Week In Review: How Trump's Policies Moved Stocks - January 12, 2020

3. "FOREVER CHEMICAL" BILL VETO: President Trump is planning to veto the PFAS Action Act of 2019, which aims to keep harmful "forever chemicals" out of groundwater, The White House said in a statement on Tuesday. After failing to include a measure to broadly regulate per- and polyfluoroalkyl substances, or PFAS, in the annual defense policy bill late last year, House lawmakers introduced sweeping legislation in November that would force the EPA to set a drinking water standard for PFAS. The White House says the bill would "bypass well-established processes, procedures, and legal requirements of the Nation's most fundamental environmental laws," adding that by "truncating the rulemaking process, this legislation risks undermining public confidence in the EPA's decisions, and also risks the imposition of unnecessary costs on States, public water systems, and others responsible for complying with its prescriptive mandates." The Fly notes that Larry Robbins of Glenview Capital has previously named 3M (MMM) and Chemours (CC) as short ideas due to their exposure to potential PFAS litigation.

4. GOVERNMENT SERVICES STOCKS: In a research note on Thursday, Wells Fargo analyst Ed Caso told investors that while 2019 was "great" for government services' stocks' performance, putting their current valuations near historic highs, the funding outlook is strong, which gives solid market visibility through calendar 2021. Despite the presidential election cycle "noise," Caso also believes that in the case of a Trump win the group is likely to see little change, while a new president is unlikely to impact spending prior to government fiscal year 2022.

Caso downgraded Leidos (LDOS) to Equal Weight from Overweight with a $102 price target, noting that its shares were up 85% in 2019. He downgraded ManTech International (MANT) to Underweight from Equal Weight with a $76 price target as he expects shares to lag peers given its lower EBITDA margin. He also downgraded Parsons (PSN) to Underweight from Equal Weight with a $42 price target, noting that the "clarity and consistency" of its financial model is "still evolving," which he sees leading to relative underperformance.

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