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Trump promises tax relief, immigration overhaul in Congress address Tue Feb 28, 2017 | 11:03pm EST

http://www.reuters.com/article/us-usa-trump-instant-idUSKBN168351?il=0

President Donald Trump opened the door on Tuesday to a broad overhaul of the U.S. immigration system and vowed to pursue massive tax relief for the middle class in a speech to Congress as he sought to rebound from a chaotic start to his presidency.

 

 

KEY POINTS:

Trump said he was open to a broad overhaul of the U.S. immigration system, a shift from his hardline campaign rhetoric.

He emphasized his desire to focus on problems at home by boosting the U.S. economy with tax reform, a $1 trillion infrastructure effort and an overhaul of President Barack Obama's signature healthcare law, known as Obamacare.

 

COMMENTS:

 

DAVID TAWIL, PRESIDENT OF MAGLAN CAPITAL, NEW YORK

"I think the market is going to be positive. The market continues to see him as a good-for-business president. He’s very pragmatic when it comes to business. In terms of getting these grand visions done, I don’t think the market gives so much importance to that. When he spoke about cost cutting, that immediately resonates with everyone on Wall Street. That’s easy stuff. That’s low hanging fruit. It’s really hard to grow revenues. But it’s really easy to cut costs. There is so much fat. It’s so over regulated. This is easy stuff. He said enough of that during the speech that he will resonate well.

"I think some people were probably looking for some meat on the bones. He definitely covered everything. It was more of a laundry list. There wasn’t a lot of details.

"To me, the tax reform is something everybody wants. Repatriation of money abroad is something that ever wants. Why not take care of those and then take care of the dicey things? Like Obamacare and immigration."

 

OMER ESINER, CHIEF MARKET ANALYST AT COMMONWEALTH FOREIGN EXCHANGE IN WASHINGTON DC

"(Trump's) mention of historic treaties and NATO specifically was reassuring for our allies globally, and in that sense it was probably reassuring for global financial markets as well."

"(The speech) was still probably light on actual details on the fiscal side of things. We got mention of a trillion dollar infrastructure spending package. I think it's very early so I wouldn't necessarily hang my hat on that number. It was largely absent of any major focus on the tax side of things. In terms of overall details, on the fiscal side of the equation, it was probably pretty light. But I think despite that on some level the market might be reassured by the more or less balanced tone of the speech. It was much more presidential than some of the previous speeches and commentary we've gotten from the president."

 

PAUL NOLTE, PORTFOLIO MANAGER AT KINGSVIEW ASSET MANAGEMENT IN CHICAGO

“The devil is going to be in the details and I think that’s why you didn’t see the futures move too terribly much. The markets are still, show me what you are going to do, how is this all going to work and how are we paying for it. That’s going to take probably a couple weeks to a couple months to get laid out.”

“Everybody is looking for more details and we’re still waiting.”

“I think expectations right now are really high all the way around and it’s going to be a process. We’re going to have to wait to see some of this develop.”

 

STEVE MASSOCCA, SENIOR VICE PRESIDENT AT WEDBUSH SECURITIES IN SAN FRANCISCO

"I thought it went pretty well, certainly no land mines or explosions."

"From an investor's perspective there was no new information, no surprises good or bad. From the perspective of where money goes tomorrow, I don't see what we have learned that's new or different. ... But he burnished his image, so there's a positive there. He's a pro business president so that's a good thing."

 

RANDY FREDERICK, VICE PRESIDENT OF TRADING AND DERIVATIVES FOR CHARLES SCHWAB IN AUSTIN, TEXAS

“He pretty much didn’t say anything he hadn’t said before so markets have no reason to react overly positively or overly negatively ... Would the market have liked details sure, but I don’t think it was expecting them."

    “If anything the market might move moderately higher tomorrow. It pulled back moderately today. The uptick in volatility today was a preparation for the potential for a downside move ... It was a little bit of hedging going on before an event that could move the market.”

    A key focus for Wednesday will be Personal Consumption Expenditures, a key inflationary measure that the U.S. Federal Reserve watches, Frederick said.

 

BRIAN JACOBSEN, CHIEF PORTFOLIO STRATEGIST AT WELLS FARGO FUNDS MANAGEMENT IN MENOMONEE FALLS, WISCONSIN:

“He was surprisingly detailed about what to replace Obamacare with. It’s likely Congress will be able to take that up shortly as part of the 2017 budget and then quickly pivot to the 2018 budget which will deal with tax reform. That plan is much less developed, but he has time.”

On taxes, Jacobsen said: “Every deduction and credit that would need to be eliminated to lower tax rates in a budget-neutral way has strong defenders. That’s how those deductions and credits got there. So, we’ll just have to watch and wait to see which special interests President Trump will take on.”

 

TIM GHRISKEY, CHIEF INVESTMENT OFFICER OF SOLARIS GROUP IN BEDFORD HILLS, NEW YORK.

"It seemed to be a somewhat kinder and gentler Trump. He wasn't attacking individuals like he often does."

"This remains a very pro-growth agenda and the markets like that, but I didn't hear anything new that would make it necessarily move ahead, except that he stuck to his guns to make his agenda items happen."

 

PAUL CHRISTOPHER, HEAD GLOBAL MARKET STRATEGIST, SCOTT WREN, SENIOR GLOBAL EQUITY STRATEGIST, SAMEER SAMANA, GLOBAL QUANTITATIVE STRATEGIST AT WELLS FARGO INVESTMENT INSTITUTE IN ST. LOUIS.

"The speech was much more presidential in tone than recent addresses, including the inauguration address. The president repeatedly reached across the aisle to the Democrats, reassured our allies of his support, and decried racism and bigotry.

"However, the speech was short on details and did not even prioritize the president’s goals. There was very little mentioned about tax reform, and the infrastructure proposal for $1 trillion in spending is at odds with the more modest proposals in Congress. Investors had little to grasp, and market reaction during the speech was choppy and directionless. Treasury yields and the dollar drifted lower.

"The focus of the speech seemed to be more on the broad array of his policy themes during the past year, and the need for unity in achieving them.

 

 

MARKET REACTION:

 

STOCKS: U.S. stock futures were stronger at the start of Trump's address, with major indices 0.3 percent higher. They eased those gains as he spoke, with the S&P 500 E-mini futures last up 0.2 percent.

BONDS: U.S. Treasury futures TYv1 dipped slightly ahead of his speech, and were last down 0.4 percent.

FOREX: The dollar erased its earlier gains in Asia, with the market jittery as Trump's speech was short on details on his economic stimulus. The dollar/yen eased to around 112.80 yen JPY= from the day's high of 113.375 yen hit earlier, on hopes the Federal Reserve may raise interest rates this month.

 

(Americas Economics and Markets Desk; +1-646 223-6300; Editing by Howard Goller)