SNATCHING DEFEAT FROM THE JAWS OF VICTORY

You may want to listen to Friday’s radio show from the 2 minute to the 20 minute mark. All my thoughts on what we just saw on the healthcare bill.

Our thoughts:

How does a political party win just about everything: the house, senate, white house, governorships and state legislatures and not able to come away with legislation? Simple! Just do everything wrong. You choose a complex, blob of a legislation that you have been begging to get at for years instead of the probably more easy tax reform. You cobble together quickly what amounted to something that had something that pissed off just about everyone. You drown out the other party so you have zero chance to get even one of their moderate’s vote. You ignore the several factions in your own party and actually do not disclose the legislation to some. You only kiss those faction’s arse when you start to realize you need more votes. You schedule a vote not knowing if you have the votes. You then cancel that vote. You rush and schedule a second vote not knowing if you have the votes for the second vote. And then, you pull the vote and blame it on the other party. Way to go! If we wanted to fail in Washington, we do not think you could write a better script or do it better.

So you move forward…hopefully! Mike Ditka once said “success isn’t permanent and failure isn’t fatal!” We certainly know that in politics success isn’t permanent but it’s the failure part that worries.  We worry because markets and business have put a lot of faith and confidence in pro growth stuff coming out. We worry because markets have had a good run from the day after the election. We worry because valuations are into historic high range. We worry that financials have been rolling over. We worry that “Trump stocks” in areas like construction, materials and cyclicals have topped.We worry that confidence, which is such an important intangible, is slowly slipping away. We are not alarmists but we are realists.  But the good news is that baseball games have 9 innings. After all, it is just over 60 days of this new administration and last we looked, there are about 1400 days to go. But politicians are politicians. They start running for their next election the day after winning an election. We gather most are looking at the shape of things over the weekend and planning strategy not based on what’s good but how to win the next election. This is unfortunate but this is also true.

Our best recommendation: Put your head down. Pay no attention to the national media that was drinking champagne all weekend. Get all factions in your party together. Reach out to the other side. Yes…we said that. AND GET SOMETHING DONE. If there’s anything we know, people understand dollars and cents. Lower corporate taxes. Lower taxes for the middle class. Forget the border tax because a tax is a tax is a tax. The people always end up paying for it. Convince the deficit hawks (we are deficit hawks) that less government and the ability for people to keep more of their money will increase economic growth. Increase economic growth and you increase revenue to the treasury. Increase revenue to the treasury and you enter a virtuous cycle instead of the nightmare we are watching…and that is massive debt, massive deficits and a government that is growing like the blob in the movie “The Blob!” As government grows, the potential of the economy slows and in case you don’t know, federal spending in the year 1999 was less than $1.8 trillion. This year: $4.1 trillion and growing.  Where the hell is the money going? This trajectory must change. This trajectory must be stopped or the markets and the economy will eventually stop them.

Put your head down. Get to work. Stop blaming. Start legislating. If you don’t, markets will head back to the November levels and business confidence will take a hit. And then you think you are in the soup now? Just wait!