US businesses cannot afford the HC bill

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North Cackalacky

Subject: RE: US businesses cannot afford the HC bill

trinnas - 2010-03-27 6:29 PM

ScudRunner - 2010-03-27 4:42 PM

trinnas - 2010-03-27 12:04 PM

ScudRunner - 2010-03-27 2:01 PM How come I'm not allowed to "create an asset" based on my predicted tax returns for the whole rest of my life, and add that to my net worth?

If I read that correctly, Caterpillar is "losing" fake future-dollars.

If you are of the corporations are evil mind then I would expect you would see it that way but this is something that is required for the SEC and originally set up by the government regulators.

It's got nothing to do with "evil." It just strikes me as odd, and slightly stupid, that they are forced to claim the loss of $100M that they don't really have in the first place. I mean, I know the whole system is essentially a shell game, but it is still a little mind-boggling every once in a while to see such stark examples of it.

ETA: I have a hard time feeling bad for the corporation, or understanding how they can claim they're going to have to start firing people, when they lose some of their profit margin because they are no longer allowed to claim an income tax deduction on money they didn't actually spend (since it came from some place else).

Also, in the case of AT&T and the $1B loss, that's one third of their profit for one fiscal quarter. If it's all profit, and they lay some people off because their profit for one fiscal quarter is going to suffer one time and then their annual tax deduction will be a little bit smaller, that's just stupid.

They are not playing a shell game and if you had read the article and thought about it you would have seen that but let me try and explain it to you. The subsidy and tax write off are to incentivise the companies to provide the prescription drug coverage for their retirees on a pension. When the gov't passed Medicare part D they found it would be cheaper, for the gov't to pay companies a subsidy and allow the full tax write off than it would have been if their retirees enrolled in Medicare D. Because they are publicly traded companies they are required by gov't regulation to disclose and account for assets (the subsidy) and liabilities (lessened due to the tax write off) not just for today but into the future as well. They do this so investors have access to the information and can make substantive judgments about purchasing stock in the companies (think Enron and World comm). The government just changed the tax rules (liabilities) with the HC bill. The companies are required, by the government, to reflect these liabilties changes for current and future liabilities already stated. And, they are required to make those changes when the tax rules go into effect. Do you see the pattern here? This means the companies get less tax write off and they may or may not drop prescription coverage for their retirees, we shall see. If they do it means Medicare D will have to pick them up, costing the government more money. As you will note, if you go back far enough, I already said I do not feel overly bad for the companies as they are losing only the write off of the subsidy not the subsidy itself (yet). The timing however is rather lousy as we are in a weak recovery and these companies taking this hit now will likely cause some ripples in the economy that we really don't need now. And if these companies drop their retirees drug coverage it will increase the cost projections for the HC bill.
This is my understanding from the research I did so I would understand what was going on anyone with an MBA please feel free to correct me if I made any mistakes.

I see the pattern. I read the article. If I understand it, AT&T is going to take a $1B loss on an asset they created, and have to report, based on a tax exemption they had planned for over the lifespan of all current and retired employees. And, unless I'm totally missing something, then it's all covered for a long time. They've paid for it, and they don't have to keep paying for it, except in much smaller increments as their workforce and retirement pool changes.

And that fact the government previously signed the dumba$$ deal that let the companies take a tax write off on money they didn't actually spend doesn't mean that the government can't fix it.

Of course, I realize that everyone doesn't have $12B a year in profit to play with like AT&T does. I just think that people need to bring out something more damning than the closing of this particular tax loophole to say that the HC bill is going to bankrupt my grandmother's company.

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Subject: RE: US businesses cannot afford the HC bill

trinnas - 2010-03-27 6:29 PM

They are not playing a shell game

Oh, and I didn't say anyone was playing a shell game. I said the whole system was a shell game. As in, the whole world economic system.

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Subject: RE: US businesses cannot afford the HC bill

ScudRunner - 2010-03-27 9:24 PM

trinnas - 2010-03-27 6:29 PM

ScudRunner - 2010-03-27 4:42 PM

trinnas - 2010-03-27 12:04 PM

ScudRunner - 2010-03-27 2:01 PM How come I'm not allowed to "create an asset" based on my predicted tax returns for the whole rest of my life, and add that to my net worth?

