January 23, 2014
- 6.3 million: Another number indicating Obamacare is “unsustainable”
- Markets in a tizzy, media fumble about for answers
- Beyond the cold weather: Guenthner digs into a natgas rally
- Byron King identifies winners and losers from a strike in South Africa
- Shunning Big Oil just like Big Tobacco… Homeland Security overkill (say it ain’t so!)… “making idiots of ourselves”… and more!
So… 115 days into the Obamacare signup process, here’s a scorecard…
Yep… 2.2 million people have signed up for “private” insurance on the exchanges since Oct. 1. But nearly three times as many people have ended up on Medicaid or the Children’s Health Insurance Program (CHIP). Before the signups began, just over 60 million people were covered by Medicaid.
Not all of that 6.3 million Medicaid total on the scorecard can be chalked up to people who went to an exchange website; some of them might have simply renewed existing coverage.
Also at work, according to Reuters, is “what health care policy analysts call an ‘out-of-the-woodwork effect,’ in which people who heard about Obamacare sought to obtain health insurance and discovered that they had qualified for Medicaid even before the law expanded eligibility.”
But those are trifling details. The core of the matter was captured in our virtual pages three months ago by former Medicaid director Gail Wilensky…
“Either the private insurance enrollments come up somewhere around the expected amount or there’s going to be a problem,” she said. “You need a volume and you need a mix of people that are healthy, as well as high users in private insurance, in order to have it be sustainable.”
Once again, we’re seeing real-time fulfillment of our friend Jud Anglin’s forecast months ago: Obamacare is built to fail — an intermediate step designed to pave the way to a full-on Canadian-style system.
But buried within the Affordable Care Act’s 906 pages is a three-word loophole that affords you the chance to avoid the legislation’s worst effects — to “opt out” of Obamacare, as it were. And the best time to jump on it is now, early in the tax year. No time like the present to follow through.
Markets are in a tizzy this morning on news of Justin Bieber’s DUI.
We mock the media’s perennial quest for instant explanations of inscrutable market moves. “U.S. stocks lower as factory data disappoints,” says a CNBC alert today, an oh-so-typical example of the genre. And it’s true, the “Flash PMI” numbers from both the U.S. and China are lower than expected. Elsewhere, the retail numbers filtering in continue to look weak.
But the reality of the frenzied trading is more prosaic: “This is a symptom of everyone jockeying for position at the start of the new year,” says our Greg Guenthner.
Boring, we know. In any event, let’s survey the landscape as we write…
- The Dow is down more than 175 points, below 16,200. All the major indexes are down about 1%
- Treasuries are rallying, the yield on the 10-year down to 2.81% — a 6-week low
- Gold has likewise rallied to a six-week high at $1,259. And only about half of that move can be chalked up to dollar weakness
- The dollar index is down nearly 1%, to 80.6
- Crude is up to $97.28, its highest level so far in 2014.
And then there’s natural gas. “Winter storm Janus is bringing the heaviest snowfall of the season — and some of the highest natural gas spot prices ever — to the northeast United States,” says The Christian Science Monitor.
Oh, God help us, other media outlets are picking up on The Weather Channel’s asinine practice of naming winter storms after Roman gods and such. Although we spotted this instance of epic fail by The Weather Channel’s graphics department…
That’s where you can put your polar vortex…
“Natural gas prices jumped more than 5% during yesterday’s session, pushing prices to levels not seen since late 2011,” interjects the aforementioned Greg Guenthner, before today’s episode of The 5 goes completely off the rails. “This morning, it’s close to cracking $5.
“Sure, the cold temps are behind the big surge in natural gas prices this week. But what’s really important right now is the long-term chart:
“This bullish move will launch gas into an even sharper uptrend as it continues to break out of its post-financial crisis funk. If you’re looking to play this monster move, you can always check out the United States Natural Gas Fund (UNG). Don’t chase. Instead, look to buy the dips to play the longer-term trend.”
Or you could play the even more attractive short-term natgas play Greg recommended to his PRO-level readers of The Rude Awakening. For access to plays that deliver weekly gains of up to $4,950, look here.
“There is an unmistakable fear permeating this conference,” says Breakthrough Technology Alert editor Stephen Petranek — reporting again today from the World Future Energy Summit in Abu Dhabi.
As he noted yesterday, oil sheiks are showing up in Mercedes with V-12 engines — the gas-guzzling equivalent of a beer bong — to listen to speakers discuss energy that doesn’t come from fossil fuels.
“They are here in a serious frame of mind,” says Stephen, “to take in speakers, like economist Jeffrey Sachs, director of the Earth Institute at Columbia University, who tell them that they have already pumped too much oil and that if they don’t stop soon, much of their country will disappear under the rising Persian Gulf that surrounds us.”
That speaks to the “fear” Stephen senses, “a fear that is whispered intently among delegates and visitors but rarely referred to from the stage as do-good speaker after do-good speaker suggests that we must move far more quickly toward clean and safe energy. The elephant in the room is that before long, the world may decide that oil and the Exxon Mobils and Shells and BPs that promote and produce it will be seen as pariahs not unlike Big Tobacco and the executives who marketed it to teenagers when everyone knew it caused cancer.”
As one venture capitalist put it to Stephen over breakfast, “In what will seem in retrospect like a single moment, the world could turn on the oil producers and start penalizing them with punitive taxes the way it did with tobacco producers.”
Stephen again: “If that were to happen and utilities and governments were to move even faster toward sustainable solutions, especially solar, the stocks of many of these companies would soar.” Rest assured he’ll keep his ear to the ground…
Gold is up big today, but platinum is up big over the last month, as a miners’ strike looms in South Africa…
Yesterday, the CEOs of the world’s top three platinum producers issued a rare joint statement — accusing South Africa’s big mining union of making “unaffordable and unrealistic demands.” If the union follows through on a strike next week, half of world platinum production will go offline.
