Morning Report

Posted on January 5, 2012 by Brent Nyitray

Vital Statistics:

Last Change Percent
S&P Futures 1267.7 -5.3 -0.42%
Eurostoxx Index 2334.3 -15.590 -0.66%
Oil (WTI) 102.93 -0.290 -0.28%
LIBOR 0.5825 0.000 0.00%
US Dollar Index (DXY) 80.661 0.530 0.66%
10 Year Govt Bond Yield 2.00% 0.03%

Markets are down slightly on a couple of lukewarm bond auctions in France and Hungary. This also begins pre-announcement season, where companies who are going to miss their quarterly numbers fess up. Today’s names: Tesoro, J.C. Penney, and Eli Lilly.

Initial Jobless Claims continued their 375k a week pace, lower than the 400k pace we had been accustomed to. The ADP number was way better than expected, forecasting 325k jobs being created in December, vs expectations of 178k.

The Fed released a white paper yesterday discussing the US housing market and possible policy responses to it. I have not read it yet, and I will give you my take when I have finished it. They do suggest that the GSEs relax refinancing guidelines, and that the government find a way to encourage foreclosures to be turned into rental properties. Anecdotally, here in the Northeast, I do find that banks are very reluctant to move off of their offering prices in short sale situations, which signals they know something is in the works.

Today is the first Thursday of the month, which means retailers are giving their comp sales numbers. The winners: Macy’s, The Limited, Zumiez. Losers: J.C. Penney, Target, Kohl’s, The Gap, and American Eagle. Margin pressure continues to signal that the consumer is very value conscious and that promotional activity drove sales.

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Kindness and Understanding and Cruel Smirks, Mockery, and Open Scorn

Posted on January 5, 2012 by nsullivan12

In light of Iowa, and the general tenor and direction of the GOP race for the nomination, and
for that matter the general tenor and direction of the party as a whole, the Tea Party deserves kindness and understanding and a dismissive and cruel sneer.

The Tea Party should be forgiven. Our endeavors often come to nothing
and it becomes apparent that our our efforts were ludicrous from the start. Life is like that. For that reason, the Tea Party deserves kindness and understanding. As do we all.

And after all the bluster, all the talk, after all the risible history lessons (that is to say after all the strange, crackpot accounts of historical events), after all the comical claims to have, God knows how, privileged access to the consciousnesses of “the founders” and to know all their wishes for us, their progeny, after all the nonsense about “socialism”, after all the excuses
for, confusingly, not manning the barricades when a Republican president was spending, after prattling on and on about smaller government while guarding medicare like a rabid, starving, snarling cur protecting a bone with a scrap of meat clinging to it, after all
that, the Tea Party deserves cruel smirks, mockery, and open scorn.

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Bits & Pieces (It’s Hump Day And I Got Nuthin’)

Posted on January 4, 2012 by Kevin S. Willis

We need more people to post here. I got writer’s block or something. 😉

The perfect epitaph. — KW

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Health Care Headlines

Posted on January 4, 2012 by ashot

I wanted to put this post up last week, but got distracted by work and my one month old son (he’s great by the way). So some of this is a week or two old and I don’t have much time to add a bunch of analysis, but I thought some of these may provoke some discussion or just be informative to those who are interested.

The American College of Physicians encourages physicians to take into account the cost-effectiveness of their treatment decisions. In their ethics manual (which you can access for free), the ACP does more than just argue that physicians should take into cost effectiveness with regard to exposing patients to excessive, unnecessary or potentially harmful treatments. The manual encourages physicians to think about how cost effective care can increase the availability of health care to more people. Now I’m all for more cost-effective health care, but I’m not sure I want my physicians worrying about how a treatment they are ordering for me may somehow reduce health care resources available to the community as a whole.

USA Today recaps some of the provisions of the ACA that have already had an impact. It’s not exactly a critical look at the law (OK, it’s pretty much a puff piece), but the government’s success in fighting fraud has gotten more attention lately and the article leads with that aspect of the ACA. While the Obama Administration deserves some credit for the crackdown on fraud, I would also point to the increased use of electronic medical records as a reason for the increase in fraud prosecutions.

The Washington Post has a depressingly humorous article about doctors complaining that the Medicare “doc fix” was closer to becoming a reality than ever. So they’re complaining that the perpetually scheduled reimbursement cut that they know Congress will never pass was closer to passing this time than in the past. Boo-freaking-hoo. The refusal of Congress to pass the cut in physician reimbursement under Medicare is of great amusement to me and NoVa, but it’s emblematic of why we need to fundamentally change our health care system.

The Detroit Free Pressdiscusses all the merger activity between solo hospitals and larger health systems. One of the criticisms of the ACA and programs like ACOs was that they would lead to mergers which would lead to less competition and higher prices. To a large extent mergers were occurring before the ACA so it’s a bit difficult to determine to what extent the ACA increased that activity. It’s also difficult to determine whether or not the mergers will lead to higher prices. The argument that they won’t is that consolidation will lead to increased efficiency which will lower health care spending. It remains to be seen whether or not one or both of those theories will be true.

