President Trump seems to have had yet another productivity meeting with business leaders, this time from the airline industry which has some specific needs and requests.

The focus, like with all American industries mired in the anti-business, anti-growth regime in the past eight years, was on taxes and regulations but also industry-specific need for infrastructure (physical and technical) aide.  The industry would like to revamp the air traffic controller (ATC) system to one that is satellite-based and controlled by the industry not the federal government. 

During the meeting, President Trump mentioned a tax announcement is coming in the next few week.   Those comments helped the market, which opened tentatively higher at the start of trading.  A timetable for tax reform is critical to keeping animal spirits alive.

But there was a bigger spark today, and that came from St Louis Fed President James Bullard whose comments dovetailed with post-FOMC speculation that the Fed has shifted back to a dovish, non-interventionist mode.

Remember, the market was told to brace for as many as three interest rate hikes in 2017, now we are being told that only one might be necessary.  In a speech at Olin Business School at Washington University, Bullard posed and answered these questions:

• Will the low-safe-real-rate regime go away naturally in 2017?
• Will the new administration’s policies drive the safe real interest rate higher in 2017?
• Will the U.S. economy overheat in 2017?
• Is the Fed’s normalization program limited to increases in the policy rate?

Bullard said the answer to all of the above is “no” and he went on to explain them in greater detail.  There is muted danger of inflation this year, policies of deregulation, infrastructure spending, and tax reform are going to have a major impact in 2018 and 2019, while trade and immigration are longer term issues of concern.

The conclusion for Bullard is there might only be a need for a single rate hike this year.  That would be the ultimate backdrop for an economy clearly gaining momentum.  This is the news today that nobody expected, but is obviously being cheered on Wall Street.

The airlines are enjoying a great session as well on hopes there is clear action.  While it wasn’t part of the released video, I’m sure there was a push for the Export-Import Bank helping foreign rivals, including Middle East airlines that are already subsidized to the tune of billions of dollars. 

JETS

President Trump has bought the rally three weeks, and probably a lot more, since the fact is we don’t need to do everything in the world in just 100 days. We do need occasionally handholding and reassurance that all those promises will come true.