|Dow||-106.47 to 18,096.90|
|S&P 500||-9.25 to 2,098.53|
|Nasdaq||-12.76 to 4,967.14|
|10-YR Yield||+0.001 to 2.123%|
|Gold||-$5.50 to $1,198.90|
|Crude Oil||+$1.31 to $51.83|
Obamacare is the source of passionate debate around the country. Now, it’s the focus of scrutiny in the hallowed halls of the Supreme Court!
The nation’s chief justices heard arguments today about whether the Affordable Care Act, as currently structured, is fundamentally flawed. At issue are federal tax subsidies that help individuals buy health insurance. The law says subsidies should be available to people who buy insurance in marketplaces “established by a State.”
But only one-third of U.S. states have formed exchanges. In the rest of the states, individuals buy coverage through federally run exchanges. Obamacare opponents claim in the King v. Burwell case that subsidies for those buyers are therefore illegal, as the marketplaces are not state-run.
|The Supreme Court is hearing another challenge to Obamacare – the Affordable Care Act.|
We likely won’t get a court decision until June. But today’s arguments will help determine whether justices will side with the Obama administration or the Obamacare opponents.
What’s at stake here? If the Obama administration loses, more than six million individuals would lose the tax subsidies they’ve used to buy insurance through the federally run Healthcare.gov website.
That, in turn, would make coverage unaffordable for a large portion of those buyers. A large portion of them would cancel. So would many healthy individuals. That’s because coverage would no longer be deemed affordable for many of them, exempting them from the financial penalties Obamacare mandates for people who can afford insurance, but choose not to buy it.
The end result? A “death spiral” for the health care law and the insurance programs central to it.
Naturally this is a huge issue for uninsured Americans, who face the loss of affordable coverage. It’s also a huge issue for hospital companies, drugmakers, insurers, and others who have benefitted from the increase in the insured patient population. So if you’re invested in the health care sector, or if you’ve had trouble affording insurance, I’d keep a close eye on today’s Supreme Court drama!
|“Naturally this is a huge issue for uninsured Americans, who face the loss of affordable coverage.”|
With this major challenge underway, I wanted to hear your opinion on Obamacare. Does this case have merit, and would you like to see the law derailed? Or is it just another attempt by disgruntled Obamacare fighters to stick it to the President with a questionable legal argument? Are you invested in health care stocks, and worried about the outcome here? Please share your thoughts at the Money and Markets website when you have a minute.
|Our Readers Speak|
Nasdaq 5,000 – just a stepping stone to higher prices? Or a last gasp before the big fall? Here’s what you had to say …
Reader Chuck B. said we could have further to run, given the fact we’re still nowhere near the inflation-adjusted peak for the tech index. His comments:
“Someone else ran Nasdaq 5,000 through the Minneapolis Fed’s inflation calculator. Turns out that would equal 6,960 in today’s dollars. There are many other reasons to think the markets have a ways to go before they peak out. PEs are nowhere near what they were in 2000, for example.”
Reader Mike P. discussed several reasons why today’s market environment is different than it was back in 2000, and offered his own forecast of the future:
“There are a number of differences between now and the ’90s.
“1. Retail investors seem to still be scarred by the 2008 crisis. In 1987, the stock market crash affected far fewer people than the 2008 crash, but even then, the stock market really didn’t take off until 1994, seven years later. We’re just at that point now relative to 2008.
“2. Demographics have changed, which may explain the demand for bonds as Boomers retire or their target date funds near their endpoint. Getting a coupon payout every month just seems more reliable than hoping for increasing returns in your stock portfolio.
“3. In the 90’s, the goal was to launch a website and sell out to insatiable investors. That’s not so easy now.
“4. Biotech seems far more bubbly now than back then. However, the promise is greater now with improving technology and extreme pricing.
“I’m expecting another October-like selloff when the Fed raises rates, but then another snapback as the bull market continues for a few more years, albeit at a tempered rate of increase.”
On the flip side, Reader Billy said all signs point to an end to this epic run: “No question from a macroeconomic, technical, cyclical, and demographic standpoint, we are in a classic topping scenario for the capital markets.”
Finally, Reader Kent G. thinks the market rally is built on a wobbly foundation:
“The entire market is a sham built on cheap financing, bogus earning reports and massive stock manipulations. Real companies earn their profits by sales, not stock manipulations and buy backs. No sales, no earnings, no new jobs. Not all that tough to figure out. Stir in a few trillion in vapor money and you get a vapor economy.”
You couldn’t ask for a more diametrically opposed set of views. We’ll have to see which side wins out in the end. And just in case you missed it, I’ve shared my personal take:
Investing in rock-solid companies, with high Weiss Ratings, in powerful sector bull markets is still a smart way to go. Energy stocks and foreign equities also look ridiculously beaten-down and cheap, cheap, cheap … offering opportunity to savvy investors. Should my “crash indicators” start flashing yellow, I’ll change tacks. But that’s not happening yet!
As always, this website link is where you can add your two cents to the mix.
|Other Developments of the Day|
The U.S. job market is the focus of attention this week, thanks to the release of fresh data. ADP said today that the economy created 212,000 jobs in February. That was down from an upwardly revised 250,000 in January, and the weakest rise in six months.
Keep a close eye on what happens tomorrow with the European Central Bank, and what the Labor Department says on Friday in the “official” jobs report. Those events could determine the next major move for the U.S. dollar.
Exxon Mobil Corp. (XOM, Weiss Ratings: C+) became the latest energy sector giant to react to lower oil prices by slashing capital spending. The company told analystsin a presentation today that its capex budget will sink to $34 billion in 2015 from $38.5 billion last year.
It’s gorgeous here in South Florida … again. Not so much in the rest of the country. Yet another winter storm is sweeping through the Midwest and Northeast, dropping copious amounts of rain, sleet, ice, and snow on millions of Americans who are probably ready to hang the Groundhog up by his paws!
I enjoyed the movie “The Internship,” where Vince Vaughn and Owen Wilson land coveted starter jobs at Google (GOOGL, Weiss Ratings: B+). The campus (some scenes were filmed there; others were recreated in Georgia based on the real Mountain View headquarters) seemed like a great place to work, packed with perks and much less straight-laced than many corporate environments.
But according to the Wall Street Journal, you ain’t seen nothin’ yet! That’s because Google, Facebook (FB, Weiss Ratings: B-), Salesforce.com (CRM, Weiss Ratings: C-) and other growing tech firms are snapping up hundreds of thousands of square feet worth of real estate in Silicon Valley and San Francisco.
The goal? Secure land for flashy new offices and buildings full of high-end perks. The risk? These companies get stuck paying too much for real estate they won’t need later if growth doesn’t live up to expectations, just like it didn’t in the dot-com bust of the early 2000s.
Do you think this land-banking strategy makes sense? Are you sick of all the snow? Is Exxon making the right move by cutting its capex budget? The website is your outlet for discussing these stories, so be sure to take advantage of it!
Until next time,