All Eyes On Healthcare Reform

Ahead of the opening bell this morning, Initial Jobless Claims again reported within a range consistent with a strong domestic labor force: 241K new claims was roughly in-line with consensus estimates, up 3,000 from the mildly upwardly revised 238K from the previous week. As we’ve pointed out in the past, from an historic perspective we would have to go back to the early 1970s to find a U.S. jobs market this strong — well before the onset of dozens of industries that simply did not exist back then.

Later today, we expect to see the unveiling of the Senate healthcare bill — supposedly completely reconstructed from the earlier bill passed by the House — which has been coddled in near-complete secrecy without information being leaked. There have been no hearings nor committees on this bill, and the nonpartisan Congressional Budget Office (CBO) has not been allowed to review it (recall the CBO’s strongly negative account of the House healthcare reform bill, where it pointed out that 23 million Americans would lose their healthcare coverage over the next decade).

In fact, there may be seven or eight Republican senators who may not be on board with this new version of the healthcare bill, sight unseen. We shall reserve judgment until the bill is at last revealed today, though it is believed that drastic cuts to Medicaid will exist (though dragged out over a longer period of time) in order to pay for tax cuts — which will be a central theme of congressional tax reform planned to follow the new healthcare policy on Capitol Hill — which may be a deal-breaker for many politicians as they consider their aging constituencies. Yet Republicans do not have a wide enough majority to cover seven or eight votes against; it’s widely understood that no Democrats will vote for the new bill, even prior to its unveiling.

Republicans on the Hill could really use a win on this, following several failed attempts at new policy passing through, including many historically radical initiatives signed in executive orders from President Trump. Midterm election campaigns will be hot and heavy by this time next year — with 70 seats up for grabs in the House of Representatives — and a track record of non-performance on a series of major campaign issues last year would not look good.

Finally, following the July 4th holiday in a couple weeks, we look forward to Q2 earnings season after a robust Q1. Can publicly traded companies continue their current growth trends in Tech, Construction and elsewhere? Will results be muted by weakness in Energy and Retail? Check our Zacks Director of Research Sheraz Mian’s latest Earnings Trends report here: Will Earnings Growth Continue in Q2?

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