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President-elect Donald Trump is just like E.F. Hutton, to some extent. Trump held his first press conference since being elected yesterday and the global stock markets began reacting before the conference was completed. While much of the news conference was devoted to fake news and what assets Donald Trump will hand over to his sons, Trump also made some statements regarding government contracts and inability to act flexibly and competitively regarding expenditures. In particular, Trump focused on military expenditures and then on Big Pharma. No one expected this statement, and the pharmaceutical indexes began dropping in real time with the press conference.
One of the biggest problems with the government budget regarding Medicare is pharmaceutical company negotiation restrictions. By law, the federal government cannot negotiate drug prices on the wholesale with pharmaceutical companies. This is a major perk for the companies because they effectively command certain prices for each prescription with little or no competition, working more as a cooperative than a competitive market. They are also connected to the hip pocket to the federal budget, and it appears that the big “cash cow” just got a thorn stuck in their foot. And, investors jumped ship quickly, knowing that Congress is under complete Republican control and they may see an excellent opportunity to reduce the budget significantly regarding targeted programs that generate massive debt.
The question now may be one of what will be next, as Trump evaluates the budget and addresses methods of stopping the bleeding at the U.S. Treasury Department. The military industrial complex is surely being targeted, even though many of those in Congress are financially beholden to the lobbyists in this massive industry. The group of corporations involved are central to the U.S. economy in a variety of ways, and the ownership group of those companies are highly influential individuals. One thing is for certain. After January 20th, we will indeed see what is next on the agenda, and it looks like Obamacare.