Tax Reform (Long Unhappiness & Therapy Bills)

Who is Advising Giancarlo Stanton?

If the bankers aren't happy, it must be worthwhile. Totally kidding. Ken Moelis of Moelis & Co. ($MO) has joined the ranks of Bridgewater Associates LP CIO Ray Dalioopposing the elimination of the SALT deduction and questioning to what degree there'll be unintended consequences. Indeed, people in Los Angeles, Chicago and New York are freaking the eff out about what the reform legislation will mean as a practical matter. As it relates to the loss of the mortgage interest deduction, a choice quote, "An analysis of the Senate bill by Moody’s Analytics concluded that home prices in Manhattan could fall nearly 10 percent in the coming years because of the bill. Some New York and New Jersey suburbs could be even more vulnerable because property-tax rates are higher there and prices are still recovering from the bursting of the housing bubble." Boom. Nothing like an instant 10% decline in your real estate value. But don't worry, New Yorkers. Allegedly, naysayers argue that the threat of flight for tax arbitrage purposes is overblown. Or is it? The IRS recently reported a "record loss of people" out of Illinois. Where did they go? Florida and Texas, of course. Apparently Giancarlo Stanton didn't get the memo.

Query whether the rise of the 1099-economy and the "remote-first" movement will interact with the new tax bill in odd ways. People today seem less and less tethered to a physical location. Doesn't that, in many ways, explain the rise of WeWork? If people can leave, they will. We hear Austin, Denver, Nashville, and the Research Triangle are all looking ripe for growth.  

Energy (Who Can Make Sense of it All?)

This headline about sums up the effects of tax reform on energy policy: weakened incentives for solar and wind development and 1.5mm acres of the Arctic will be opened to new oil and gas development. Because there's, like, a ton of demand. But, even Bob Murray of Murray Energy Corporation isn't happy, alleging that tax reform will lead to more coal bankruptcies. Wait, we thought there was a coal bailout afoot? So confusing. Elsewhere, the Interior Department's Bureau of Land Management is delaying an Obama administration regulation that restricts harmful methane emissions from oil and gas production on federal lands. This should inure to the benefit of frackers who haven't exactly had an easy time the last few years. The debate over solar tariffs is getting faster and furious-er: NextEra Energy Inc.'s SVP, as just one example, thinks tariffs will decimate new utility-scale solar projects. Yet, curiously, congressional Republicans in Texans are conspicuously absent from the list of opponents to the tariffs, despite Texas being the 7th largest adopter of solar capacity in the US. Wait. They're voting against their constituent's interests? We could swear we've heard that recently in another context too.