US: House Passes GOP Megabill In Major Win For Speaker Johnson And Trump
The House of Representatives has passed the GOP tax and spending bill in a 215-214 vote, with two Republicans voting 'no'. The bill’s passage is a major win for House Speaker Mike Johnson (R-LA) and President Donald Trump, who have consistently outperformed expectations in Congress.
- The new revised ‘Big Beautiful Bill’ includes a raft of sweeteners for conservatives. It accelerates work requirements for Medicaid, kicking them in at the end of 2026, rather than the start of 2029.
- The revised bill sharpens language on Biden-era Inflation Reduction Act clean energy credits. While it doesn’t rescind the credits entirely, it cuts them off sooner and makes then more difficult to attain. It also softens the rollback of credits for advanced nuclear reactors – a win for the nuclear sector.
- For blue-state moderates, the bill hikes the cap on the State and Local Tax (SALT) deduction from $10,000 to $40,000 - up from $30,000 in the initial Ways and Means bill.
- The bill “also lowers the remittance tax rate from 5% to 3.5%, and renames new savings accounts for kids from “MAGA accounts” to “Trump accounts,”" per Punchbowl.
- The bill now heads to the Senate, where Republicans are expected to rewrite the tax portion of the bill, soften language on safety net programmes, and seek to salvage some of the IRA credits.
- When the House received the package back, it will be accompanied by additional pressure from a looming default as the package includes a $4 trillion hike to the debt ceiling.
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EQUITIES: Busy Week for Earnings, With Alphabet, Tesla in Focus
First earnings of the week filtering through in a busy few sessions for corporate reports. So far today:
- 3M - Beats on EPS
- General Electric - Beats on EPS, affirms FY view
Major names due this week including:
Tuesday: Tesla, Verizon, Lockheed Martin
Wednesday: Boeing, IBM, Philip Morris
Thursday: Alphabet, P&G, T-Mobile
Friday: Abbvie
Full schedule including EPS, revenue expectations and timings here: https://media.marketnews.com/MNIUSEARNINGS_210425_3ed710b2f3.pdf
EURIBOR OPTIONS: Mixed flow Seen In Recent Trade
Recent option flow includes:
- ERZ5 98.50/62 call spread vs. 98.31/18 put spread paper paid 0.5 for the put spread on 13K.
- ERM5 98.12/98.25 call spread paper paid 1.25 on 5K.
SPAIN: PM Commits To Hitting 2% Of GDP On Defence In 2025
Speaking after a meeting of the Council of Ministers, Prime Minister Pedro Sanchez says that Spain will hit the (current) NATO defence spending floor of 2% of GDP in 2025. For several years, Spain has been NATO's most notable laggard in terms of defence spending, which is estimated to have come in just above 1.4% in 2024. The new 'Industrial and Technological Plan for Security and Defence' was approved by ministers today and will be sent to Brussels on 23 April for evaluation.
- Sanchez: "To achieve [the 0.6% increase], we will have to make a significant investment, a significant effort of €10.471 billion in addition to what has already been allocated to security and defence,"
- Of the E10.471bln, E3.3bln will go on a 'digital shield' to protect critical infrastructure and the military from cyber attacks. A larger proportion, accounting for 35% of the total, will go to increase wages for the armed forces.
- Just 15% of the investment will go on to fund new defence and deterrence equipment, a contribution that could draw criticism from the US and NATO's other big spenders.
- The PM claims that the investment can be funded by reorienting NextGen EU funding, " savings generated by the government's rigorous management and the good performance of economic policy," and headroom from the last approved budget in 2023.
- Sanchez claims that 87% of the investment will remain within Spain, while the bulk of the remainder will be spent in the EU, with only 5% going outside the Union.
