Health Stocks Will Surge on Wall St Tomorrow: Mark my Words

I am in favor of doing nothing rather than the abomination of a plan the Baucus-FaucUs Caucus put out.

This is not change I can believe in..

If wall street healthcare stocks increase substantially more than the market Tuesday it tells you all you need to know.

Subsidies will be slashed so insurance will be a big rip off for most people, with nothing to control costs.

http://emptywheel.firedoglake.com/2009/0 9/07/believe/

After the speech finished, Chuck Todd came on and said something like, "progressives have to be disappointed." Todd's point, I think, was that Obama didn't really mean it. It was weak tea designed to fire up Obama's labor audience but ultimately Obama was going to drop the public option.

And it may well have been.

But what Todd doesn't seem to get is that Obama stands to lose more if he utters those words--if he acknowledges our point, that the public option is key to real reform, to bringing down costs--than having not uttered them.

So while Todd may take Obama's weak tea mention of the public option as so much weak tea, he seems to be missing that any such a mention is only going to further inflame progressives if and when Obama sacrifices something he "believes" in just a few days.

http://openleft.com/diary/14972/baucus-c irculates-health-care-plan

If this is an improvement over the status quo, right now I don't see how.

This moves the ball into the Progressive Block's court, not into President Obama's.  This draft proposal from Baucus is nowhere close to the type of health care bill they have said they can support.  Off hand, it seems perfectly justified to send this bill down to defeat.  However, as activists, we only have power to defeat or change this bill if the Progressive Block decides to hold the line.  They are going to be asked to fold and compromise, so it is their time to demonstrate leadership.  Let's see what happens.

No matter what happens, it is imperative that there is at least a vote on a robust public option in both branches of Congress.  We need a roll call indicating who opposes a real public option, and is instead looking to force this crappy bill on us.  Otherwise, there will be no way to hold Congress accountable.

Tags: obama (all tags)

Comments

41 Comments

is this change you can believe in?

47 million new mandated customers and health insurance companies getting government subsidies?

what will be the difference between Cigna and Blackwater?

by TarHeel 2009-09-07 12:47PM | 0 recs
Stocks Will Surge

Glad to see you took my advice. You're actually investing your money, or are you just bloviating?

by QTG 2009-09-07 01:13PM | 0 recs
Re: Health Stocks Will Surge on Wall St

If only there were some way you could capitalize, perhaps monetarily, on this foreknowledge!

As the resident Wall Street guy, let me share something.  When health care stocks go up, that does not mean that something just happened that is a huge boon to the publicly-traded health care companies.  What it means is that something happened that people THINK is a huge boon.  By and large, the stock markets - just like the prediction markets at Intrade that people love - reflect the conventional wisdom, and that's it.

If people think cap-and-trade legislation is going to destroy the US economy and send us back to the 18th century, then stocks will drop, but that doesn't mean cap-and-trade WILL kill the economy.  It just means some people think that, or more precisely, some members of the investor class think that.  Since the investor class skews in the direction of the sort of folks who watch CNBC, the conventional wisdom tends to assume that conservative policies will be good for the economy and liberal policies will be bad for it.

The market is not good for much more than a handy talking point in this kind of analysis.  Remember when the market was tanking during 2008, and all the wingnuts were like "aha, this shows you what the market thinks of the fact that Obama is likely to win the election!"  Silly argument, and honestly, you're trafficking in the same stuff here.

I'm also interested to know if you're willing to endorse the counterfactual here; which is to say, if health care stocks DON'T surge tomorrow, will you take that as evidence that the plan on the table isn't a huge giveaway to the insurance companies?  Because you're not really using the scientific method if your hypothesis can only be proven but never disproven.

by Steve M 2009-09-07 01:55PM | 0 recs
Re: Resident Wall Street guy?

 I thought I was the resident Wall Street guy. In what capacity do you serve Mammon/Capitalism?

by QTG 2009-09-07 02:10PM | 0 recs
absolutely

when all healthcare stocks move (on perception) either up or down in unison and against the overall market it definitely tells you something..

I think it was the morning after sebelius announced the public option was negotiable that healthcare stocks moved up 5-10% in a down market.

I'm guessing something similar tomorrow

by TarHeel 2009-09-07 02:13PM | 0 recs
Re: absolutely

It tells you something about what investors THINK.  These investors are not super-rational super-beings.  While it may feel good to have the conventional wisdom fall in line with our personal opinions, one shouldn't mistake that for actual confirmation.

by Steve M 2009-09-07 02:33PM | 0 recs
and they plummented

by Wednesday.

by DTOzone 2009-09-07 03:45PM | 0 recs
As a Wall Street Guy

I do think it is fair to watch some of these stocks.  In particular I would watch what happens to the health insurance companies: Cigna and Aetna for example.

