- Cue the end-of-the-world headlines now that “repeal and replace” is dead
- How the death of Obamacare reform could be a blessing in disguise — for Trump and the market
- Colorado prepares an end-run of federal marijuana law… just in case
- A gold coin that’s impossible to pawn just got stolen
- What’s the meaning of “health insurance” in the first place?
Well, it’s not as if we couldn’t anticipate the crepe-hanging headlines this morning…
“Trump Risks Losing Wall Street’s Faith After Health Care Failure” (Financial Times)
“Health Care Defeat Rattles Markets in Sign of Loss of Confidence in Trump” (NBC News)
“‘Trump Disappointment Trade Is Now in Full Swing’ — Analysts on Global Stock Sell-Off” (MarketWatch).
We interrupt this dirge of disappointment to note that as we write… the Dow industrials have shed 144 points and rest at 20,453. That’s not even a 1% move on the day — such as happened last Tuesday.
What’s more, the Dow is down a whole 3.14% from its all-time high on March 1.
Most remarkable of all: The Dow is still up 11.6% since Election Day.
And on what basis? Certainly, it’s not fabulous growth in corporate earnings. Nor is it because we suddenly have a rip-roaring economy again.
No, it’s because of anticipation that a Trump presidency would lead to fabulous growth in corporate earnings and a rip-roaring economy. Judging by the headlines, the Dow ought to be giving up at least half of its post-election gains and sit at least 1,000 points lower than it does right now.
What if the demise of Obamacare repeal turns out to be a blessing for Trump?
We’re not saying it is… We’re just entertaining the possibility and then teasing out what that means for the markets.
“It’s worth remembering,” writes Daniel McCarthy at The National Interest, “that health care policy has haunted both of Trump’s immediate predecessors, even after they succeeded in passing their bills.
“The Medicare Part D expansion under George W. Bush permanently damaged his relations with tea party-style conservatives — indeed, it damaged the entire Republican establishment’s relations with them — while Obamacare politically backfired and gave Republicans control of Congress mere months after it was passed. With policy successes like these, a president might well wonder whether defeat is preferable.”
Maybe that’s the reason Trump is so quick to wash his hands of the matter.
“It’s near-impossible to discern somebody’s true motive,” writes political reporter Michael Tracey, “but put it this way: Can you imagine a President Ted Cruz shrugging his shoulders and conceding that Obamacare will remain in effect for perpetuity — just because of one legislative defeat?
“Though we can never know for sure, it’s reasonable to infer that Trump saw this affair as an opportunity to ‘throw a bone’ to Paul Ryan for the sake of intraparty cohesion, and then, once it (inevitably) blew up, pin him with the blame. Consequently, Ryan’s station is weakened, and Trump can argue that following the ‘Ryan agenda’ rather than the ‘Trump agenda’ is a recipe for disaster — legislatively, but also politically, as the ‘Ryan agenda’ is exceedingly unpopular and favored disproportionately by GOP elites, on whom Trump did not rely for victory last fall.
“In fact, Trump won partially as a rebuke to those very elites. He, as well as Steve Bannon, presumably recognize this.”
Assuming the foregoing is true, Trump’s hand is strengthened as he moves on to his next priority, tax reform.
We reiterate what we said Friday: There’s no hope for overhauling personal income taxes; Democrats will put up resistance over a “giveaway for the rich.”
But when it comes to corporate income taxes, there’s bipartisan agreement something needs to change. Corporate America has parked as much as $2.5 trillion overseas to avoid a corporate tax rate that’s the highest in the developed world. “I think we have momentum,” says Rep. Kevin Brady (R-Texas), chairman of the House Ways and Means Committee.
Imagine what happens if all that money abroad is brought home.
Around here, we’ve done more than imagine. We’ve been running the numbers since October, poring over previous episodes of corporate tax reform. The objective — develop a proprietary trading formula to maximize the profit potential.
That research is now ready for your review. It points to the possibility of turning every $1 invested into $2,872.
Here’s the thing: If you want to position yourself for maximum gains, you don’t want to wait for Congress to act. You want to move within the next three weeks… for reasons that will become clear when you follow this link.
As the day wears on, the Dow has slashed the morning’s losses in half. At last check, the Big Board is down only one-third of a percent, at 20,531. Don’t those headlines above look increasingly silly?
Bonds and gold are both rallying, as they did on Friday. The 10-year Treasury note yields 2.38%. The bid on gold is back above $1,250 for the first time in a month. Most of that strength can be chalked up to dollar weakness; the dollar index is creeping down toward 99 for the first time since mid-November.
Heh… Colorado lawmakers are drawing up a worst-case-scenario plan just in case the feds crack down on recreational marijuana.
We’ve been saying for months the feds won’t enact such a crackdown. And a few days ago, we cited Attorney General Jeff Sessions himself, admitting the feds don’t have the resources to do so: “We’re not able to go into a state and pick up the work that the police and sheriffs have been doing for decades.”
But just to be on the safe side… “A bill pending in the [Colorado] legislature would allow pot growers and retailers to reclassify their recreational pot as medical pot if a change in federal law or enforcement occurs,” says The Associated Press.
The Trump administration has left no ambiguity about medical marijuana: It will not interfere. Problem solved.
