What Could Go Wrong? Full Week Ahead Preview

Ok, it’s time to break out the Jared Vennett clip, because the coming week should bring plenty in the way of excitement.

First on the agenda will be everyone playing catch up after Friday. Stocks were weighed down by the ABC story which incorrectly cited a person close to Michael Flynn as saying the disgraced former national security adviser was prepared to testify against “candidate” Trump when the reality (for now) is apparently that Flynn will testify against “President-elect” Trump. Ultimately, that doesn’t change much in terms of the doom and gloom surrounding the administration but what it does mean is that the end isn’t as high as it seemed just after lunchtime on Friday.

The news got materially worse for Trump over the weekend (e.g. the KT McFarland story) and the President exacerbated the situation with an ill-advised Saturday tweet that seemed to amount to an admission of guilt in the obstruction of justice investigation. He would, of course, go on to make things worse still with a veritable deluge of insults and insinuations blasted out between Saturday evening and Sunday afternoon.

The point though is that the market will now need to reclaim the Friday afternoon losses and also price in the Senate passing their version of the tax bill early Saturday morning. All of that should combine to give the dollar and risk assets some support. Have a look at what you’re already seeing on Sunday evening:

As Goldman writes, we’re now in the home stretch for the GOP tax bill. They’ll still need to go to conference though:

We expect congressional Republican leaders to begin conference negotiations immediately, and believe they will target completion the week of December 11. If successful, this would produce final details around December 11-13, and final passage in the House and Senate December 14-15. One reason we expect this timing is because of the need to address expiring spending authority by December 8, which we expect to be extended temporarily through December 22, creating only a short period before year end when Congress is not addressing other fiscal deadlines.

Note the reference to the spending authority expiration. They’ll need to address that almost immediately. “There’s not going to be a government shutdown. It’s just not going to happen,” McConnell told George Stephanopoulos on ABC’s “This Week” on Sunday. At issue is DACA and this comes on the heels of last week’s boondoggle when Trump effectively uninvited Pelosi and Schumer to a planned meeting at the White House.