When Penalties are Preferable

September 20, 2013

  • Snoozing at Obamacare headlines: How about news you can use?
  • “Opting out” of the Affordable Care Act: A step-by-step guide
  • Globe-trotter Chris Mayer unpacks what’s wrong with emerging-market conventional wisdom
  • After a banner week, what’s next for gold? Analysts, readers, Antichrist weigh in
  • Reader accuses us — us! — of being “zombies”

  Well… We can say in all honesty we never anticipated linking to a video of a gynecological exam in The 5. Much less one that features a creepy Uncle Sam wielding a speculum.

There’s no shortage of Obamacare headlines this morning. But most of them are far more predictable, and far less entertaining, than the one-minute spot prepared by the “Opt Out” campaign…

  • The House is voting today to “defund” Obamacare. As if they haven’t already done so on [pausing to check] 40 previous occasions
  • With only 11 days before the online insurance “exchanges” are supposed to open, the government’s software still can’t spit out the right prices, according to this morning’s Wall Street Journal. As if we didn’t see that coming…
  • Home Depot is dropping health coverage for 20,000 part-timers — sending them to the exchanges. Talk about Johnny-come-latelys…
  • Nearly five in eight Americans polled by ABC News and The Washington Post say they “lack the information needed to understand the changes that will take effect as the Affordable Care Act is implemented.” No surprise with a bill that stretched to 906 pages — plus 20,000 more of associated regulations.

Besides, there’s nothing you can actually do in reaction to these stories. You’re a helpless spectator. Which is why we find the YouTube video much more intriguing…

  “What we’re trying to communicate is, ‘No, you’re actually not required to buy health insurance,'” says Evan Feinberg. “You might have to pay a fine, but that’s going to be cheaper for you and better for you.”

Mr. Feinberg is president of a group called Generation Opportunity, described by Yahoo News as “part of a coalition of right-leaning organizations with financial ties to billionaire businessmen and political activists Charles and David Koch.”

Generation Opportunity produced the video; there’s also a version geared toward men, in which the patient is curled up on the table and old Sam snaps on a pair of latex gloves.

The message for everyone: You’re better off paying the fine than getting on the exchange merry-go-round.

“The health exchanges rely heavily on young, healthy Americans who will subsidize the sick and elderly within the pools,” explains Yahoo. “Without the healthy, the exchanges could be unsustainable. The Obama administration is devoting millions of public dollars to promote the exchanges, but many conservative groups are actively working to convince people not to join.”

 Nor is the campaign limited to the videos.

“Generation Opportunity intends to host events at college football tailgate parties festivals,” says Yahoo, “where ‘brand ambassadors’ (read: hot young people) will pass out beer koozies that read ‘opt out,’ pizza and literature about the health care law. Some events may have impromptu dance parties with DJ’s, complete with games of cornhole and competitions for prizes, organizers said.”

They’re even commissioning actors on Craigslist to dress up like Creepy Uncle Sam at $275 a pop.

Hmmm… Maybe this campaign will have more legs than the “burn your Obamacare card” message that fell flat because, well, there’s no such thing as an Obamacare card.

  Young people aren’t the only ones opting out. “I would love to have insurance, but we just don’t have the money,” says Sandra Czop.

Ms. Czop is 58. She’s a mortgage loan officer in the Chicago suburb of Bloomingdale. Her business is down 60%. Her husband is unemployed. For now, the penalty — or, if you prefer the Supreme Court’s nomenclature, tax — is easier to swing than insurance. “We need that $100 to put food on the table,” she tells CNN Money. “We have no money to put gas in the car.”

A couple earning $50,000 a year — just below the national household median — is eligible for a $1,300 subsidy to buy insurance on the exchanges. They’d still be stuck paying $4,750 in premiums — a far sight more than the $300 penalty.

“For some folks,” the CNN Money story sums up, “health insurance just isn’t a good deal.”

If that’s what you’ve concluded in your own case, but you’re not sure what to do next, you’ll benefit from our special report The Obamacare Antidote: 6 Ways to Get the Best Health Care of Your Life and Save up to $2,000 per Year. It’s packed with useful advice for which we’re getting scads of positive feedback.

“There are so many ideas in the report,” writes one reader, “which I will put to use and tell friends and family about.” Another describes how he got a $150 test for only $43.19 following our guidance. “An excellent report,” he says. For access to this enormously useful guide, look here.

  Stocks are treading water this morning after the major indexes posted minor losses yesterday. As we write, the Dow is down fractionally, the S&P up fractionally.

Traders in nearly every asset class could prove to be squirrelly today. It’s a “quadruple witching” Friday — one of four days a year in which stock options, stock futures, index options and index futures all expire. Throw in an uncertain outcome to elections in Germany on Sunday and traders will be jockeying for position right up to the close…

  “It’s always interesting when so many people start to say the same thing,” observes Chris Mayer, “almost reflexively, without ever thinking about it.”

Chris is back from speaking at a conference in Uruguay. Most of his fellow speakers were united on this proposition: “The big developed markets are in trouble; therefore, you need exposure to emerging markets.”

