US: Major congressional defeat for the Trump administration - Rabobank

Piotr Matys, EM FX Strategist at Rabobank, notes that US President Donald Trump had pledged to repeal and replace “disastrous” Obamacare and he failed miserably.

Key Quotes

“Political bickering on Capitol Hill that could be a script for the next episode of House of Cards ended with Republican leaders led by House Speaker Paul Ryan withdrawing the American Healthcare Act minutes before the vote late on Friday when it became clear that there was not sufficient support for it amongst Republicans.” 

“While Mr Ryan claimed that “we were very close”, it is a major congressional defeat for the Trump administration. President Trump, who criticised Democrats for their unwillingness to replace Obamacare, pledged to move on with his agenda. However, an inability to approve the American Healthcare Act raises concerns about the prospects of far more important fiscal stimulus, which has been the main driving factor behind impressive gains in global stocks since Mr Trump got unexpectedly elected.”

“The sell-off witnessed last week, when the S&P 500 plunged the most since the US presidential election, could be just the beginning of a deeper correction given that the defeat of the healthcare bill is likely to undermine market confidence.”