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Pulled Health Care Act means bruised egos but little else!

President Trump’s decision to pull his American Health Care Act bill late on Friday was seen by some as an early referendum on his policy agenda. However we wouldn’t agree with such a blunt assessment. In reality Trump was unlikely to ever get much (if any) Democratic support to overturn a healthcare policy that more than anything else symbolised the Obama administration. Clearly he also failed to get sufficient support for the bill from Republican lawmakers. However we think that’s more reflective of the complex nature of the topic and bill in question. What the loss indicates though is that progress on Trump’s legislative agenda may be a little more nuanced than the ‘slam dunk’ that Republican majorities in the House of Representatives and Senate might imply.

In hindsight Trump could have been better advised to pursue the overhaul of the US tax code first, an area where he is likely to have more widespread support from both sides of Congress. Consequently, we think he still stands a good chance of achieving his taxation goals which will have a much bigger impact in ‘moving the dial’ for the economy and investment markets. Equities and the dollar retraced a little late last week ahead of the failure of the healthcare bill but in truth we don’t believe its failure changes our market outlook (risk assets to grind higher amidst plenty of political and central bank noise) much.

Tom McCabe – Global Investment Strategist, March 27 2017