U.S. stock futures are set for a lower open on Monday as investors digest presidential election results on Sunday from France, a strong April U.S. employment report on Friday, and expected political gridlock over Republican efforts to replace Obamacare that could eventually complicate President Trump’s efforts to offer deep tax cuts.
France’s presidential election results on Sunday showed that with 98 percent of votes tallied, pro-EU candidate Emmanuel Macron won easily gaining 65.8 percent to LePen’s 34.2 percent, according to Kantar Sofres.
Macron, a centrist, who leads the newly formed En Marche! Party that came into existence last year, still needs to build a parliamentary majority in the days ahead to accomplish his political agenda.
Macron’s landslide presidential win in Sunday’s election occurred despite his political campaign facing a coordinated hacking operation that proved to be ineffective and didn’t change the final outcome of the presidential race.
The defeat of far right candidate Marine LePen of National Front is a relief to EU leaders in Brussels and dealt a setback to the euroskeptic movement in Europe that picked up momentum last June when Britain voted to leave the EU in their Brexit vote.
France’s economy is the 2nd largest in the 19 member euro currency bloc and is of vital importance for the cohesion of the European Union, especially ahead of Germany’s closely watched federal election on September 24th.
On March 14th Mark Rutte of VVD Party defeated far-right and euroskeptic candidate Geert Wilders to become prime minister of the Netherlands.
U.S. President Trump tweeted a message of congratulations to Emmanuel Macron on Sunday and said that he looks forward to working with him.
Congratulations to Emmanuel Macron on his big win today as the next President of France. I look very much forward to working with him!
— Donald J. Trump (@realDonaldTrump) May 7, 2017
Former U.S. Presidential candidate Hilary Clinton, whose own presidential campaign faced a political setback last year from a coordinate hacking effort, tweeted “Victory for Macron, for France, the EU, & the world.”
Clinton injected some humor in the next line of her tweet when she tweeted, “Defeat to those interfering w/democracy (But the media says I can’t talk about that).”
Victory for Macron, for France, the EU, & the world.
Defeat to those interfering w/democracy. (But the media says I can't talk about that)
— Hillary Clinton (@HillaryClinton) May 7, 2017
Donald Tusk, President of the European Council since 2014 tweeted his congratulations to Macron and to French people for choosing Liberty, Equality and Fraternity over tyranny of fake news.
Congratulations @EmmanuelMacron. Congratulations to French people for choosing Liberty, Equality and Fraternity over tyranny of fake news.
— Donald Tusk (@eucopresident) May 7, 2017
On March 4th the U.S. House of Representatives narrowly passed an amended version of the Republican based American Health Care Act that wasn’t officially scored by the Congressional Budget Office (CBO) and still lacks in depth analysis concerning its projected impact.
The Congressional Budget Office provided 2 earlier scores of the American Health Care Act before it was amended behind the scenes and voted on late last week.
The 2 CBO scores that were entered before the amended version of the American Health Care Act surfaced late last week shows that the proposed healthcare legislation will eliminate Obama taxes, cut deeply into Medicaid spending and Medicaid expansions with the poor, and charge the elderly more for healthcare costs.
In 2018, 14 million more Americans would be uninsured under the Republican healthcare legislation and it would rise to 21 million in 2020 and to 24 million in 2026.
Higher Average Premiums Until 2020
The CBO declared the healthcare legislation would “tend to increase average premiums in the nongroup market prior to 2020 and lower average premiums thereafter.”
The amount of the premium increase is projected to increase 15 percent to 20 percent higher than under current law, largely because the individual mandate penalties would be eliminated, inducing fewer comparatively healthy people to sign up.
Republican Maine Senator Susan Collins admitted on ABC’s This Week With George Stephanopoulos that she has a lot of concerns with the newly passed House bill because of the lack of analysis from the CBO.
“It’s difficult to assess the new House bill because we still don’t have a CBO analysis of the impact of coverage and costs. And those are key questions” Sen. Collins admitted on ABC.
Only 2 Republican Senators in the Senate are needed to oppose the newly passed House healthcare bill and some other Republican Senators such as Ohio Senator Rob Portman have already expressed reluctance to go along with proposed healthcare changes.
In a May 4th statement, Senator Rob Portman said, “I’ve already made clear that I don’t support the House bill as currently constructed because I continue to have concerns that this bill does not do enough to protect Ohio’s Medicaid expansion population, especially those who are receiving treatment for heroin and prescription drug abuse.”
U.S. Jobs Report: Stronger Than Expected April Payroll Gains
Last Friday the U.S. Bureau of Labor Statistics reported that the U.S. non-farm payroll increased by 211,000 in April and surpassed the 180,000 consensus estimate from briefing.com.
The U.S. unemployment rate was 4.4 percent in April, a 10 yr. low.
Job revisions for February and March combined were 6,000 lower than previously reported.
Average hourly earnings for all employees on private nonfarm payrolls in April increased by 7 cents to $26.19. For the year, average hourly earnings have increased by 65 cents, or 2.5 percent.
During the past 3 months, job gains have averaged 174,000.
The Week Ahead
Corporate earnings will continue this week, although the economic data entering the market is relatively slower this week and the sharp decline in crude oil prices since mid- March could grab more investor attention and make more headlines if crude oil prices fail to hold a rebound which occurred early on Monday, largely based on hopes of future production cuts led by Saudi Arabia.
April retail sales will be closely later in the week on Friday, the same day that an April inflation report, CPI, is reported.
PPI inflation for April will be released a day earlier on Thursday.
Full U.S. Economic Calendar
Tuesday- Wholesale Inventories (March), JOLTS- Job Openings (March)
Wednesday- Treasury Budget (April), Crude Inventories, Export/Import Prices (April), MBA Mortgage Applications Index
Thursday- PPI (April), Initial and Continuing Jobless Claims, Natural Gas Inventories
Friday- April Retails Sales, CPI (April), Business Inventories (March), Michigan Sentiment-Prelim (May)
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