Trump Delivers A “No-Health Plan” To Supporters Including An Imminent Recession (#GotBitcoin?)

Republicans said they would delay any new health-overhaul push until after the 2020 election, putting off action on legislation amid uncertainty about what a GOP replacement for the Affordable Care Act would look like. Trump Delivers A “No-Health Plan” To Supporters Including An Imminent Recession (#GotBitcoin?)

See Below: (Breaking News) Federal Judge Blocks Trump Rule On “Association Health Plans”

Republicans are looking to craft alternative to President Obama’s Affordable Care Act.

The GOP lost the House to Democrats in 2018 in part over voters’ concerns about health insurance, and any plan President Trump supports would face resistance in the Democratic-controlled House. Despite Mr. Trump’s recent effort to push the issue, there is currently no clear path to a GOP health plan, or certainty that a replacement to the ACA will be crafted.

President Trump, after spending a week trying to build momentum for a new health plan, tweeted late Monday that a vote on a new health proposal “will be taken right after the Election when Republicans hold the Senate & win back the House.”

White House press secretary Sarah Sanders said Tuesday on Fox News that the administration would “lay out principles” of a plan, but she didn’t provide a timeline.

“I think the president realized with Nancy Pelosi in the House, we’re unlikely to get bipartisan cooperation, particularly in this political environment,” Sen. John Cornyn of Texas, a member of Senate GOP leadership, said Tuesday. “So maybe it was more a nod to the reality of our times than anything else.”

The administration thrust health care back into the spotlight last week when it asked a federal appeals court to invalidate former President Obama’s signature health act, sowing confusion over the next steps if the law is thrown out. The health law remains in place while the case continues.

“Last night, the president tweeted that they will come up with their plan in 2021. Translation: They have no health-care plan,” Senate Minority Leader Chuck Schumer (D., N.Y.) said at a press conference outside the Supreme Court Tuesday. “It’s the same old song they’ve been singing: They’re for repeal, they have no replace.”

Mr. Trump’s move to hold off on pushing for a vote on a GOP replacement plan for Obamacare is likely to bring relief to Republican members of Congress. Many had worried that diving back into an ACA replacement plan could hurt them in the 2020 election and give Democrats an opening to attack them as a threat to coverage.

The decision means congressional Republicans can continue to work on their marquee issues such as lowering costs while other key GOP leaders have been tapped by the president to help craft an ACA replacement plan. GOP senators involved in these discussions include Rick Scott of Florida, Mitt Romney of Utah and Bill Cassidy of Louisiana.

The president has also spoken with conservative groups, and Sen. Lindsey Graham (R., S.C.) and is leaning on senior White House adviser Kellyanne Conway and Brian Blase, the special assistant to the president for health-care policy, according to people familiar with the discussions.

According to administration officials, internal White House discussions over health care have been contentious at times and Mr. Trump was encouraged to take on the issue, which he promised as a candidate to address, by his acting chief of staff Mick Mulvaney.

Mr. Trump has said preserving coverage protections for people with pre-existing conditions would be critical, people familiar with his thinking say. Ideas have included turning Obamacare funding into block grants that states could use to set up their own health systems and preserving some sort of subsidies to assist lower-income people with obtaining coverage. Mr. Mulvaney on Sunday said nobody would lose their coverage if the ACA ends.

Mr. Trump’s announcement last week that the GOP would produce a health-care plan took Republicans by surprise. Although some GOP senators began discussions over various health-care bills, they don’t expect to reach a consensus or vote on any major health-care overhaul before the 2020 election, according to lawmakers and aides.

Most Republicans, including Senate Majority Leader Mitch McConnell (R., Ky.) have preferred to wait and see if the White House produces any plan of its own.

Democrats in the House and Senate on Tuesday introduced resolutions condemning the Trump administration’s efforts to undermine the ACA. The House is expected to vote on the resolution Wednesday, a move designed to put congressional Republicans on the spot and force them to go on the record over whether they support the president’s efforts to unwind the health-care law. Some House Republicans are expected to vote with Democrats.

