First it was the Fed with constant jawboning that the next Fed rate cut is "just around the corner." Then it was OPEC, applying the same "spook the headline-scanning algos" strategy, arguably following Goldman's advice, repeating relentlessly that a production cut was imminent. Now, it is may be the White House's turn.
With concerns growing (but not too much based on the where the S&P is trading) rising about the lack of clarity of any of Trump's economic policies, but most of all his tax plan, a White House official told Bloomberg that President Trump's "phenomenal" tax plan is real, and that a concrete proposal - headed by Trump's chief economic adviser, former Goldman president Gary Cohn - will be issued in the "next few weeks."
Bloomberg adds, citing the unnamed official, that congressional leaders have been consulted on the blueprint which is separate from Trump’s proposed budget.
Trump first mentioned the plan on Thursday in a meeting with airline executives, calling it "phenomenal" and saying it would be revealed in two to three weeks. White House Press Secretary Sean Spicer told reporters later that day that specifics would emerge only in the coming weeks. Still, he said the White House is at work on an outline of the most comprehensive business and individual tax overhaul since 1986.
Cohn said last week that he has been meeting with members of Congress and working on two key goals: cutting corporate income taxes and individual income taxes. He emphasized during a Feb. 3 interview with Fox Business News that he has been focused on tax cuts for low earners. “We’re not spending a lot of time with the high earners,” Cohn said during that interview.
Cohn also said during an interview on CNBC last week that all options for corporate tax reform are being considered, including the plan favored by House Speaker Paul Ryan that would cut the corporate tax rate to 20 percent and tax U.S. companies on their domestic income and imports, while exempting their exports and offshore income. That so-called “border-adjusted” plan has run into widespread opposition from retailers, oil refiners and other industries. Major exporters, including companies like General Electric Co., have expressed support.
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Goldman or not, as we pointed out earlier, citing Richard Breslow, the limitations on Trump’s ability to singlehandedly adjust the system are now closely watched, especially after last night's Appeals Court ruling.
"This will embolden members of Congress to stand up to him if they don’t support his tax plan. And there appears to be many who don’t – even from his own party.
That puts further doubt on an already vague promise. No sign of details and no guidance on the timeline for implementation.
As Breslow accurately pointed out, "Trump’s immediate reaction to the legal decision -- “See you in court” – shows he is determined to fight this all the way up to the Supreme Court. This may distract him from the domestic economy."
Which means that in lieu of actual details and actions, the White House may have no choice but to engage in the same jawboning popularized by the Fed and OPEC: promise but rarely, if ever, deliver. Since Trump's tax cut proposal is arguably the single biggest driver of recent equity upside - and since the likelihood of it passing without major pushback especially now that the Senate may not be able to pass the Border Adjustment Tax - Trump's twitter account may soon be even busier.