I don't think people are trading in these stocks soley on the basis of the twists and turns in the health care debate, but it is certianly relevant.

And the diarist this morning is completely wrong.
The S&P 500 up .6%, and the health care plans index is down 1.77%.  Aetna and Cigna are both off more than 1.5%.
Here is a good page to track the health insurance companies:
http://biz.yahoo.com/ic/522.html

by fladem 2009-09-08 06:26AM | 0 recs
Re: Health Stocks Will Surge?

Wall Street is totally irrational and largely disconnected from reality. If you disagree, check out the stock prices of AIG, Fannie Mae and Freddie Mac. Even prominent Wall Street analysts are at a loss to explain why they are not zero.

Baucus' bill, despite the (intended) outrage it produced among the progressive class, is actually a shrewd move by a very savvy politician. In order to do reconciliation it is first necessary to pass a bill in the Senate. Baucus' bill, which will undoubtedly get a very good CBO score, is the type of bill that can get the votes of Olympia Snowe, Ben Nelson and (with a little arm twisting) other conservadems. Once the Senate and House have passed their widely disparate bills amd October 15 has passed, the conference committee can totally disregard the Baucus bill and get the best deal they can with the support of 50 Democrats and Joe Biden.

The worse Baucus' bill is, the better it is for the progressive cause. Conservative Senators know this, of course, but have the ability to vote against the conference committee bill while telling their constituents that the health care bill they voted for was the good one. The best outcome for conservadems is to vote against a bill which ultimately passes.

by STUBALL 2009-09-07 03:30PM | 0 recs
Re: Health Stocks Will Surge?

The bill is a pile  of poo. It sets up a plan that most americans can not afford, which is the only relevant test that I consider useful for anyone using the word progressive.

by bruh3 2009-09-07 04:02PM | 0 recs
Health insurance companies

Your diary gets off point by focusing on predicting the irrational thought proceses of the Wall Street. The better point here is something that we can easily predict from the Baucus plan- a) a regressive tax and b) for junk insurance. Focus on that, and you will point out why the insurance companies will love this plan.

by bruh3 2009-09-07 04:01PM | 0 recs
Re: Yes!!!

Predicting the future requires that you focus on  the predictable and rational thought processes of DC, tarheel(s)!!!!

Because predicting the future is not something amateurs can understand, you should leave it up to the pros like bruh3.  Some sycophants will argue that predicting the future can't even be done with more precision that you could expect from random chance. What idiots!

by QTG 2009-09-07 04:26PM | 0 recs
Not to be contrary

bu tomorrow may be a good day to short healthcare stocks

by jsfox 2009-09-07 05:21PM | 0 recs
Re: Health Stocks Will Surge

Hmmm.  If I was an amoral investor, I'd probably wait a day or two.  But I'll make note of your words.

by Drummond 2009-09-07 10:02PM | 0 recs
Let's watch the Chart

http://finance.yahoo.com/echarts?s=IYH#c hart2:symbol=iyh;range=1m;indicator=boll inger+volume;charttype=line;crosshair=on ;ohlcvalues=0;logscale=on;source=undefin ed

Gotta bust out of the Bollinger bands to qualify as a 'SURGE'!!

Full disclosure: I'm long IYH (and others in the sector).

by QTG 2009-09-08 03:03AM | 0 recs
Re: The day is young.

But I will be marking your words from time to time:
"If wall street healthcare stocks increase substantially more than the market Tuesday it tells you all you need to know."-tarheel(#?)

9:40AM ET
Dow Up 0.41%
Nasdaq Up 0.62%
ISHARE DJ HLTHCR SC(RT-BATS: IYH)Down 0.44 (0.76%)

by QTG 2009-09-08 05:46AM | 0 recs
Re: The day is young.

Beat me to it :)

by jsfox 2009-09-08 05:58AM | 0 recs
Maybe their waiting

for the speech tomorrow..

certainly the baucus plan seems like a great deal for insurance - he even lowered copays to 65% for insurance which is a sweet deal for them

by TarHeel 2009-09-08 06:06AM | 0 recs
Re: Maybe their waiting

Dude, you can't just rewrite your hypothesis when you don't get the results you were hoping for. From "mark my words" to "well, maybe tomorrow..."

I tried to warn you, the market isn't what you think it is!

by Steve M 2009-09-08 06:16AM | 0 recs
am I wrong

that mandating everyone buys private insurance with taxpayer subsidies will not increase profits for them?

what am I misssing?

by TarHeel 2009-09-08 06:43AM | 0 recs
Re: am I wrong

Actually, you have now learned what all Stock predictors eventually learn. Predict often, and never look back!!!

