With pundits attributing the ongoing market rally, which last week manifested itself in a "perfect week" when every single day was a new record high, the first such occurrence in over two decades, to rising hopes that Trump's tax reform will pass, the worst possible news for the market was that a blocking group of republicans - three or more - would emerge in the Senate, making tax reform impossible. Well, that's precisely what CNBC reported moments ago when it announced that Republican senators Bob Corker, John McCain - i.e. the most ardent "never Trumpers" in the Republican party - along with Rand Paul may not support tax overhaul, citing an unidentified adviser to Senate Majority Leader Mitch McConnell. CNBC also notes that if he is elected in Alabama, Roy Moore may also not support the overhaul.
It is well known by now that two of the three Senators mentioned (Corker, McCain) have been sparring with Trump front-and-center in recent weeks, and as such their "nays" are hardly a surprise . As for Rand Paul, he's been no secret skeptic. Paul was against the budget resolution vote last week but in recent days the press seemed to conclude that he and Trump were getting along great. This appears not to have been the case.
Adding to the confusion, there is growing concern about the upcoming Alabama Senate race on December 12, where frontrunning Roy Moore might not support the bill either if elected.
In response to the news, the dollars has slumped, with the USDJPY dropping nearly 40 pips back to the mid-113 area, while the EURUSD spiked from 1.176 to 1.179.
For now stocks are preparing not to notice that the catalyst for the entire move higher in recent weeks may have just been taken out back and shot.
Moments later, however, the move reversed itself if only briefly following a headline from Bloomberg that:
- TAYLOR APPEARED TO WIN SENATE GOP STRAW POLL, SEN. SCOTT SAYS
As Bloomberg adds, President Trump asked about Stanford economist John Taylor and Fed Governor Jerome Powell for a show-of-hands straw poll of Senate Republicans on who they favored for the Fed chair position, and also mentioned Janet Yellen, Sen. Tim Scott tells reporters. "He didn’t announce a winner, but I think Taylor won."
That move however has since been faded and the dollar slide continues.