WASHINGTON, April 18, 2017. Wall Street averages attempted to recover Thursday from a messy Wednesday crash in the healthcare sector. With the trading battlefield still littered with the shattered corpses of healthcare shares, most other sectors performed reasonably well. For their part, shares damaged in Wednesday’s healthcare stock puke-a-thon sustained further damage Thursday, although many tried to recover. At least a little. Traders also found themselves distracted by the political firestorm surrounding AG Barr’s morning release of of the controversial Mueller report.
This brief recap on Wednesday’s trading action, via a Briefing.com report (no link), provides detail what happened Wednesday during the healthcare secrot massacre.
“Investors are dumping healthcare stock en masse for the second day in a row.
“S&P Biotech (XBI) -4.5% stocks are leading the Healthcare sector (XLV) -2.5% and the S&P 500 (SPY) -0.2% lower as the XLV hits a three-month low.
“The sector staged a nasty reversal yesterday after the nation’s largest health insurer UnitedHealth (UNH) warned that ‘medicare for all’ proposals emanating from Democrats would destabilize the health care system.
“That warning seems to have awakened investors to a very real political risk that will present itself over the next year and a half.
“Healthcare will be a primary issue in the upcoming election cycle, which means healthcare companies will be the punching bag.
“As a result, risk-averse investors may choose to avoid the healthcare sector as negative sentiment dominates the narrative until November 2020, and potentially thereafter if more liberal Democrats control the White House in 2020.”
Until recently, has shone as one of our best-performing sectors. But this year, in preparation for next year’s electoral battlefield, America’s socialist party made a decision to place this crucial industry in their sights. As in 2008, healthcare once again becomes a weapon to be wielded indiscriminately during the Election 2020 campaign.
Wall Street averages attempt to recover, but… Mueller report
Meanwhile, whether we end up positive or negative at COB Thursday, major Wall Street averages and everything else stocks and bonds took a back seat to the release of the redacted Mueller Report.
If you’re a member of the GOP and not a RINO or #NeverTrumper, the report confirms that both President Trump and the GOP are blameless in all things Russian, collusionary or otherwise obstructionist. That’s true even though Mueller, as we expected, laid a tasty trail of speculation. That will tempt Democrats to continue with their never-ending attempts to unseat a legitimately elected president, prolonging the Deep State’s now foiled and discredited coup.
But today’s Socialist-Democrat-Communist-Stalinist-Anarchist party immediately attempted to fram the Mueller Report, as previewed by the sinister Trump-appointed AG Bob Barr. Barr masterfully destroyed a barrage of negative leading questions and traps posed by the still-colluding MSM. The latter likely regard the redacted report, as Dan Rather et. al. once opined in another anti-GOP election year attack, as “Fake but Accurate.” We know that because we can’t see the redactions. Yet.
Mueller report: Fake but accurate
Don’t doubt that Congressional lefties and their remaining moles in DOJ and the US “intelligence” agencies will eventually leak all that allegedly good stuff.
One thing is guaranteed. The never-ending chain of Washington “investigations” will go on forever. The aim, as it always is, is to turn the United States into another one-party, Marxist banana republic paradise. Like Venezuela. Besides, it’s more fun to “investigate” in Washington than to actually go on record legislating something useful. We note that the Democrat-controlled House hasn’t really bothered with any meaningful legislation at all since they took power back in January. Why risk allowing your constituents to know where you really stand on crucial issues?
Back to healthcare and “Medicare for all” and the return of the single-payer lie
What Congress can do, however, and what it IS doing, is virtue-signaling the hell out of something they can’t pass: “Medicare for All.” This greatest of all socialist mirages, would likely make the Obamacare debacle look like that proverbial Sunday School Picnic.
That was the Democrats’ plan all along anyway. Use Obamacare as a costly stalking horse, a crude but effective move to destroy our already-destroyed national budget forever by extending the Obamacare mess into single-payer nirvana. Opinion to the contrary, this has never provided better, cheaper and more extensive healthcare whereever it’s been imposed.
Beside generating fake news, one thing you can always count on from today’s “Democratic-Socialists” is that all their “free” goodies will be paid for in only two ways. First, huge middle class tax increases. Next, printing presses running overtime in the bowels of the US Treasury Dept.
But even worse than this charade is the likelihood that medical care, hospitalization, the dispensing of critical drugs and other treatments will get more expensive by the day. And the government will eventually ration it as they already do in the UK, Canada and elsewhere. The fear of precisely this outcome caused investors to blast all those medical sector stocks out of orbit Wednesday. The action extended the steady selling of these stocks already underway.
The healthcare stock crash holds back market averages
Unfortunately, Washington’s neverending “investigations” drone on. Virtually all 2020 Democrat presidential contenders threaten us with zero energy plus an Obamacare debacle on steroids. In this environment, healthcare stocks will behave as if the Sword of Damocles were hanging over them 24/7. No matter how well these companies may be doing. No matter how many life saving medical breakthroughs they may discover.
In a free article via Stockcharts.com, chartist Erin Swenlin elaborates on the damage in healthcare stocks and the concurrent damage in the S&P 500 (SPX), both reflected in the VIX volatility index.
“At this point in the week, the SPX is down about 0.23%. I suspect there will be more downside to endure going into the last half of the week. We don’t talk about broadening patterns too much, but, in the very short-term, those are what I’m seeing on the SPX and they typically resolve downward. The VIX is now suggesting a buying exhaustion lining up as well. The good news is that the defensive Health Care Sector ETF (XLV) did trigger an IT Trend Model Neutral signal. I’d prefer everyone pitch in on a rally to new all-time highs, but if I’m going to lose a BUY signal, I’d rather it be in a defensive area of the market.”
In turn, this sagging sector will continue to weaken current Wall Street averages. Such mass dumping of key stocks diminishes the returns of John Q. Public’s 401(k) accounts.
Times for voters and investors to wake up
The average working American holding a 401(k) account must come to realize that he’s actually investing in stocks and bonds. Perhaps then, he’d stop voting for the same left-wing nutcases they vote for every year. He might even elect someone new. Someone that looks out for the average American rather than his re-electability.
Until then, markets will continue to attempt upside breakouts. Only to be thwarted every time by left-wing attacks on one or another industrial sector. Whichever sector might scare Americans most during the upcoming election. Right now, that’s healthcare. But fear not: Energy won’t be far behind.
– Headline image: Cartoon by Branco. Reproduced with permission and by arrangement with Comically Incorrect.