The lawsuit seeking to invalidate the ACA is currently pending before the New Orleans-based U.S. Court of Appeals for the Fifth Circuit, where the parties are in the middle of submitting written legal arguments. The case was brought by Republican-led states.

The Democratic-led states defending the ACA filed their brief this week, and the Republican challengers, as well at the Justice Department, are due to file their briefs next month. An eventual Fifth Circuit ruling will likely take several months, and if the case goes to the Supreme Court, the litigation could last well into 2020.

Federal Judge Blocks Trump Rule On Association Health Plans

Rules loosening requirements on certain limited plans was designed to ‘end run’ 2010 health law.

A federal judge on Thursday struck down a Trump administration rule expanding access to certain health plans that don’t comply with the Affordable Care Act, a blow to the president just as he promises to deliver a replacement package for the health law.

The administration’s rule loosened requirements on association health plans, where groups or associations join together and obtain health coverage that is generally lower cost but lack benefits mandated under ACA. The administration has billed the plans as a way to give consumers more options, but Democrats have said they could weaken insurance markets.

U.S. District Judge John Bates said in his ruling that the administration’s rule on association health plans rule was designed to “end run” ACA requirements. The administration can seek a stay and appeal the decision or revisit the rule.

The rule released last year was a far-reaching step by the administration to wield its regulatory powers to chisel away at the ACA. Business groups such as the U.S. Chamber of Commerce had praised the action, saying millions more small businesses and self-employed people would be able to get less-expensive plans.

Administration critics said the decision Thursday is evidence that Republicans will jeopardize coverage. They had said healthier, younger people would opt for such plans. That could cause premiums form more elderly and sick people to rise.

“That’s the Republican vision for health care: higher costs, worse care,” said Leslie Dach, chairman of Protect Our Care, which supports the ACA, of the judge’s ruling.

An additional four million people were expected to enroll in these less comprehensive plans by 2023, according to the Labor Department, which issued the final rule.

“We disagree with the district court’s ruling and are considering all available options,” Justice Department spokeswoman Kelly Laco said. “The administration will continue to fight for sole proprietors and small businesses so that they can have the freedom to band together to obtain more affordable, quality health-care coverage. The Association Health Plan rule opened health-care options for dozens of associations representing thousands of small businesses and sole proprietors and provided them with access to the same type of affordable health-care options offered by other employers.”

Record Credit Card Debt Contradicts Donald “Duck” Trumps Claim of Booming Economy

U.S. Credit Card Debt Hit $870 Billion — the largest amount ever — as of December 2018, according to the data from the Federal Reserve. Credit card balances rose by $26 billion from the prior quarter.

“The increase in credit card balances is consistent with seasonal patterns but marks the first time credit card balances re-touched the 2008 nominal peak,” according to the report.

Nearly 480 million credit cards are now in circulation — up by more than 100 million since hitting bottom after the recession a decade ago.

At the end of last year, credit cards were the fourth-largest portion of consumer debt in the U.S. after mortgage, student loan and auto debt. But the quarterly increase in credit card debt was faster than the other categories. Overall debt reached a record $13.5 trillion.

About 37 million credit card accounts had a 90+ days delinquent mark added to their credit report last quarter, an increase of about two million from the fourth quarter of 2017. These 37 million accounts hold roughly $68 billion in debt that is 90-plus days delinquent.

One possible trouble spot is that, by age group, older Americans are seeing their credit card debt transition into the delinquency category at an increasing pace. In particular, those in their 50s have seen the most rapid change and could be considered the most vulnerable should a change occur in their employment.

An analysis of data compiled by Bloomberg on credit card asset-backed securities based on the cash flow stream of pooled credit card accounts found the block issued in Aug. 2015 has the highest delinquency rate — exceeding 6 percent.

