With both JPM and Goldman having warned for months that the market is far too sanguine about the implementation (and effectiveness) of Trump's proposed domestic fiscal policies, Friday's events were a rude awakening for some, and framed how contentious the passage of any stimulus measures by the new president - one who as the WSJ writes this morning is realizing he misses a governing coalition - will be. And while coming to grips with the qualitative aspects of Trump's failure to cobble together a deal was Friday's business, the key question now deals with the quantitative aspects of what happens next, starting with Trump's tax reform which as the president himself said will be his immediate next focus as Obamacare repeal is left indefinitely on the back burner.

Here are some thoughts from Goldman's David Kostin.

Investors have begun to appreciate that the boost to S&P 500 earnings from corporate tax reform will likely be delayed until at least 2018.

The boost to S&P 500 earnings from a lower corporate tax rate is likely to be smaller and to occur later than investors originally expected.

The House Republican blueprint proposes a reduction in the statutory federal corporate tax rate to 20% from the current 35%. We estimate that a 5 pp reduction in the effective tax rate would boost ROE by 100 bp and lift S&P 500 EPS by about 6%.

However, our Washington, D.C. economist expects the tax rate will be cut less than proposed to roughly 25%. Investors have also reduced expectations for the timing and size of tax reform. After outperforming the S&P 500 by 520 bp post-election, our basket of stocks with the highest effective tax rates has given back all of its post-election gains in the last three months (see Exhibit 1).

The flip side, however, is that according to Goldman, the market appears to have now largely priced this in, and as a result over the past month, companies in the "high-tax rate basket" have given up all their post election gains and then some. In fact, if anything, there is some modest scope for upside surprise should Trump fail to disappoint on his next key legislative item.