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Trump’s policy update – Nomura

Analysts at Nomura explained that after a frenetic first week that saw 19 new executive orders and memorandum, the second week of the Trump Presidency saw a much slower pace of new policy actions.

Key Quotes:

“One of the most important takeaways from the first two weeks of the Trump administration is that President Trump appears to be seriously pursuing his “America First” policy, though many policy details and actions have yet to be disclosed.

In the first week, significant announcements were made about health care, immigration, trade, pipelines, national security, and deregulation. In the second week, President Trump performed a number of duties, such as nominating Neil Gorsuch to the Supreme Court and talking to many foreign leaders. However, during this second week, President Trump issued only three executive actions that have consequences on the economic outlook and deregulation.

The first order signed this week gave general guidance on the pace of net new regulations going forward. The sentence of the order that received the most attention was: “for every one new regulation issued, at least two prior regulations be identified for elimination.” It is an interesting question as to what counts as a regulation for these purposes, but the basic intent of this executive order is to reduce the future flow of regulations and undo previous regulations (quantifying regulations is a tricky business though).

The second executive action, signed on Friday afternoon, directed the Secretary of Labor (who has not been confirmed yet) to explore rolling back the “fiduciary rule” for financial advisers. The third action, also signed Friday afternoon, tasked the Secretary of Treasury to identify how financial regulations (like those in the 2010 Dodd-Frank law) should be changed to meet a set of principles. Congress is also hopping on the deregulation bandwagon.

So far this year, Congress used the Congressional Review Act to overturn nearly a half dozen regulations from the Obama administration, including the ones on coal mining operations and background checks on guns. One possible reason why the pace of new executive actions has slowed is because the Trump administration is running lean. Only 6 out of 21 President Trump’s nominees for cabinet-level positions have been confirmed by the Senate. It is expected that next week several others will be confirmed, including Secretary of Treasury nominee Steve Mnuchin.

Looking ahead, press reports suggest more executive actions are queued for release in coming weeks. In particular, once Tom Price is sworn in as the Secretary of the Department of Health and Human Services, we expect him to use his administrative authority to begin the process of rolling back some aspects of the Affordable Care Act (a.k.a. “Obamacare”). Moreover, we continue to believe that the Trump budget plan, which we expect to be released before the President speaks to Congress at the end of this month, may have an important impact on our outlook for fiscal policy and the economy over the next year.”

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