Obamacare ‘Lite’ Weighs on Washington, Wall Street

There was only one story on Washington and Wall Street today, and it was the fate of the Trump/Ryan healthcare bill in the House of Representatives.

Well, after plenty of horse trading and sausage making by the White House and members of Congress, it appears that the game is over for this bill, at least for now.

And, that means that the hopes of dismantling Obamacare also are now shelved.

The real news came to a head with about 20 minutes left in the trading session. That’s when House Republican leaders officially canceled a planned vote on the bill. They effectively pulled the proposed legislation, as the "yes" votes were not there to ensure its passage.

Just after the market closed, Speaker Paul Ryan held a press conference. He addressed what can only be described as a big defeat for his leadership, and for President Trump.

To put an exclamation point on the issue, the Wisconsin Republican said:

"Obamacare is the law of the land; it’s going to remain the law of the land … We’re going to be living with Obamacare for the foreseeable future."

I guess seven years wasn’t enough for Paul Ryan and his fellow Obamacare opponents to come up with a palatable solution to a law that many Americans are extremely unhappy with.

Image Credit: themoderatevoice.com

Now that the Obamacare issue is basically off the table, what’s next for the Trump agenda?

Well, the silver lining here is that the administration has signaled it will now pivot to the more-important issue, at least from Wall Street’s perspective. And that is corporate tax reform.

In his presser, Ryan said as much. However, the Speaker acknowledged that getting things done will be a challenge from here, saying:

"Yes, this does make tax reform more difficult. But it does not, in any way, make it impossible. We will proceed with tax reform."

Judging by the market’s short-term reaction to the news, the pivot to tax reform might be just what the doctor ordered.

After it become clear the bill was shelved, the Dow went from being down more than 100 points to being essentially flat. When the final bell sounded, the Dow was off 59 points.

For investors, and for those of us tasked with helping investors navigate the markets, next week is going to be very interesting.

Will Wall Street get nervous and effectively call off the Trump rally?

Or, will a pivot to tax reform remove the healthcare unknown, and help generate even more optimism on the economic front?

The world will soon find out, and we’ll be here to put it all into context for you.

***

Regarding Obamacare and the entire healthcare issue, readers Tony and Kay D. wrote in with a great perspective on this issue:

Brad, consider: You work for me. I call you in and tell you that come the first, I’m gonna give you a 10% raise. Come the first, I give you a 10% raise. It’s expected, and while pleased, you are not particularly excited.

Strike that. You work for me. I call you in and tell you that come the first, I’m gonna give you a 5% raise. Come the first, I give you a 10% raise. It’s not expected, and you are quite pleased.

Strike that. You work for me. I call you in and tell you that come the first, I’m gonna give you a 20% raise. Come the first, I give you a 10% raise. It’s unexpected, and you are not happy. Matter of fact you’re quite disappointed — probably angry.

Here’s a lesson in life from an old man. It’s not what you get that makes you happy/unhappy; it’s the difference between what you get and what you expect. Note that above, it’s the same 10% raise in all cases.

What’s the point?

Well, for a few generations, we’ve been giving various folks/groups free medical, free food, free cash, free housing, free education, etc. I see that stopping in the near future. Those folks ain’t gonna say, "Gee, it was good while it lasted." They are gonna be quite disappointed — and angry. They are gonna DEMAND their "free stuff." Think about it.

Brad response: I have thought about this, and I agree. It’s very hard to take away a government program that gives benefits to millions of citizens. Trying to do so inevitably leads to anger, fear and cries of unfairness.

That’s why so much government is so pernicious. It trains us all to rely on the nanny state. And when the nanny state needs to be reformed out of fiscal need, well, then too many politicians are afraid to do so.

So, we get proposals such as Obamacare "lite," a plan that less than one-fifth of Americans, according to most polls, thought was a good deal.

Think about it, indeed.

*******

Do you know what is a good deal right now … or, rather, has the potential to be a very good deal, very soon? Gold.

For that, we have to watch the U.S. dollar. Here’s what Sean Brodrick is looking for, there …


Mining for Money

You Can Gain from Gold’s Seesaw of Pain
By Sean Brodrick

Our lesson today is the Seesaw of Pain. And how you can profit from it.

Reuters reported this morning:

The dollar edged up against the yen on Friday, recovering from its worst run of daily losses vs. the safe-haven currency since 2010, but gains were capped by worries that U.S. President Donald Trump was on course for defeat on a new healthcare bill.

By the afternoon, the greenback started sliding again. That said, a bounce over the next few days wouldn’t surprise me. And that opens the door to an opportunity.

Let me lay it out for you.

Here’s a chart of the Dollar-Yen. I’ve added gold, as well as a trend indicator on the bottom.

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As you can see, the trend in the dollar-yen is bad. And it is the opposite of what is going on in gold. In other words, the dollar’s decline is boosting gold.

Often — but not always — gold moves opposite the U.S. dollar. One going up hurts the other. I call this "The Seesaw of Pain."

After such a sell-off, the dollar is going to try and bounce. It could for a few days. This could push gold lower. And that lines up with gold banging its head on a big downtrend. I talked about that in yesterday’s Uncommon Wisdom Daily afternoon edition.