Lastly, here’s a link to the government’s anti-trust complaint against Blue Cross Blue Shield of Michigan (BCBS). It provides an interesting (albeit one-sided) read. As a brief summary, BCBS entered into most favored nation (MFN) agreements with hospitals throughout Michigan that required the hospitals to charge other insurers as much or more than they charged BCBS. Since BCBS has such a large share of the insurance market here in Michigan that made it hard, if not impossible, for some insurers to compete. And obviously it drove prices up for everyone, including BCBS. Both Michigan and the Feds are in on the suit and several private insurers have filed similar suits.

Filed under: health insurance, healthcare | 20 Comments »

Morning Report

Posted on January 4, 2012 by Brent Nyitray

Vital Statistics:

Last Change Percent
S&P Futures 1267.9 -4.2 -0.33%
Eurostoxx Index 2356.76 -33.150 -1.39%
Oil (WTI) 102.41 -0.550 -0.53%
LIBOR 0.5825 0.000 0.00%
US Dollar Index (DXY) 80.052 0.389 0.49%
10 Year Govt Bond Yield 1.94% -0.01%

Markets are giving back some of yesterday’s gains on a slow news day.

The Fed announced yesterday that they will be more transparent in forecasting interest rates in the future. The ironic thing is that when I studied money and banking way back in the day, the view was that if the market perfectly anticipated Fed policy, it would be ineffective. The Fed had to surprise the market for policy to have its full effect. I believe this will probably be temporary – the Fed knows it has to extricate itself from the financial system and that rates eventually have to go up. The Fed is going to ensure that increases are well-telegraphed and that people have ample time to adjust.

Not a lot of economic data this morning. We will have jobless claims tomorrow and payrolls / unemployment on Friday.

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Bits & Pieces (Tuesday Night Open Mic)

Posted on January 3, 2012 by Kevin S. Willis

TED Talk: How Healthy Living Nearly Killed Me.

That’s it for tonight! I ain’t got much, sorry to say. — KW

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Everyone should enjoy this…for one reason or another.

Posted on January 3, 2012 by ScottC

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Morning Report

Posted on January 3, 2012 by Brent Nyitray

Vital Statistics:

Last Change Percent
S&P Futures 1272.5 19.9 1.59%
Eurostoxx Index 2362.18 -8.020 -0.34%
Oil (WTI) 101.13 2.300 2.33%
LIBOR 0.5825 0.002 0.26%
US Dollar Index (DXY) 79.786 -0.494 -0.62%
10 Year Govt Bond Yield 1.95% 0.07%

Markets are rallying on thin volume as market participants focus on a lack of bad news out of Europe. Sovereign yields are slightly higher across the board. Investors may also be taking a view that the ISM report (due at 10:00 am) will be better than expected.

On the “glass half-empty” side of the ledger, the WSJ has an article on Bridgewater’s view on the economy – and it doesn’t bode well. Money quote:

“What you have is a picture of broken economic systems that are operating on life support,” Mr. Prince says. “We’re in a secular deleveraging that will probably take 15 to 20 years to work through and we’re just four years in.”

In Europe, “the debt crisis is [a] long ways from over,” he says. The economic and financial morass will mean interest rates in the U.S. and Europe will essentially be locked at zero for years.

Dalio is long gold, Asian emerging market currencies, and high quality government bonds. The article goes on to say that they believe there is money to be made in US Treasuries. That is a defensive portfolio.

The NYT has an article discussing the dismal state of the US consumer. The article echoes the Bridgewater piece that debt remains a headwind for the US economy. This analysis isn’t new – economists have been talking about it since the crisis began. But how much progress has been made in consumer deleveraging? A couple charts suggest that things are not as bad as it seems.

Chart: Consumer Debt as a percent of GDP:

The above chart shows the progress being made in deleveraging, but it ignores one huge issue – what determines spending – the amount you owe or the amount you pay? Lower interest rates have allowed homeowners with equity to refinance at much lower rates. If you look at debt service – the amount people actually pay – it is down quite a bit.

Chart: Ratio of Debt Service Payments to Disposable Income:

While the dour mood of the job market will undoubtedly influence consumer spending, low interest rates have at least increased borrowing capacity, which may come into play when the consumer’s mood shifts.

********EDIT:

ISM is in, better than expected (53.9 vs 53.5 expected). Good manufacturing report. Best news: bit jump in employment, rebounding back to Spring levels. Construction Spending was also up 1.2%, better than the .5% estimate.

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Bits & Pieces (Monday Night Open Mic)

Posted on January 2, 2012 by Kevin S. Willis

Medical technology innovations to look forward to in 2012 and beyond.

The places where we’ve got to warn people not to dive. It’s getting crazy, people!

That’s an interesting way to air condition your car.

Even princesses can get fed up.

That’s it for today! — KW

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If This Is The Best We Can Do, We Deserve to Lose

Posted on January 2, 2012 by Kevin S. Willis

From Ace of Spades (yes, McWing, again), talking about the GOP and the upcoming election: If This is the Best We Can Do, We Deserve To Lose.

Our choice is coming down to whether we want to run the car over the cliff at 120MPH with Obama or whether we want to clip along at a leisurely 60MPH with the eventual GOP nominee in the driver’s seat for that final launch over the edge.

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