“The ‘strike season’ tends to be in the fall,” says our natural resource maven Byron King, “so this comes unexpectedly to outsiders. But insiders saw this coming, apparently…
“It’s not a ‘make or break’ for the auto industry,” Byron adds, “if they’re selling $30,000 vehicles with perhaps $300-1,000 of platinum and palladium in the catalytic converters and see a 10-15% change in the value of the metal.
“Still, it’s enough to change the economics of platinum and palladium players outside South Africa in terms of attractiveness, risk profile and economic underpinnings.” Readers of Byron’s Energy & Scarcity Investor should eye their inboxes for a new idea to that end soon.
From the “Don’t You Feel Safer Now?” Department — the feds’ questioning of a man wearing Google Glass in a movie theater.
Last Saturday, agents from the Department of Homeland Security descended on the AMC Easton Town Center 30 cineplex in Columbus, Ohio. A manager had spotted a patron wearing Google Glass — the goofy-looking Internet-connected “glasses” gadget — and called in the feds, just in case he was committing an act of piracy. (The feds determined he was not, and let him go, but only after exhaustive questioning.)
Bonus points: The guy was watching a spy movie, Jack Ryan: Shadow Recruit.
“Has it really come to this?” writes Annalee Newitz at io9. “United States citizens’ tax dollars are being spent on detaining somebody for over three hours because he might have been about to post a s****y Glass video from some dumb movie online. Shouldn’t DHS be dealing with important things like — I dunno — disaster response and national security? And shouldn’t the movie industry pay for its own damn anti-piracy patrol?
“Oh, and FYI, the detainee wasn’t actually recording the movie. In fact, the record function on his device was turned off. Thank goodness because now our nation is safe.”
“You’re making idiots of yourselves,” writes a reader who clearly takes exception to his fellow reader’s disparity rant on Monday.
“Eighty-five people in the world own more wealth the one-half of the world population. That is not free enterprise. It is not capitalism. That is corruption at the highest levels. You are totally ignorant to even talk of the issue. It would be wise to consider Ms. Antoinette. You could be branded with the same brand.
“‘Tis the middle class that will come for those that have antagonized them. They may have only ropes and pitch forks, but there are many, and they can read, and they will remember those that crossed them.
“Please let up on your nonsense about no income disparity. You being rude, obnoxious, showing callous indifference, meanness, lack of mercy and cruelty.
“In addition to demonstrating provincialism, a general coarseness, vulgarism and inhumanity to your fellow man, you are being stupid.
“Now to see if you can take a hint or if you’re so full of hubris you continue to demonstrate your uncivilized behavior.”
The 5: Yikes.
Is everyone who has an opinion on this issue in the George W. Bush mindset, incapable of “doing nuance”?
We can’t speak for the reader on Monday, but for our part, we’re keenly aware that 90% of American families have seen a decline in inflation-adjusted income over the previous decade. As we pointed out last month, a rising tide is no longer lifting all boats.
As Marc Faber explained, a decade-plus of Federal Reserve bubbles has done nothing to boost the real incomes of most people — but has done a great deal on behalf of the top 1/100th of “the 1%.”
The problem, as we showed last week, is that the 1/100th crowd — the bunch having a swell time this week in Davos, Switzerland — is the one most dangerous to your own wealth if you own a small business and/or belong to the upper-middle class. Soros and Buffett have extensive vehicles with which to dodge the tax man, and they always will. You do not, and the prescriptions to remedy “income inequality” will fall hardest on you while they don’t feel a thing.
But hey, thanks for invoking the headless ghost of Marie Antoinette, and your ham-fisted attempt to put us in the same company. It’s a healthy reminder that during the Reign of Terror, the passion of the mob was so inflamed that once the beheaders ran out of aristocracy… they started guillotining each other.
“All right, an admitted rookie has entered the fray!” writes one of our regulars after we welcomed a newbie yesterday.
“Dave, that was a nice welcome, but as a longtime reader and occasional contributor, may I offer her some words of wisdom? Let the games begin!
“No, in all seriousness, I think that she will find that this is, and I quote Dave: ‘You’re in limited, but good, company!’ Great company, I might add! Not just your subscribers but Agora and its publications. I’m hooked on some of them and keep getting tempted by others. Also, The 5 is well worth the price of admission, and Dave allows us subscribers to sound off and add rebuttal and answer questions. I look forward to each issue.
“I really look forward to when subscribers sound off on each other and then Dave comes up with feral hogs and tapers (or is it tapirs?). Let’s let the new reader figure that one out…
“Enjoy your new subscription, welcome to the club and read your 5. I do! Thanks, Dave.”
The 5: Aw, don’t scare her off with the feral hogs in the first week!
Cheers,
Dave Gonigam
The 5 Min. Forecast
P.S. OK, so the NSA’s tireless efforts to vacuum up your phone records have done nothing to stop a terrorist: That was affirmed yet again yesterday by an independent government panel.
From its report: “We have not identified a single instance involving a threat to the United States in which the telephone records program made a concrete difference in the outcome of a counterterrorism investigation. Moreover, we are aware of no instance in which the program directly contributed to the discovery of a previously unknown terrorist plot or the disruption of a terrorist attack.”
Which is not say the NSA’s “predictive analysis” is entirely useless. In fact, one of our own analysts has in effect “hacked” the NSA’s techniques to predict the market’s moves with an accuracy rate of 86.7%.
Yes, you can put this strategy to work in your own portfolio. Learn how it works and how you can benefit, right here.