt's picture

 

McConnell and Ryan are the Leaders of the Resistance

ObamaCare Repeal..........Zero

Tax Cuts.........................Zero

Supreme Court.............. Zero

Wall............................... Zero

Budget........................... Zero

Glass Stegall.................. Zero

H1b reductions.............. Zero

10 Other

work visa reductions......Zero

Political Appointees.......Zero

Audit Fed.......................Zero

Term Limits...................Zero

Free Speech in Church...Zero

Transportation Bill ..........Zero

Defund DACA................Zero

 

BetterRalph's picture

The "forced to buy something mandate" is no good, it hates the rule of law. Everyone I know, hates it, only communist marxist socialist liberals love it.

The INSURANCE as the center of the UNIVERSE is no good. IT should be SUPPLEMENTAL, and everything should be AFFORDABLE straight up with PRICES. Oaklahoma Surgery Center is an example.

The FOOD pyramid fraud must go-it's making diabetics. HFLC is in it CURES them.

Take Cannabis off the SCHEDULE 1 or get rid of the DEA.

William Dorritt's picture

"communist marxist socialist liberals love it" = RINOs are Marxists

William Dorritt's picture

If Trump is allowed to bring back 5 Million Manufacturing Jobs

5 Mil plus 20 million secondary jobs = 25 million new (returned) US jobs

Median Income of $56.5 K

$56.5K x $25MM =

$1,412,500,000,000 in wages

$0,508,500,000,000 in new Fed State and Local Taxes Collected

 

Example GE:

$123,000,000,000 Revenue

333,000 Employees

$369,369 Revenue per employee

 

5MM x $369K = $1,846,846,846,847 GDP Increase from direct MFG

 

 

**************Estimated Tax Analysis**************

US Median Inc $56,600, IL taxes est
           
Marginal Tax Rate ….Effective TaxRate....Tax Amount.......Tax Type
25.00%...................... 12.58%…....................$7,047 ….........Federal
7.65% ….....................7.65%…....................$4,284...............FICA
3.75% …....................3.60%.........................$2,018..............State

$13,349 Total Income Taxes
$42,651 Income After Taxes
$14,400 Obama-Trump Care expense for family of 4
$28,851 Before you buy food and clothes for your kids

TAX SUMMARY
$13,349        Income Tax
$01,082        Sales Tax
$00,181        Fuel Tax
$05,556        Property Tax
$20,168        Total Est. Tax

36.00%            Percent  of income to taxes

https://smartasset.com/taxes/income-taxes#ORYQmP3wbk

$28,851 Available Income after Fed taxes
$01,082 Sales Tax
$00,181 Fuel Tax
$27,588 Net of all taxes
$14,400 Rent or House Payment

$13,188 Net for Food, Clothes, vacations etc.....

$396,337 Assets per Citizen
$879,243 Liabilities per Citizen: SSA, Medicare, budget

http://www.usdebtclock.org/

http://www.cnsnews.com/news/article/611318000000-feds-collect-record-inc...