Gary Cohn's employment status is the key signal for traders betting Trump's tax reform is still alive

• Axios is reporting Trump advisor Gary Cohn has said "if tax reform doesn't get done this year, it's probably never going to happen."
• Cohn will leave the White House if "he concludes tax reform is dead," the report says.
• The director of the National Economic Council still aims for a corporate tax rate reduction to 15 percent from 35 percent, according to the report.

Gary Cohn and Steve Mnuchin depart a closed meeting with Congressional leaders to discuss tax reform on April 25, 2017 in Washington.

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Gary Cohn staying in his current position as director of the National Economic Council is the key indicator on whether tax reform will pass, based on a report from Axios.

Axios' Jonathan Swan is reporting President Donald Trump advisor Cohn has said the Republican tax reform needs to pass in 2017 or it will not pass ahead of the 2018 midterm elections.

"Cohn has told associates that if tax reform doesn't get done this year, it's probably never going to happen," the report said. "Sources who know Cohn speculate that he'll leave the White House the instant he concludes tax reform is dead."

Swan noted both Cohn and Treasury Secretary Steven Mnuchin still aim to cut the corporate tax rate to 15 percent from 35 percent. In addition, both men are "becoming less wedded to revenue neutrality," which means the proposed tax reform plan may add to the federal budget deficit.

The S&P 500 rallied 13 percent since the Nov. 8 election through Friday as investors anticipated the passage and implementation of Trump's pro-growth economic agenda. If the Axios report is accurate, a Cohn departure from the White House will mean significant tax reform will likely not occur. Investors are now warned of this canary in the coal mine.

See here for the full Axios report.

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