Goldman: Stop worrying so much over US healthcare vote
Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.
US equities had a mini-tantrum at the start of this week as it became clear the Trump administration will struggle to push its healthcare reform through Congress. But strategists at Goldman Sachs have a message to investors: don’t worry so much.
The New York-based investment bank reckons that while the vote over the House of Representatives bill to repeal and replace Obamacare that may come as early as Friday is “important for near-term sentiment”, Wall Street’s concerns are “ultimately overdone”.
Goldman’s thesis is built on the idea that even while the odds are increasing that Republican leadership will need to “take an entirely different approach to reforming the Affordable Care Act (ACA), the prospects for tax reform are still good”.
In fact, Goldman’s political analysts still “expect legislation that lowers the corporate tax rate and makes incremental tax reforms to be enacted by late 2017 or early 2018″.
Citigroup strategists offered a similar opinion, noting that, “failure of President Trump and House Republicans to deliver on this one of two stated objectives this year would not signal the death knell for fiscal stimulus”.
They added that:
If Congressional Republicans are forced to abandon the Obamacare overhaul, then public expectations for any other legislation probably will diminish. However, parliamentary proceedings in Congress still would allow movement forward on Federal government tax reform and spending priorities when focus on the budget grows more intense heading into late-April/early-May.
Wall Street’s pivot to focusing on tax reform may be one reason that why US stocks have calmed following Tuesday’s 1.2 per cent fall, the worst one day fall since Trump’s election.
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