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Mind you, there’s nothing that says gold must pull back here. The odds favor it, sure. But the market loves to make fools of us all. And gold has been showing incredible tenacity this month. Gold might throw back its head, laugh and sprint higher … leaving us all in the dust.

But IF the dollar bounces as it should, that will be an opportunity to get long gold.

You can read the rest of my Thursday analysis on gold by pointing your browser HERE. Read Brad’s fine column on healthcare, then scroll down to see my "Mining for Metals" column.

Now, let’s get back to the first chart, the chart of the U.S. Dollar-Yen. Look at the ADX indicator, which measures trend strength. It has turned bearish for the dollar-yen.

It’s true this is a rearview mirror. But the bearish trend really started on the 15th.

And it has plenty of room to get more bearish. There is no guarantee that will happen. But more investor disappointment in Washington could certainly deepen that trend.

Bottom line: A short-term bounce in the dollar might be a short-term buying opportunity in gold and miners. Make the Seesaw of Pain work for you.

***

I want to know what you think, so if you have a comment or question about today’s Afternoon Edition topic, or any of the topics we cover, let me know. All you have to do is leave me a comment on our website or send me an e-mail.

***

The markets wanted some form of certainty on the healthcare issue, but they didn’t get it. The Nasdaq fared the best with a 1.2% loss this week. The S&P 500 did slightly better with a 1.4% loss. But the Dow was down every day this week, and its 1.5% loss reflected that.

• Record U.S. oil stockpiles sent crude down 1.7% this week to just below $48 a barrel.

• Meanwhile gold gained 1.5% for the week, ending at $1,250.

• Good day for healthcare stocks: Community Health Systems (CYH) was the standout with its 9.7% gain in Friday trade. Tenet Healthcare (THC) gained 7.4%. HCA Holdings (HCA) and LifePoint Health (LPNT) rose 3.5% each. Universal Health Services (UHS) gained 2.6%.

• Not such a good day for insurers: Cigna (CI, -2.2%), Humana (HUM, -1.3%), Aetna (AET, -0.8%) and UnitedHealth Group (UNH, -0.2%) all spent the day in the red.

• A first for Twitter (TWTR): The social-networking company is surveying users about a potential premium version of Tweetdeck for professionals. This would allow it to collect subscription fees for the first time. Shares gained as much as 2.5% today and closed 1.4% higher.

Good luck and happy investing,

Brad Hoppmann
Publisher
Uncommon Wisdom Daily

Your thoughts on “Obamacare ‘Lite’ Weighs on Washington, Wall Street”

  1. A grandmother of mine used to comment of some people: “How could they be so dumb and live?”. That’s us with Obamacare and other political outrages. How about besides it isn’t working (premiums going up too fast to be sustainable), its flat out illegal. Isn’t that enough? In case you forgot, while the constitution does say Congress has the power to lay and collect taxes, it also says all taxing and spending bills must originate in the House. The ACA originated in the Senate, so it is unquestionably unconstitutional. If no one in Congress, the White House or the Court knows this, we are in much deeper trouble than one bad bill (that no one was supposed to read before voting upon).

  2. “Obamacare is the law of the land; it’s going to remain the law of the land … We’re going to be living with Obamacare for the foreseeable future.”

    This is the comment of a fraud and a coward. How can it be so difficult to just reintroduce and pass the bills from previous years that were vetoed by Obama? Paul Ryan needs to go.

    If Obamacare is allowed to stay and become another “entitlement”, say goodbye to the American health care system and say hello to single payer. Airlines will be happy, however. Many Americans will fly to India, Thailand, Costa Rica, etc. to get their health care. Count on it.

    It’s time for the “deplorables” to DEMAND that Congress grow a spine, do its job and destroy Obamacare.

  3. You hit a foul ball with your ‘Paul Ryan et al had 7 yrs. to craft a healthcare plan’ comment. Would you spend significant time and energy on a proposal years before you had any idea you would even have the votes to get it passed? There had to be an election to guarantee a Republican House and it’s been all of 2 months since a new Administration has been set in. Your snide comment was out in left field. Get some patience!

  4. Trump is good at bullying–critique NATO as obsolete, insult the German Chancellor, try to push China around, denigrate trade, threaten a few US companies, deport Dreamers, randomly pick up immigrant mothers as “dangerous” criminals–but he can’t reach compromise with his own party members, and can’t work with the opposition. He’s also emaciated his Secretary of State, and is under criminal FBI investigation for treason. On to tax reform–don’t hold your breath.

  5. Trump can not get tax reform passed. He is extremely ignorant and totally incapable of accomplishment of any kind! He will not have done anything in his first 100 days and I will go out on a limb and say he will not accomplish anything in the second 100 days either!

  6. The analogy concerning the results of “free stuff” and our expectations was very good. Consider, also, that those receiving government goodies might be less disappointed, about receiving less, if our employees, supposedly “serving ” us, weren’t catering to special interests and stuffing their retirement coffers with the perks that most of their constituents could never even begin to imagine. So much for the concept of public “servant”. Perhaps, it is time to make congress live under the same constrictions, as all of the rest of us.

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