I'll make a capitalist out of you yet!

by QTG 2009-09-08 06:44AM | 0 recs
Re: am I wrong

I already told you what you are missing.  The stock market goes up and down based upon the perception of investors, not some kind of objective reality.

by Steve M 2009-09-08 07:39AM | 0 recs
Re: I don't think

a dependence on "objective reality" is tarheel's problem. More likely the problem is a fundamental lack of insight into the predictability of future events, generally.

by QTG 2009-09-08 08:26AM | 0 recs
by QTG 2009-09-08 09:12AM | 0 recs
but but but

it's only down a quarter of a point, it was down .4% two hours ago!

RALLY!!!

by DTOzone 2009-09-08 09:22AM | 0 recs
Re: but but but

The journalists who cover Wall Street have no more of a clue than the rest of us.  That said, I think this Reuters writeup is telling and indicative of the point I've been trying to make in this thread:

But insurers took a fresh hit on Tuesday as details emerged on a health reform proposal from a leading U.S. senator that includes billions of dollars in fees for insurers and other potentially negative provisions for the industry.

The plan from Senator Max Baucus, a Democrat who chairs the powerful Finance Committee, includes $6 billion in annual fees on insurers based on market share and a tax on so-called luxury health plans, according to documents obtained by Reuters.

"Despite the fact that they're not new, they might be working their way into the stocks here today," said Thomas Carroll, an analyst with Stifel Nicolaus.

Scott Fidel, an analyst with Deutsche Bank, said the components proposed by Baucus, who has not officially unveiled his plan, raised a "new element of concern."

Shares of WellPoint Inc (WLP.N), Aetna Inc (AET.N) and UnitedHealth Group Inc (UNH.N), the three largest health insurers, each fell more than 2 percent, bucking a generally positive stock market.

Shares of two other large insurers, Cigna Corp (CI.N) and Humana (HUM.N), were each off more than 1 percent.

The point is, if people like analyst Scott Fidel think Baucus' plan is bad for the industry, that's going to drive stocks lower.  It makes no difference if TarHeel is 100% right about the policy consequences of Baucus' plan and Scott Fidel is 100% wrong.  What matters is what investors think, and for the most part investors don't think about policy outcomes the same way that staunch liberals do.

As an aside, my mutual fund has a large position in WellPoint, so I really wish TarHeel was right about all this, but alas.

by Steve M 2009-09-08 10:43AM | 0 recs
Re: but but but

Just a reminder of the challenge here:
If wall street healthcare stocks increase substantially more than the market Tuesday it tells you all you need to know. - tarheel(?#)

Apparently I don't need to know shit!

Watching the market on a minute to minute or day to day basis is fun, but it's completely chaotic and random. Predicting it is like wanking, mildly amusing and completely unproductive.

by QTG 2009-09-08 10:51AM | 0 recs
delete this

As I said, this diary is distracting from your other work. The reality is that you have two really good diaries on the recommend list. And yet, this pointless diary gets the  bulk of the comments. i wish you would delete this one and focus on those diaries.

by bruh3 2009-09-08 10:53AM | 0 recs
Re: When a diarist

uses the phrase "Mark My Words" in his title which also makes a BOLD PREDICTION which is then easily refuted, I couldn't think of a more self-serving and blatantly dishonest act than to delete the diary and the comments it demanded and got.

I await the diarist's response to your cheesy suggestion.

by QTG 2009-09-08 12:07PM | 0 recs
Recced

Because I want this back on the REC list!

by Ravi Verma 2009-09-08 01:25PM | 0 recs
Re: Recced

hmm nod

by Steve M 2009-09-08 01:42PM | 0 recs
Your shipment of fail has arrived

I don't meant to rag on this, but it's just funny;


The health-care sector was one of the worst performers Tuesday, a day before President Obama was set to address a joint session of Congress and try to give momentum to health-system reform.

Some of the worst-performing stocks in the sector as of midday were WellPoint (WLP: 51.8694, -2.2406, -4.14%), UnitedHealth Group (UNH: 27.82, -1.0279, -3.56%) and Cigna (CI: 29.41, -0.45, -1.51%).

Health care stocks are down 0.6%, as a group. Their weakness comes amid ongoing efforts to reform health care. According to New York Times, the White House is weighing a public option. Meanwhile, an Associated Press report indicated that a Republican senator is trying to fashion a compromise that might use nonprofit cooperatives. The reports have weighed heavily on managed care stocks in particular; they are down 2.1%.

lol

by DTOzone 2009-09-08 02:32PM | 0 recs
Re: Ironically

those stocks are looking pretty attractive right now. For shits and giggles, I'll set up a paper portfolio assuming a purchase of each of these stocks 'at the market' for tomorrow's open. (I'll use the free website finviz). $100,000 (pretend) divided more or less equally among the 3 stocks, adjusted to make round lots.

