Trump Gives the BAT the Boot
The Trump Correction we predicted at the top grinds on – overexuberance in March is being bled off, but the realities are excellent underneath a confusing news-flow. Last week Trump reversed himself by not naming China a currency manipulator and by speaking well of Yellen. Flip-flops, yes, but both predictable and both removing major economic risks, and artfully timed to follow his Gorsuch and Syria triumphs. Also last week, we think Trump definitively separated himself from Ryan’s “border adjustment tax” scheme, setting the stage for a White House-driven tax reform initiative. Reform is always complicated, all the more so this time as it may open up a large arbitrage gap between corporate and individual rates. While the White House works it out, it pretends to be putting Obamacare repeal first. We counsel patience. The confusion on tax reform proves it is very much alive.