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Dallas, TX
December 17, 2009, 08:00 EST |
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Dr. Joe Duarte's Market I.Q. |
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The Internet's Intelligence Digest
Intelligence, Market Timing, And Trading Strategy For Traders and Investors
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Doctor Shortage Complicates Health Care's Future
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What's Hot Today: |
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U.S. stock index futures were pointing to a lower open
on Thursday. A rising dollar is getting the blame, but the deteriorating
climate conference, and the health care uncertainty aren't exactly helping
the overall investing environment.
Today's Economic Calendar:
- Jobless Claims 8:30 AM ET
- Leading Indicators 10:00 AM ET
- Philadelphia Fed Survey 10:00 AM ET
- EIA Natural Gas Report 10:30 AM ET
- 3-Month Bill Announcement 11:00 AM ET
- 6-Month Bill Announcement 11:00 AM ET
- Fed Balance Sheet 4:30 PM ET
- Money Supply 4:30 PM ET
News For Thought
Copenhagen climate conference left out in the cold. According to Reuters: "Prospects
for a strong U.N. climate pact grew more remote on Thursday at the climax of
two-year talks as ministers and leaders blamed leading emitters China and the
United States for deadlock on carbon cuts." The report added that an impasse
between the United States and China about emission cuts threatens to lead the
conference to failure.
Wall Street Journal/NBC News poll confirms what others have been saying for
weeks to months about Democrats. According to The Wall Street Journal: "Less
than a year after Inauguration Day, support for the Democratic Party continues
to slump, amid a difficult economy and a wave of public discontent, according
to a new Wall Street Journal/NBC News poll." President Obama's job approval rating
in the poll, which ended on 12-14-09 is 47%, just about in the same range as
Rasmussen, Gallup, and others have registered recently. According to the report: "Democrats'
problems seem in part linked to their ambitious health-care plan, billed as the
signature achievement of Mr. Obama's first year. Now, for the first time, more
people said they would prefer Congress did nothing on health care than who wanted
to see the overhaul enacted."
Inside the poll, the news gets worse for the Democrats as "The biggest worry
for Democrats is that the findings could set the stage for gains by Republican
candidates in next year's elections. Support from independents for the president
and his party continues to dwindle. In addition, voters intending to back Republicans
expressed far more interest in the 2010 races than those planning to vote for
Democrats, illustrating how disappointment on the left over attempts by party
leaders to compromise on health care and other issues is damping enthusiasm among
core party voters." Again, this poll is echoing results from Rasmussen polls
over the last several months, proving the predictive power of the latter. Rasmussen's
polling this past weekend registered new approval ratings lows for President
Obama.
Republicans aren't exactly ringing the popularity bell either. According to the
report: "Twenty-eight percent of voters expressed positive feelings about the
GOP -- a number that has remained constant through the Democrats' decline over
the summer and fall. Only 5% said their feelings toward the Republicans were "very
positive."" Our conclusion is that the anti-incumbent sentiment is still rising,
which means that a scenario where party representation may not change, but familiar
faces disappear is just as likely as any other in 2010.
Two other important facts emerged in this poll. First, the president's personality
is starting to fade as a positive. According to the report "Fifty percent now
feel positive about him, six points lower than in October and an 18-point drop
since his early weeks in office." Second, Speaker Pelosi, who announced that
she is now in "campaign mode" may actually harm those candidates that she stumps
for. According to the report: "Ms. Pelosi's presence on the campaign trail could
do more harm than good. Fifty-two percent said they would be less likely to vote
for a candidate who agreed with the speaker almost all the time, compared with
42% who felt that way about candidates siding with Republican leaders."
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Doctor Shortage Complicates Health Care's Future
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It's Much More Dangerous Than Anyone Knows
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As health care "reform" stalls in Congress once again, the general public should
consider that if and when the package passes, the compromises are ironed out,
and the president finally signs the final bill into law, the system will move
on to the next crisis, the lack of well trained physicians to take care of the
surging number of patients that will supposedly have access to care.
To be sure, the lack of foresight and the potential for future consequences have
never been the hallmark of political decisions. Yet, this one has the potential
for some huge effects in the future, especially the political future of those
who enact the "reform" package.
A little known fact is that in order to save money for Medicare, the funding
for physician training programs was cut in 1997. That means that today's long
waits at the doctor's office, and the projected shortage of physicians over the
next 15 years was fueled, at least partially by the same government that is once
again tinkering with the potential health of its constituents.
At the same time that training program funds were being cut, HMOs were empowered
by the Clinton administration, adding layers of bureaucracy to the system, where
physicians now have to ask for permission from the insurers to perform routine
procedures on patients who actually need them. Most doctor's offices now have
at least one person on their staff whose sole job is often just to ask for "approval" from
insurers for what most in medicine consider routine interventions in patient
care. In this scribe's office, part of the daily routine is talking to insurance
companies about the use of "third tier" anti-inflammatory medication for patients.
That means that a dedicated nurse has to explain to the clerk on the other end
of the phone why the doctor wants to use Celebrex for a patient with arthritis.
If the patient hasn't tried at least three other antiinflammatory medications
before, the insurer won't pay for Celebrex. What makes this even more frustrating
is that in the rare occasion when we get the approval, the patient can't afford
the $50 or $60 copay that is required to get the medicine.
According to Bloomberg: "To combat a nationwide shortage of doctors, medical
schools in the U.S. plan to add 3,000 first- year students by 2018. It won’t
be enough." Why? According to the report: "The expansion, pushed for by the Association
of American Medical Colleges, is being undercut by a U.S. health-care overhaul
designed to supply medical insurance to an additional 31 million Americans and
a cap on government-funded physician training programs that’s been frozen in
place for 12 years, said Steven Safyer, of Montefiore Medical Center."