Buy 600 WLP at the market
Buy 1200 UNH at the market
Buy 1100 CI at the market

And we'll see how that works out.

by QTG 2009-09-08 02:46PM | 0 recs
Now, let's SURGE it BABY!!!!

At the Open (disregarding 3*$8.00 Commission - my treat!)

1.WLP    WellPoint Buy 09-09-09 600@51.85 $31,110
2.UNH    Unitedhealth Buy 09-09-09 1,200@28.02    $33,408
3.CI    CIGNA Buy 09-09-09 1,100@29.40    32,340

QTG Total Investment: $97,074

For reference, had we made these same purchases on yesterday morning on tarheel's advice (WLP 54.11, UNH 28.85, CI 29.86) our

Tarheel Total Investment: $99,932

Now we watch....
09/09/09 10:10 AM
         Market Value    Gain$    Gain%  
MyDD     97491.00       417      0.43  
Tarheel  97491.00     -2441    -2.44

Please do not post comments to this, I'll track our investments there.

Exit Plan is sell to realize a gain of of $5,000
(which we will pretend to donate to some random Progressive candidate, or another worthy cause!)

by QTG 2009-09-09 06:15AM | 0 recs
Re: Now, let's SURGE it BABY!!!!

09/09/09 10:45 AM
         Market Value    Gain$      Gain%  
MyDD     96463.00      -611.00   -0.63  
Tarheel  96463.00     -3469.00   -3.47  *

***Note: (A Prudent BULL who expects a SURGE will also have an exit plan if the expectation FAILs. We will exit this trade with a 5% loss.)

Preferred Exit Plan is to sell to realize a gain of of $5,000 (which we will pretend to donate to some random Progressive candidate, or another worthy cause!)

by QTG 2009-09-09 06:44AM | 0 recs
Re: Now, let's SURGE it BABY!!!!

09/09/09 11:45 AM
         Market Value    Gain$      Gain%  
MyDD     96129.00      -945.00    -0.97
Tarheel  96129.00     -3803.00    -3.81

Surging downwards!

by QTG 2009-09-09 07:46AM | 0 recs
Re: Now, let's SURGE it BABY!!!!

09/09/09 11:53 AM
         Market Value    Gain$      Gain%  
MyDD     95989.11     -1084.89     -1.12
Tarheel  95989.11     -3942.89     -3.95

Quickly nearing the 5% Stop Loss on the Tarheel Trade!

by QTG 2009-09-09 07:53AM | 0 recs
Re: Marking Words

09/09/09 14:45 PM
         Market Value    Gain$      Gain%  
MyDD     97683.00       609.00    0.63
Tarheel  97683.00     -2249.00   -2.25

Wow. Odd how Obama is making this stuff surge and dump, dump and surge. I keep marking Tarheels words and then unmark, mark, unmark.

How's anybody make a living at this????

by QTG 2009-09-09 10:42AM | 0 recs
Re: Now, what to do????

We just made some money (potentially) if we sell now we can say we had a pretty good day and do it again tomorrow, and if Obama blows it tonight we an make a killing when the bad guys' insurance companies SURGE!!!!! Or we can hold on and take our chances....

What to do, what to do???

09/09/09 15:45 PM
         Market Value    Gain$      Gain%  
MyDD     97940.00     866.00          0.89
Tarheel  97940.00     -1992.00      -1.99

The Tarheel trade sticks, no point in selling that.

by QTG 2009-09-09 11:52AM | 0 recs
Re: The Market Closed

09/09/09 16.01 PM
         Market Value    Gain$      Gain%  
MyDD     98135.00     1061.00     1.09
Tarheel  98135.00      -1797.00    -1.80

We're holding on.
Enjoy the speech. It might be pricey if he pulls it off, but just 'pretend' pricey for the purposes of this experiment.

Tracking these three stocks on a single day should certainly convince the casual observer that the Stock Market is the very epitome of 'arbitrary and capricious'. If you are not convinced, make up a story, mark your own words, and quit your regular gig. (The story I made up for this was an old one called 'those stocks are oversold, and they'll bounce back tomorrow. It's bullshit, of course, but I made a thousand dollars in one day!!!)

by QTG 2009-09-09 01:48PM | 0 recs
Re: Half way home
09/10/09 10.30 AM
         Market Value    Gain$      Gain%  
MyDD     99799.20     2725.20     2.81%
Tarheel  99799.20     -132.80    -0.13%
by QTG 2009-09-10 06:24AM | 0 recs

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