If I read that correctly, Caterpillar is "losing" fake future-dollars.

If you are of the corporations are evil mind then I would expect you would see it that way but this is something that is required for the SEC and originally set up by the government regulators.

It's got nothing to do with "evil." It just strikes me as odd, and slightly stupid, that they are forced to claim the loss of $100M that they don't really have in the first place. I mean, I know the whole system is essentially a shell game, but it is still a little mind-boggling every once in a while to see such stark examples of it.

ETA: I have a hard time feeling bad for the corporation, or understanding how they can claim they're going to have to start firing people, when they lose some of their profit margin because they are no longer allowed to claim an income tax deduction on money they didn't actually spend (since it came from some place else).

Also, in the case of AT&T and the $1B loss, that's one third of their profit for one fiscal quarter. If it's all profit, and they lay some people off because their profit for one fiscal quarter is going to suffer one time and then their annual tax deduction will be a little bit smaller, that's just stupid.

They are not playing a shell game and if you had read the article and thought about it you would have seen that but let me try and explain it to you. The subsidy and tax write off are to incentivise the companies to provide the prescription drug coverage for their retirees on a pension. When the gov't passed Medicare part D they found it would be cheaper, for the gov't to pay companies a subsidy and allow the full tax write off than it would have been if their retirees enrolled in Medicare D. Because they are publicly traded companies they are required by gov't regulation to disclose and account for assets (the subsidy) and liabilities (lessened due to the tax write off) not just for today but into the future as well. They do this so investors have access to the information and can make substantive judgments about purchasing stock in the companies (think Enron and World comm). The government just changed the tax rules (liabilities) with the HC bill. The companies are required, by the government, to reflect these liabilties changes for current and future liabilities already stated. And, they are required to make those changes when the tax rules go into effect. Do you see the pattern here? This means the companies get less tax write off and they may or may not drop prescription coverage for their retirees, we shall see. If they do it means Medicare D will have to pick them up, costing the government more money. As you will note, if you go back far enough, I already said I do not feel overly bad for the companies as they are losing only the write off of the subsidy not the subsidy itself (yet). The timing however is rather lousy as we are in a weak recovery and these companies taking this hit now will likely cause some ripples in the economy that we really don't need now. And if these companies drop their retirees drug coverage it will increase the cost projections for the HC bill.
This is my understanding from the research I did so I would understand what was going on anyone with an MBA please feel free to correct me if I made any mistakes.

I see the pattern. I read the article. If I understand it, AT&T is going to take a $1B loss on an asset they created, and have to report, based on a tax exemption they had planned for over the lifespan of all current and retired employees. And, unless I'm totally missing something, then it's all covered for a long time. They've paid for it, and they don't have to keep paying for it, except in much smaller increments as their workforce and retirement pool changes.

And that fact the government previously signed the dumba$$ deal that let the companies take a tax write off on money they didn't actually spend doesn't mean that the government can't fix it.

Of course, I realize that everyone doesn't have $12B a year in profit to play with like AT&T does. I just think that people need to bring out something more damning than the closing of this particular tax loophole to say that the HC bill is going to bankrupt my grandmother's company.

1)This is a one time charge off against earnings as a liability which it now is.
2) "They" did not "create" the assets they have to account for both the income from the subsidy and the tax liability due to accounting rules. What I am saying is they didn't just pull it from their azzes just to make their bottom line look better as you seem to imply.
3)See JD's response as to why this was not a dumbazz deal for the government, it saved them money.
4)I agree this is not one of the myriad of reasons this bill is bad for business. There are many other ways this will cost them money including driving up premiums as the taxes on insurance companies are passed on to the consumer. Then again companies will likely pass on as much of the premium hike as the government allows them to. Lets not forget the VAT tax that many think will likly be coming our way.
5) <from other post> if you think the world economy is just a shell game you are more than welcome to absent yourself from it by bartering for every good and service you require.

