What Happens in Washington Matters to Markets

With the recent Senate decision not to implement even a so-called skinny repeal of Obamacare, the Trump administration is at crossroads. President Donald Trump, and some of his senior advisers, would still like to pursue a repeal of the existing health-care structure. Several senators and congressmen would, instead, prefer to focus on corporate and personal tax cuts in an effort to boost growth.

Although reforming health care and achieving annual gross domestic product growth of 3 percent or more were both important Trump campaign promises, which objective the administration pursues first would have major implications for investors. Specifically, emphasis on health care as the top priority would lead to disappointment for equity investors. Financial market participants were hoping to benefit from dismantling onerous regulations, cutting corporate taxes and introducing plans for infrastructure spending. Realistically, the U.S. Congress can’t handle both major issues at the same time.