Cookies In Bulk

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DOW + 20 = 21,553
SPX + 4 = 2447
NAS + 13 = 6274
RUT + 1 = 1425
10 Y + .02 = 2.35%
OIL + .69 = 46.08
GOLD – 2.70 = 1218.30
BITCOIN – 0.21% = 2359.62 USD
ETHEREUM + 2.83% = 208.81

Wall Street posted modest gains, but good enough for another record high on the Dow. The S&P 500 Index closed within five points of its record. Analysts estimate second-quarter earnings for S&P 500 companies rose 7.8 percent from a year ago, with financials projected to have had the third-best profit growth among sectors. Tomorrow, we will start seeing the major banks report earnings for the quarter.

Senate Republican leadership released the updated version of its healthcare bill today. Let’s cover the major changes.

The new version could preserve the 3.8% investment-income tax and an 0.9 percent surtax for the Medicare insurance program on people making over $200,000 a year, a huge source of revenue introduced by the Affordable Care Act and one of the biggest reasons Republicans wanted to repeal Obamacare.

Other taxes including one on health-insurance executives and a Medicare health-insurance tax would no longer be repealed in this version. Numerous smaller taxes, like one on tanning salons, would still be repealed. The original bill had $2 billion in funding to combat the opioid crisis. The new version would increase that number to about $45 billion.

The revised plan included conservative Senator Ted Cruz’s proposal to let insurers offer stripped-down, low-cost healthcare plans that do not comply with Obamacare regulations to cover certain health benefits.

The amendment would allow plans to exist that don’t comply with two regulations set up under the Affordable Care Act: community rating and essential health benefits. Those benefits include maternity and newborn care, mental health services and addiction treatment, outpatient care, hospitalization, emergency room visits and prescription drugs.

Insurer groups, including the national Blue Cross Blue Shield Association, have derided these “skinny plans,” saying they would raise insurance premiums, destabilize the individual insurance market and undermine protections for pre-existing medical conditions, by making policies that cover existing conditions very expensive.

Like the earlier version, it would end a penalty on individuals who do not obtain insurance and overhaul Obamacare subsidies to help people buy insurance with tax credits. While ending a fine on people who decline to obtain insurance, the Senate bill would force people who let their coverage lapse to wait six months before coverage could resume.

The bill retained the previous draft bill’s phaseout of the Obamacare expansion of the Medicaid government health insurance program for the poor and disabled and sharp cuts to federal Medicaid spending beginning in 2025. The BCRA also would change federal funding to Medicaid to a per-capita structure — meaning the federal government would send states a fixed amount of money per Medicaid enrollee in the state.

That’s different from how it is now, where the federal government helps cover enrollees based on how much their care costs, which can vary by person. In all, the per-capita structure would leave states with less funding than under the current law. As a result, Arizona would see a 17% reduction in Medicaid funding by 2026.

The bill would allow people to use health savings accounts to help pay for insurance premiums and contains an additional $70 billion to help low-income insurance holders cover out-of-pocket medical expenses. No word on how to pay for those expenses after the $70 billion is exhausted.

The health-care industry is aligned against the proposal, which would essentially create separate insurance markets for sick and healthy people. Even the insurance industry’s top lobbying group, America’s Health Insurance Plans, came out in public opposition to the amendment after staying quiet through much of the Senate debate. Whether the Cruz amendment stays in the bill is in doubt.

The American Academy of Pediatrics, the American College of Physicians, the American Lung Association, and American Hospital Association all expressed opposition to the bill.

The American Heart Association, along with American Cancer Society Cancer Action Network, American Diabetes Association, American Lung Association, Cystic Fibrosis Foundation, March of Dimes, Muscular Dystrophy Association, National Health Council, National Organization for Rare Disorders, WomenHeart: The National Coalition for Women with Heart Disease came out with a joint statement against the revisions, specifically the Cruz amendment.

The score from the nonpartisan Congressional Budget Office estimated that the first version of the BCRA would result in 22 million more uninsured Americans by 2026 than the current system. The CBO is expected to score the new version by Monday. We’re still likely to see many millions of people losing or going without coverage because of this bill. Although some of the taxes on wealthy people are retained, the bill doesn’t appear to use much of that to cover low-income people.

McConnell has little room for error, as even three “no” votes among Republican senators would sink the legislation. As of now, none of the 10 senators who came out publicly against the original version of the bill have said they moved into the “yes” column.

Complicating matters further, two Republican senators, Lindsey Graham and Bill Cassidy, offered an alternative healthcare proposal minutes before McConnell unveiled his new plan. It would redirect much of Obamacare’s federal funding for health insurance to states.

Meanwhile, President Trump is in Paris. On the flight from the US to France, Trump told reporters on Air Force One he is considering quotas and tariffs to deal with the “big problem” of steel dumping from China and others. The administration’s decision on steel could be unveiled in the coming weeks.

In Paris, Trump held the door open to a reversal of his decision to pull the United States out of the Paris climate accord on Thursday, but did not say what he would need in return to persuade him to do so.

Fed Chair Janet Yellen returned to Capitol Hill today for the second session of her semi-annual Humphrey-Hawkins testimony. Today, Yellen testified before the Senate Banking Committee. The Fed raised its benchmark interest rate in June for the third consecutive quarter, and it plans to begin reducing its bond holdings this year. Yesterday, she laid out a dovish approach to monetary policy.

Yellen said it would be “quite challenging” for U.S. growth to reach a 3-percent target set by President Trump. Still, Yellen said the economy remained in good health, stating: “I don’t see anything inherent in the nature of the expansion that suggests it will come to an end anytime soon.”

So, today the focus was on the Fed’s third mandate – as a regulator. Republicans sought Yellen’s support for proposals to loosen or eliminate some strictures imposed on financial institutions after the 2008 financial crisis. Democrats pressed her to affirm the importance of those regulations. Yellen agreed that some rules might be too strict, and expressed a general willingness to consider changes.

She also reiterated her support for reducing the regulation of community banks, a popular idea among members of both parties, though specifics are hard to come by. Senator Elizabeth Warren asked Yellen why the Fed had not removed members of Wells Fargo’s board after a scandal involving the opening of fake customer accounts. Yellen said the matter remained under investigation, adding, “The behavior that we saw was egregious and unacceptable.”

Dallas Fed President Rob Kaplan said he wants to see more evidence of a recovery in inflation before committing to another rate hike. Kaplan, a Federal Open Market Committee member this year, said “at present, with a federal funds rate at a range of 100 to 125 basis points, I would like to see some greater evidence that we are making progress toward meeting our 2% inflation objective in the medium term.”

He joins Fed. Gov. Lael Brainard in expressing reservation toward more rate hikes. (Minneapolis Fed President Neel Kashkari opposed the June increase.) However, Kaplan does say the plan to reduce the balance sheet “will likely be appropriate” later this year.