Week in review: How Trump's policies moved stocks
Catch up on the top industries and stocks that were impacted, or were predicted to be impacted, by the comments, actions and policies of President Trump and his administration with this weekly recap compiled by The Fly: 1. CBO SCORING OF PROPOSED OBAMACARE REPLACEMENT: On Wednesday, the Congressional Budget Office released its financial "scoring" of the American Health Care Act, estimating that the bill would reduce the cumulative federal deficit over the 2017-2026 period by $119B. "In comparison with the estimates for the previous version of the act, under the House-passed act, the number of people with health insurance would, by CBO and JCT's estimates, be slightly higher and average premiums for insurance purchased individually -- that is, nongroup insurance -- would be lower, in part because the insurance, on average, would pay for a smaller proportion of health care costs," the CBO added. Leerink's Ana Gupte argues that the CBO score is "better than feared" and makes passage of the bill more likely. The reduction of uninsured by 2026 to 23M from the previous draft's 24M improves passage odds, she told investors, adding that the weakened budget reduction of $119B versus the previous $150B is a "less important predictor" of passage given the current political climate. Though the changes are negative for pure Medicaid players such as Centene (CNC) and Molina (MOH), the impact to acute care hospitals as "better than feared," Gupte contends. A repeal of HIPF would equate to 5%-18% earnings upside for MCOs in 2018, with the analyst listing the beneficiaries, in order, of Humana (HUM), Aetna (AET), Anthem (ANTM), Centene, UnitedHealth (UNH), WellCare (WCG) and Cigna (CI). Conversely, Stephens analyst Dana Hambly highlighted the slim improvement in uninsured and continues to believe the House bill is a non-starter for the Senate, from which he expects a "much more moderate bill to emerge (if any)." 2. STEEL: Earlier this week, Credit Suisse Analyst Curt Woodworth upgraded the firm's rating on the U.S. Steel sector to Overweight from Market Weight, noting that equities in the space have underperformed the market significantly since peaking in February. He expects prices to recover by late third quarter amid "strong" demand trends, low inventories, and U.S. trade actions "structurally limiting import flows." The Department of Commerce has been tasked with determining if steel imports caused harm to the economic welfare of the U.S. under Section 232 of the Trade Expansion Act of 1962, noted Woodworth, who said the market is underestimating the structural change in the mechanics of foreign producers' export behaviors. The analyst particularly called out Trump's "proactive steel trade triumvirate" of Secretary of Commerce Wilbur Ross, Director of Trade and Industrial Policy Peter Navarro, and Trade Representative Robert Lighthizer. In addition to raising his rating on the sector, Woodworth upgraded Nucor (NUE), U.S. Steel (X) and Steel Dynamics (STLD) to Outperform and raised his price targets on the three steel stocks. 3. BLACKSTONE/SAUDI INFRASTRUCTURE FUND: Blackstone (BX) shares advanced nearly 7% on Monday after the asset management giant and the Public Investment Fund of Saudi Arabia announced the execution of a memorandum of understanding in relation to the launch of a new investment vehicle dedicated to infrastructure with an anchor $20B contribution by PIF. Blackstone expects the program to have $40B in total equity commitments in a permanent capital vehicle, including $20B to be raised from other investors. After the news, Citi analyst William Katz upgraded Blackstone Group to Buy and raised his price target for the shares to $40 from $32, arguing that the company's intentions to raise a $40B infrastructure fund should be a "valuation catalyst." Meanwhile, JMP Securities analyst Devin Ryan said that the new infrastructure investment vehicle may boost the shareholder value of Blackstone by over 10%. The analyst adds that the deal shows that Blackstone "can evolve and innovate," which makes its growth outlook "strong." "Week in Review" is The Fly's weekly recap of its recurring series of "Trump Effect" exclusive stories.