Chillin' out till it needs to be funded
JP Morgan’s woes aside ( The company reports on July 13 and the CDS are holding fine) Obama’s Affordable Care Act is through with the bench led by Chief Justice John Roberts upholding the law in an immediate announcement. The details will be updated in this same post so check back on the website! The decision was a fine 5-4 meaning the 26 states could come back to a Court of appeals against the Chief Justice’s decision with Key Judge Antony Kennedy likely supporting the judgement and Clarence Thomas one of the four conservatives holding back. Markets are don 1% on the S&P retracing back to last Friday’s 1313 and Dow below 12,500 though European markets ere positive ahead of the summit.
Jobless Claims were still pegged to a high 390000 in the morning, and JP Morgan was down just 3% , BofA following at $7.89 as the street is relatively sure that this surprise was already part of the package except for those who took anew long position this week
Drug companies are holding ok with Merck actually trading at a profit, Insurers are expected to be hurt by the regulation which mostly comes online in 2014 but it seems the only suffering parties will be the population surviving on ESI ( Employer sponsored schemes) as the entire population is targeted at becoming insured under the act including Children and those with existing preconditions, the latter thru Heath insurance exchanges if the price for the payor(insurer) is too high. Insurers will at the end of the day welcome the larger pool available as laws on increasing premium every year get stricter the Doughnut hole for seniors is also being taken care of to a smaller gap of $250 by 2019. Cash payments of $250 will be made for those uncovered.
Hospital stocks like community health and Tenet were up almost 10% each while payors were down nearly 5% on the news, Wellcare and Amerigroup among those state aid companies rising because of changes in Medicare. Trading in Wellpoint and Health Management also had to be halted when the news broke. Most of the new business from nearly 20 mln Americans will be taken up by the medicaid plan sellers while the assessment is that premium companies like Aetna and United will end up focussing on more cost cutting that has already disturbed their brand into disrepute.
The morning’s other judgement was on the Stolen Valor Act which was strick down as an infringement of the First Amendment. The GDP announcement made sure that the Q1 GDP at 1.9% and Q2 at just slightly better make Government spending a continuing necessity. The Q1 GDP came on the back of a 14.3% jump in Durable Goods in Q1 and a 2.7% rise in personal consumption. the GDP Price Index, a useful addition also came in at 2% , a moderate pace of growth, boosted by a moderate inflation
Refineries are back at a 92.6% utilisation but inventories of Crude at 384.4 mln Barrels are near all time highs as people await a modest reduction in gas prices at the pump
The Euro proceeds slowly at 1.24 levels in the face of the much awaited summit, while India’s new FM started things rolling by pulling back GAAR regulations that could tax international M&A deals and a small cut in petrol(gas) prices at the pump The Euro will likely remain subdued as bailout/stimulus cash for Spain is unlikely to be drawn before September or even the end of the year as Spanish yields continue to hover just under 7% after the request for bailout funds was approved. Spain would be getting the signed agreement on legal paper in the coming week
Italy also approved new growth spending worth $100 B earlier this month reducing the size of government and approving preferential bonds for infrastructure. The list also includes long pending sales of government assets
Britain has been shying away from the union , the Pound Sterling retracing back to old $1.60 levels as the Euro currency nations move to documenting a banking, fiscal and political union