In fact, as Bloomberg reports: "Last year, there were 16,721 fewer primary-care
doctors than needed in inner city and rural areas, according to the U.S. Health
and Human Services Department. Residencies, the hospital based-training doctors
undergo before they can practice medicine on their own, have been capped by Congress
at about 90,000 since 1997 as a way to curb rising medical costs."
Consider this. According to Bloomberg: "Even with the push for more residencies,
about 1,500 have gone unused for the last three years, the medical school group’s
Salsberg said. This is because some hospitals find they no longer can provide
supervision or hands-on experience necessary to educate all the residents they’ve
been allocated, he said." Translation: there aren't enough physicians that are
willing to go into academics to teach other physicians any more because the pay
for the hard work involved in teaching physicians isn't worth the trouble.
What are the alternatives? Aside from waiting a long time to see someone when
you're ill, your chances of seeing a non-physician "extender," such as a nurse
practitioner or a physician's assistant are likely to rise. To be sure, that's
not a knock on those professionals, who are often well trained, dedicated, and
capable. But, at 4:00 A.M., when your abdominal aortic aneurysm is dissecting,
and you're bleeding to death, you want to know that a capable vascular surgeon
is available and willing to try and give you the best chance possible at that
50% survival rate under those conditions in the best of hands.
If the current trends remain in place, there won't be one of those capable folks
available everywhere. And with the number of smokers, diabetics, and non-excersisers
in the population, the number of vascular emergencies and cardiac related issues
is certain to rise. And that's not all. What we see on a daily basis tells us
that the chronic problems, such as osteoarthritis, spine problems, and other
labor and resource intensive issues will also rise.
So what's the bottom line? There are too many people that need medical care.
There aren't enough doctors to take care of all of them now. The medical education
system is underfunded. The health insurers don't want to pay for any treatments
that aren't bare bones, whether they work or not. And, even if the system was
to change for the better overnight, it would still take years for the educational
system to catch up to the needs of the population.
Conclusion
We're not trying to be negative here. We're just noticing that the longer this
debate goes on, the more evidence to support slowing down and thinking about
what we're doing rises. Yet, Congress and the president, looking for a political
prize continue to push into a potential abyss.
The system, with all its warts, still takes good care of a lot of people. But
the system is fraying, at all levels, especially that precious pipeline, future
physicians. And if there is no one to take care of patients, what's the use of
having "reform" and "access?"
That's why we're concerned about the "don't worry be happy" stuff emanating from
Capitol Hill and the White House on this issue. In other words, the golden goose
is sitting on a silver platter, the oven door is opening, and the welcoming fires
are waiting.
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All Seasons. Also Available As Kindle Books. |
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Market Moves - Stock Of The Day
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Oil Service HOLDRS Trust (NYSE: OIH) Stays Quiet
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Energy stocks
usually rally at this time of year. Yet, the Oil Service
HOLDRS Trust (NYSE: OIH) is still well below its 52-week
highs.
Chart Courtesy of StockCharts.com
Cold weather usually leads to a rally throughout the energy
sector. Yet, this year's arctic blast has barely led to
a bounce in the OIH. That suggests that economic expectations
remain subdued.
Oil service stocks are usually in the midst of any energy rally. That's because
these are the companies that keep the industry running. They build, manage, and
often maintain and repair oil and natural gas rigs. But if demand for oil and
gas are slow, due to a slower global economy, then oil service revenues and earnings
are likely to suffer.
Oil prices have been cut more than 50% from their peak of 18 months ago, and
don't seem to be boucing too aggressively, with the $70 area seeming to be the
focal point at this time.
OIH is also well off its highs and delivering a feeble bounce, despite the potential
for some mergers and acquisitions in energy rising.
What OIH is saying, barring some kind of sudden change, is that the safe bet
right now is that oil prices, due to decreased demand, are likely to stay in
the current price range for some time.
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Technical
Look at the Market |
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S & P Can't Seem To Break Out - SPY ETF Remains at 4-stars
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The S & P
500 rallied slightly on 12-16, but again failed to close
above 1119. This is still constructive action, especially
since the volatility bands are still shrinking, a technical
configuration that suggests a big move is coming.
Still, the suspense is bothersome, and the market is still torn between two major
influences. That means that traders have to choose between the positive seasonality
of the Christmas holidays, or the political uncertainties of the moment. That's
a tough call, which is why the market is going nowhere.
So the technical aspects of the market are increasingly important, and that's
why the shrinking volatility bands are very important to keep an eye on.
The bottom line is that it pays to be careful.
Summary of Start Rating System
We are adapting our star based rating system to the S & P SPDR ETF (NYSE:
SPY). In this section a 5-star rating for SPY is a signal that down side risk
is very low and that the chances of a further rise in prices are greater than
those of a fall. A 4-star rating Means that the risk is less attractive but that
the odds of a rise in SPY still outweigh the risks of a fall.
A 3-stars rating on SPY suggests that the odds of a rise and a fall are even.
2-stars and 1-stars suggest that down side risk is on the rise.
In no way is this star rating system intended as a series of buy and sell recommendations.
The system is intended as a guide to the general trend of the market and the
S & P SPDR ETF.
Star ratings can change rapidly based on the market's action. Followers of the
ratings should review them on a daily basis.
Star Ratings for S & P SPDR ETF (NYSE: SPY) - updated 12-16-09
S & P SPDR ETF (NYSE: SPY), 4 stars on 12-1-09 - closing price 110.84. Closing
price on 12-16-09 111.52. Short term support is at 109.57. Resistance is at 111.74
and is being tested. A sustained move move above 111.74 would raise the rating
to 5-stars. A move below 109 would drop the rating to 3-stars.
Chart Courtesy of StockCharts.com
Chart Courtesy of StockCharts.com
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