“I found myself in a somewhat ironic position,” says Chris, “because I am usually a big fan of emerging markets. But I am less a fan at this point because the flood of liquidity the central banks of the U.S., the EU and Japan have created wound up in Asia and other emerging markets.

“What happens when those flows reverse because interest rates move higher? You get a crisis.”

It’s happened before: Rising rates in the U.S. starting in 1994 ultimately set off the “Asian contagion” of 1997. Ray Dalio, who runs the giant hedge fund Bridgewater, recently said, “We are going to have an emerging-market crisis.” He pointed to a chart in The Economist measuring 26 countries’ vulnerability to a sudden outflow of capital…

“If (or as) U.S. interest rates climb,” Chris explains, “money could get sucked out of these places and head back to the U.S. That will create big problems for the most vulnerable emerging markets. (And it will create problems for the U.S. too, mostly of the inflationary variety.)

“I will continue to look for and explore emerging markets for great ideas,” Chris concludes. “But the bar is high.”

[Ed. Note: In the meantime, Chris has looked homeward for his favorite opportunity of the moment — something we’ve come to call “Chaffee royalties.” The paychecks they deliver can be staggering — turning every $1 invested into as much as $50. But as we’ve said before, opportunities like these can disappear as quickly as they open up… so you’d do well to check it out while you still have the chance.]

  Gold has given up more than half the gains it racked up on Wednesday. At last check, the bid is down to $1,340. Silver’s hanging onto $22 by a thread.

But gold analysts surveyed by Bloomberg are their most bullish in three weeks after the Federal Reserve’s no-taper call: Among 26 analysts, 16 expect gold to rise next week, five expect it to fall and five are neutral.

“The Fed has realized that any attempt to reduce or eliminate quantitative easing will lead to a surge in interest rates,” said Jeff Sica of Sica Wealth Management. “There will be ongoing currency devaluation both in the U.S. and around the world. I anticipate significant fundamental strength in the price of gold in the near term.”

  “Greg Guenthner is good at talking about gold in dollars,” a reader writes, “but is not good at talking about dollars in gold.”

[At least he’s not calling Greg the Antichrist…]

“If he were just telling people when they would have the best chance to get more, then that would be a good thing. If he clearly differentiated between gold in your hands and other gold, then I would not be writing this letter.

“If he clearly stated that there are at least two conditions to be placed on his advice – 1) How much gold (and/or silver) you already have. If you don’t have any, then start buying today and buy more if the price goes down. 4 2) You never sell gold that is in your hands, and you should never own any other gold.

“I have been reading you since your start. Greg does not understand what is going on in the world, and he is making you look like you don’t either. Gold is insurance, and it is protection from thieves.”

The 5: “These guys keep wanting to get into ideological arguments,” Greg tells us via instant message. “Funny, they’re not mad when I tell them the price is going to go up.”

It’s not that Greg lacks sympathy for the gold-as-insurance case. But he is first and foremost a watcher of price action, agnostic toward every asset class, observing the technicals objectively for clues.

“It’s clear that gold remains in a tight space right now,” he writes this morning. “Gold futures slipped a bit after St. Louis Federal Reserve Bank President James Bullard told Bloomberg that we could possibly see an October taper. Yeah, that’s right — the taper talk isn’t going to go away anytime soon…

“Plus, even after this week’s big move higher, gold’s rising channel that formed in July and August remains broken. So I’m not completely sold that this new move will materialize into something more just yet. In the short term, I think gold futures will dance between $1,300-1,375.”

  “Once I took your advisories seriously,” a reader writes after yesterday’s episode. “Today, I do not. It appears you have lost common sense across the board.

[Sheesh, we can’t catch a break today…]

“Bernanke’s latest announcement is nothing more than telling the world that debt ceilings do not matter, that the central bankers are in control of a nation’s fiscal affairs and that the banks print the money and so will keep on doing so, since they get more and more of the real and certified assets of the nations involved, and essentially, they own them — the nations, people and everything!

“Wake up! We are all cogs in a giant wheel that controls everything through exchanges and transfers, and those that own the machines that do that work now are in charge of our lives, no matter where we go!

“We have been looted, and all we have left is technology… the cloud, as the techies call it. There are no physical assets, only contracts with myriad small producers. No machinery, no real estate, nothing but billions of bite entries that appear on paper and can disappear too. This has been augmented with something called the social media, and guess how it is evaluated and sold to the public. Whoops! We have been looted in great style, and you don’t even know it!

“You are all zombies.”

[Ooh, that stings…]

“No wonder Bonner et al. have taken off for the mountain vastnesses of third-world nations already reduced to penury.

“What happened in Argentina, in the Isthmus, in Chile, Brazil, Mexico is going to happen again! Just like it is happening here again!”

The 5: Huh? We somehow missed the part in which we heartily endorsed the Fed’s actions on Wednesday. Or any other time.

Rest assured, when we engage in satire, we go all out.

Have a good weekend,

Dave Gonigam
The 5 Min. Forecast

P.S. As of the close yesterday, Options Hotline readers were already up 50% on Steve Sarnoff’s most recent recommendation — not bad after only three days.

But we’ll make you an even bigger promise — that Steve will deliver at least one money-doubling play in the next 60 days. If it doesn’t happen, it’s worth $1,000 to you. Details here.


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