Companies Cut Back In Spending Could Trigger Stock Selloff

Companies that miss earnings estimates could respond by cutting spending on capital improvements and labor, further strangling economic growth and reigniting a stock-market selloff, Mr. Wilson warned, adding that earnings misses tend to force companies to rethink their priorities.

Analysts estimate S&P 500 profits in the first quarter contracted 4.2% from a year earlier, according to FactSet. They expect that will be followed by no growth in the second quarter. That puts the broad index at risk of entering its first earnings recession—marked by at least two or more consecutive quarters of declining earnings—since 2016.

Part of the profit pain for companies is due to the high bar many set during last year’s tax-cut-fueled earnings boom, making year-over-year growth comparisons hard to meet without another economic stimulus. S&P 500 companies grew profits 20% in 2018, one of the best growth rates since the financial crisis, according to FactSet. Analysts see profits growing just 3.7% this year.

Dozens of companies have slashed their profit forecasts for the first quarter. Walgreens Boots Alliance Inc. last week became the latest big company to cut its full-year profit forecast as a result of challenging market conditions, joining corporate powers such as Apple Inc., FedEx Corp. and 3M Co.

With earnings season kicking off in earnest this week and valuations creeping up to their highest levels in more than half a year, investors say they plan to scrutinize corporate executives’ comments to gauge whether the contraction in corporate profit growth is a momentary blip or further evidence of a late-cycle economic slowdown.

U.S. Services-Sector Growth Cooled in March

The nonmanufacturing purchasing managers index posted some of its strongest numbers since 2008 last fall but softened around the new year.

The U.S. services sector expanded at a slower pace in March, a sign that a key segment of the economy continues to cool.

The Institute for Supply Management’s nonmanufacturing purchasing managers index fell to 56.1 in March from 59.7 in February. Economists surveyed by The Wall Street Journal had expected the index to fall to 58. The reading was the lowest since August 2017. Readings above 50 are a sign of expansion while readings below 50 show a contraction. March was the 110th-straight month of growth, ISM said.

The March reading “still reflects a rate of growth that’s good, not quite as strong as we’ve been accustomed to,” said Anthony Nieves, head of the ISM survey.

Respondents to the survey cited labor constraints as a reason for the slower growth. That could put pressure on employers to raise wages. Worker pay has been trending up in recent months after a long stretch of muted growth in the aftermath of the recession.

“All indications are coming from our respondents that there is wage pressure,” Mr. Nieves said. “Just in dialogue with some of the recruiters out there, this has been an ongoing trend.”

The Labor Department is scheduled to release employment and wage data for March on Friday. The services sector accounts for roughly 84% of all private-sector jobs and services make up two-thirds of consumer spending.

The services index posted some of its strongest numbers since 2008 last fall but softened around the new year as households pared back spending in December. A separate measure of retail sales rose slightly in January but fell in February a sign that Americans could be taking a cautious approach to 2019 so far.

Retail trade was one of only two industries to report a contraction in March, according to the ISM survey. The other was educational services.

Mr. Nieves attributed last fall’s faster pace of growth to the effects of the 2017 tax overhaul. Those effects are now starting to wane, he said.

The report showed that business activity and new orders were weaker than in February, while employment was growing at a faster pace.

The ISM nonmanufacturing report comes from a survey of businesses in the services sector, construction and public administration. Since services are not usually imported, activity in the sector is considered an important indication of the underlying demand in the economy.

Investors Brace For Hit To Profits As Costs Rise

Increasing wage and energy costs threaten to hurt companies’ margins just as the U.S. economy slows.

Investors are concerned that rising wages and energy costs will eat into corporate profits, threatening the decadelong bull market in stocks.

Economists expect to see a strong month of wage growth when the Labor Department releases the March jobs report Friday. Wages grew at their fastest pace in nearly a decade in February, after starting to pick up speed just over a year ago.

At the same time, energy prices have jumped. Fueled by output cuts led by the Organization of the Petroleum Exporting Countries and U.S. sanctions on Venezuela and Iran, U.S. crude-oil futures prices rose 32% in the three months through March, logging their biggest one-quarter percentage gain since 2009.