State revenue would take a hit under that worst case: “A switch would cost the state more than $100 million a year because Colorado taxes medical pot much more lightly than recreational weed — 2.9% versus 17.9%.”
But revenue is no longer the point, says one of the bill’s sponsors: “If there is a change in federal law, then I think all of our businesses want to stay in business somehow,” says Republican State Sen. Tim Neville. “They’ve made major investments.”
[Ed. note: Whether the Colorado bill passes is still an open question. But there’s a more immediate catalyst for the cannabis industry coming up in just two more days. Based on previous similar catalysts, the profit potential runs as high as 1,810%. But you’ll want to act no later than midnight Wednesday night.]
We’re not sure if it’s ingenuity or sheer daring… but either way thieves in Germany made off today with giant gold coin.
The 2007-issue Canadian Maple Leaf has a diameter of 20.9 inches, weighs 221 pounds and at current gold prices is worth about $4.5 million. Its purity is such that it made the Guinness book of records. And somehow it disappeared from the Bode Museum in Berlin.
The “Big Maple Leaf” housed at the Bode Museum — before it was stolen, that is…
Police say the thieves snuck in through a window around 3:30 a.m., broke into the cabinet and made off before police arrived. The only clue police have to go on right now is a ladder that turned up near some train tracks nearby.
Must be some kind of underground demand for this coin, because it’s not the easiest thing in the world to pawn off…
“No matter how much you ‘try’ to be nonpartisans, it is very obvious to see you are Republican Trump supporter,” begins today’s mailbag.
“Seems like your prediction of big tax cut of rich people and corporations may not pass either. Politicians have tried for 30 years without success. What make you think Trump can change that? His connection to Russia is mind-boggling.”
The 5: RussiaRussiaRussiaPutinPutinRussiaPutin…
Look, we’re just reading the tea leaves as best we can. We said for much of late last year and early this that large portions of Trump’s agenda didn’t have a prayer of being enacted. Then we got emails from Trump fanboys demanding we “Get on board with our president!”
Now we’re seeing the possibility that the failure of Paul Ryan’s “Obamacare Lite” bill might, ironically, clear the way for corporate tax reform… and we’re hearing it from the other side.
That’s OK. We’ll just keep calling ’em as we see ’em. We’re not in the business of making people feel good about their politics; we’re just looking to help our readers make money.
“Your ‘bold reader’ on Friday seems to speak from the perspective of someone who has never tried in vain to buy private health insurance (prior to ACA) while having a pre-existing condition,” a reader writes.
“Or having a child suffering from a pre-existing condition. Once a person (or their family) travels down that path, their view changes dramatically. He is an ignoramus. Many times a person’s health needs are based on chance, not on bad health decisions. Ask any parent of a Down syndrome child. Or a child with cancer.
“If health care pricing were easily ascertainable and paid for by each individual directly to the provider (as opposed to being skewed and obscured by third-party health insurers), his argument would have more validity. There are currently far too many middlemen (between a patient and his doctor) with profit motives in our health care system.”
“The premise of insurance,” writes another, “is that a large group of people club together to pay for the misfortunes that a few of their group will suffer.
“If you have a horror of subsidizing someone else, should they need help, then never buy insurance and completely fund your own health care, no matter how much it costs you.
“While I do think people should be responsible for keeping fit and eating healthily, things come out of left field. I had a friend in San Francisco who was driving to work on the Golden Gate Bridge when a car crossed the center divide, hit him head-on and caused horrendous injuries, necessitating the removal of his spleen and patching up other major organs. Had he not had insurance, he and his family would have been financially devastated for life.
“The reader is arrogant and selfish and has made an illogical comparison to justify a lack of human kindness.”
The 5: At the risk of putting words in the mouth of Friday’s reader, we daresay he wasn’t arguing that everyone self-insure and those who can’t are out of luck.
Indeed, the whole point of insurance is that it covers high-cost but low-probability events like that crash. But in the present day and age, people have come to think “insurance” means a free doctor visit for a routine case of the sniffles. And yes, third-party payers do obscure price transparency. But that’s a story for another time…
“You got two out of three right,” says a reader in response to our own remark on Friday that “’separating health care from medical insurance’ would deprive the insurance companies, Big Pharma and the hospitals of the vigorish they extract from us, however indirectly.”
“Reigning in insurers and pharma costs would go a long way. The other is revision of tort law that makes the delivery of health care more expensive. There have yet to be actions taken regarding these three areas that would make health care more affordable. Quite the opposite with the insurance companies writing ACA verbiage. Until all three operate differently, how can we achieve better, affordable health care?”
The 5: Well, yes. But too often, “conservatives” have argued over the years that the only thing wrong with the pre-Obamacare health care system was “out-of-control lawsuits” — as if fixing that would be a panacea for everything else.
Oh, well, we’ll never solve the problem here…
Best regards,
Dave Gonigam
The 5 Min. Forecast
P.S. Now that Obamacare reform is a dead letter and the president says he’s willing to let the system collapse under its own weight… what can you as a health care consumer do?
It might surprise you to learn you’re not helpless. Our Laissez Faire team is hard at work on an updated series of reports revealing legal solutions to get around Obamacare’s worst obstacles. Watch this space for updates…
