|Dow||+38.82 to 18,135.72|
|S&P 500||+2.51 to 2,101.04|
|Nasdaq||+15.67 to 4,982.81|
|10-YR Yield||-0.011 to 2.112%|
|Gold||-$2.60 to $1,198.30|
|Crude Oil||-$0.65 to $50.88|
The European Central Bank met today. At that meeting and in the post-meeting press conference, ECB President Mario Draghi confirmed that Euro-QE will start next week, running at a pace of 60 billion euros per month. On the surface, that sounds euro-negative.
But Draghi also talked up the euro-zone economy, and raised forecasts for both growth and inflation in the next couple of years. He said that policymakers “see objectives are gradually being obtained” and that risks “have diminished following recent monetary policy decisions.”
That’s not exactly a victory lap. But it does suggest that he doesn’t think the euro currency needs to go to zero and rates need to go to negative-1,000% in order to get growth back on track. You could argue that’s actually euro-supportive.
|The ECB Governing Council.|
At the same time, we learned today that initial jobless claims filings here in the U.S. rose 7,000 to 320,000 in the most recent week. That was the highest level since May.
A separate report from outplacement firm Challenger, Gray & Christmas said companies announced 50,579 layoffs in February. That was up 21% from a year ago, with energy sector cuts accounting for a sizable chunk of them.
Stronger growth in Europe, and somewhat weaker (but not recessionary) growth in the U.S.? After a period of time where everything and anything was breaking the dollar’s way? And when everyone except for five Martians went long the buck and short the euro? That would tend to argue for a lower dollar and euro bounce.
Stated another way, the markets are in a state of flux. I’ve argued for some“Big Reversals” in various assets, and advocated a strategy of buying in 2015 what you previously sold in 2014, and selling what you previously bought.
I’m seeing some encouraging signs, such as the fact supposedly “bearish” oil inventories news isn’t causing prices to fall. We’re still hovering around $50 a barrel, give or take, versus the January low of $43-and-change.
|“Stated another way, the markets are in a state of flux.”|
But until we get some more clarity – on policy plans, currency values, and the state of the job market (tomorrow is the big data day there!) – I’m sitting on my hands for a bit in my shorter-term trading services, even as I’m continuing to pursue opportunities in services focused on longer-term trends.
So how about you? Do you think the market outlook is getting more or less cloudy? Are you interested in continuing to ride old trends, or do you agree that some big reversals in those trends are brewing? What do you think of the ECBs latest move? The news on the U.S. economy? Let me know at the Money and Markets website.
|Our Readers Speak|
Obamacare’s day in court clearly grabbed your attention, as more than 150 comments came in regarding the latest legal challenge to the health care insurance program.
Reader Kathy B. said: “Obamacare needs to be scrapped and replaced. Tort reform, buying across state lines, health savings accounts … people need to have some skin in the game! Insurance should be available to the uninsurable.”
Reader John M. added that “Health care and health insurance have always been separate. Insurance is inherently inflationary due to the loss of quality and cost transparency. College costs rose when student loans became guaranteed. Medication costs rose when medications became covered in health plans. Home prices skyrocketed when mortgages were broadly guaranteed.
“Whereas you probably know which local grocer has the best prices on favorite items, which has the best bakery, which has the best produce, and which has the best meat and seafood. If you want to make healthcare affordable, you add transparency to the market and trust consumers to make suitable choices about health care from a broad menu of health care (not health insurance) choices. You don’t create a corporate welfare program for insurance companies and mandate consumers participate. Insurance is the cause, not the solution.”
But Reader John R. said there are ways to fix Obamacare without scrapping it entirely, and that coverage in a country like ours can and should be offered to those who can’t afford care. His view:
“Health care should be a regulated utility. It is needed in a developed economy, and as a community we are more productive if we have healthier people.
“Real health reform means actually getting rid of a system where we pay when sick and figuring out how health care dollars can be spent to reduce illness and incentivize healthy living. The only ‘socialized’ targets should be the children and elderly who tend not to have the resources or knowledge to invest in healthy behaviors.
“The ACA should be progressively amended not demonized. The intent was to decrease the embarrassing situation of poor health outcomes and excessive health care spending that left large numbers of people out of the health care loop.”
And Reader Mike S. summed up the anti-Obamacare argument in this simple fashion: “The Republican version of healthcare for the average American citizen: They (the 1%) have it and you (the 99%) don’t. :(“
Clearly there are no easy answers, and a lot of passion on both sides of the Obamacare debate. It’s a shame we’ll have to wait until June for a Supreme Court decision, as it leaves everyone in a state of limbo.
In the meantime, if you have any other thoughts you want to share on the U.S. health care situation, make sure you share them at the website.
|Other Developments of the Day|
M&A action keeps heating up in the health care industry. The latest: Abbvie (ABBV, Weiss Ratings: C) agreed to buy Pharmacyclics PCYC, Weiss Ratings: B-) for $21 billion, or $261.25 in cash and stock.
PCYC was also in the sights of Johnson & Johnson (JNJ, Weiss Ratings: B+), but the health care giant got outbid. The deal will add the cancer treatment Imbruvica to Abbvie’s portfolio, which includes Humira for the treatment of arthritis.
Chinese policymakers admitted the economy is slowing there, and cut their 2015 growth forecast to around 7%. That would be down from 7.4% in 2014.
Of course, there have been questions about the accuracy of China’s economic statistics for a long time. So it’s tough to know how quickly GDP really is growing. But the real message here is that after cutting interest rates twice in the past few months, China doesn’t appear poised to launch a massive stimulus package to boost growth like it did in the wake of the Great Recession.
So who “won” at yesterday’s Supreme Court hearing on Obamacare? The analyses I’ve read were mixed. But it appears the court is divided on the legality of insurance subsidies in states with federal marketplaces, based on the questions that were asked of government and challenger attorneys.
A decision won’t be forthcoming until June. But it’s worth pointing out that hospital stocks like Tenet Healthcare (THC, Weiss Ratings: C) and Universal Health Services (UHS, Weiss Ratings: A-) rallied strongly yesterday. That suggests some investors are already anticipating a pro-Obamacare verdict based on what they heard in court.
Meanwhile, the U.S. ambassador to South Korea Mark Lippert is recovering after taking a knife to the face from a 55-year-old protestor. Kim Ki-jong was reportedly angry at U.S. policy in Korea.
If you have any thoughts on these stories, don’t forget to use the website to share them.
Until next time,