These costs threaten to push down corporate profitability, some investors say, creating another hurdle for the stock market just as a slowdown in the European and Chinese economies is chipping away at U.S. growth. Muted inflation has pushed central banks to keep interest rates low, in turn encouraging investment in riskier assets such as stocks.

“You typically see wages rising in a late-cycle environment,” said James Camp, managing director of strategic income at Eagle Asset Management. He said oil and gas prices are increasingly a hindrance, too, though he is less concerned about those costs because of the energy industry’s ability to ramp up production at short notice.

“All of those factors conspire to say we’re at peak margins,” Mr. Camp said.

Helped by the Republican tax cuts and a booming economy, the largest U.S. companies may never have been more profitable than they were late last year. Net margins for members of the S&P 500 hit 10.7% in the fourth quarter—their highest level on record, according to FactSet data going back to 1999.

Surging profits have been a big factor behind the stock market’s record bull run. But some investors now think the only direction margins can go from here is down, as employees benefit more from the long economic expansion.

Average hourly wages in February were 3.4% higher than a year earlier, according to the Labor Department, part of a global pickup in compensation driven by low and falling levels of unemployment. That is one reason why analysts have slashed their forecasts for earnings growth this year.

Corporate profits are set to decline in the first quarter for the first time in years.

“One thing we’re concerned about is if there’s continuing strength in the labor market and a slowdown in economic growth,” said Greg Boutle, U.S. head of equity and derivative strategy at BNP Paribas. A combination of higher wage bills and weaker revenue growth could hit labor-intensive companies such as those in the consumer-discretionary and industrials sectors particularly hard, he said.

One concern for fund managers: the development of complex global supply chains and the expansion of Amazon.com Inc. have made it harder for companies to feed costs through to customers in the form of higher prices.

That could help keep inflation under control, meaning the Federal Reserve is less likely to raise interest rates. A market-based measure of expectations for average annual inflation over the next 10 years, known as the 10-year break-even rate, has hovered beneath the Fed’s 2% target for more than four months.

Food companies have recently suffered because they haven’t been able to raise prices in the face of relentless cuts by Amazon and Walmart Inc., said Andy Hopkins, head of equity research at Wilmington Trust.

Thomas Costerg, senior economist at Pictet Wealth Management, said, “As wage growth moves towards 4%, you start to worry about a recession.” He said the resulting squeeze on margins is one of the three main reasons to worry about the bull market. The others: worsening consumer-credit conditions and the fall of longer-term bond yields below yields on shorter-term debt, which often presages a recession. The latter trend reversed recently, although longer-term bond yields remain off the highs they hit in 2018.

Wages are back on the radar of small businesses. The share of owners who said labor costs were their biggest problem rose to 10% in February, according to the National Federation of Independent Business, the highest level since the advocacy group began reporting the measure in 1986.

To be sure, these small businesses remained less concerned about the cost of labor than its quality, as well as taxes and regulation. Moreover, some investors and strategists remain unflustered. Even with recent gains, wage growth has continued to look sluggish compared with the late stages of previous economic expansions.

“You’re going to see some margin compression, but I don’t think it’s going to be too prolonged or problematic,” said Aaron Anderson, a member of Fisher Investments’ investment-policy committee.

Mislav Matejka, an equity strategist at JPMorgan Chase, has told clients to worry less about margins, which often rise in tandem with commodities prices as both take their lead from the strength of the economy. Overall sales stand to benefit when consumer-spending power is increasing even if wages whittle away at profitability, he said.

Still, others worry that the combination of higher input costs and a slowing economy could spell trouble for labor-intensive sectors such as autos and companies that have high levels of debt.

“If margins are coming under pressure from the cost side, albeit slowly, and top lines are falling as growth slows, then it’s really going to be a question of which companies have the strongest balance sheets moving forward,” said Mr. Camp of Eagle Asset Management.