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Subject: RE: US businesses cannot afford the HC bill

trinnas - 2010-03-27 11:25 AM

Since companies had created an asset based on the expectation they would be getting these deductions over the lives of their current and future retirees, they say they need to take a charge reflecting the fall in the asset's value.
Accounting rules say the charges, which affect what are called "deferred tax assets," must be taken in the quarter in which a tax-law change is enacted. The first quarter ends Wednesday. Companies wouldn't have to announce the charges before they actually report their first-quarter earnings over the next several weeks. However, if they viewed the charges as material, they might feel they needed to inform shareholders immediately.

I assume this quote came from the WSJ article. I don't know for sure, because I am not a subscriber and thus can't read the whole article.

"Created an asset" were someone else's words to describe the situation, but they seem apropos considering the accounting rules in question.

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Subject: RE: US businesses cannot afford the HC bill

ScudRunner - 2010-03-27 11:25 PM

trinnas - 2010-03-27 11:25 AM

Since companies had created an asset based on the expectation they would be getting these deductions over the lives of their current and future retirees, they say they need to take a charge reflecting the fall in the asset's value.
Accounting rules say the charges, which affect what are called "deferred tax assets," must be taken in the quarter in which a tax-law change is enacted. The first quarter ends Wednesday. Companies wouldn't have to announce the charges before they actually report their first-quarter earnings over the next several weeks. However, if they viewed the charges as material, they might feel they needed to inform shareholders immediately.

I assume this quote came from the WSJ article. I don't know for sure, because I am not a subscriber and thus can't read the whole article.

"Created an asset" were someone else's words to describe the situation, but they seem apropos considering the accounting rules in question.

Actually that was my point, though I appear to not have expressed myself well, The asset class was created by accounting rules and was not some kind of dodge the companies were using. The dollars are not fake they are very real and will be realized by the companies this year and in the future. Those "losses" must be reported and they must be reported in the year the tax rule goes into effect, but the $100mil is a non cash charge so they are not writing a check.

Master

2006

Portland, ME

Subject: RE: US businesses cannot afford the HC bill

ScudRunner - 2010-03-27 1:01 PM How come I'm not allowed to "create an asset" based on my predicted tax returns for the whole rest of my life, and add that to my net worth?

If I read that correctly, Caterpillar is "losing" fake future-dollars.

because you don't report in GAAP and Caterpillar has to report changes in future tax obligations in the year you know the obligation will occur and investors want to have the all the info to predict future earnings.

Frankly, if people bought and sold stock on you, you'd have a write down as well to account for your future tax obligation to pay for this bill.

Edited by Jackemy 2010-03-28 9:16 AM

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Subject: RE: US businesses cannot afford the HC bill

ScudRunner - 2010-03-27 4:42 PM

Also, in the case of AT&T and the $1B loss, that's one third of their profit for one fiscal quarter. If it's all profit, and they lay some people off because their profit for one fiscal quarter is going to suffer one time and then their annual tax deduction will be a little bit smaller, that's just stupid.

People hear "profit" and they think it's all money that is going into the owner's pockets. Business reinvest this profit back into the company the next year for R&D, expansion, acquisitions etc..

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Veteran

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Subject: RE: US businesses cannot afford the HC bill

I don't know.

I do know that large businesses tend to support the notion that business should supply employees with medical insurance. Not because they're overly concerned for the well being of their employees, but because usually smaller competitors can't support the cost of paying for these benefits.

Edited by Johners 2010-03-29 12:19 PM

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1087

Portland

Subject: RE: US businesses cannot afford the HC bill

Simply put:

This bill was passed before it was propperly researched.

Edited by menglo 2010-03-29 1:37 PM

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Subject: RE: US businesses cannot afford the HC bill

Jackemy - 2010-03-28 9:12 AM

ScudRunner - 2010-03-27 1:01 PM How come I'm not allowed to "create an asset" based on my predicted tax returns for the whole rest of my life, and add that to my net worth?

If I read that correctly, Caterpillar is "losing" fake future-dollars.

because you don't report in GAAP and Caterpillar has to report changes in future tax obligations in the year you know the obligation will occur and investors want to have the all the info to predict future earnings.

Frankly, if people bought and sold stock on you, you'd have a write down as well to account for your future tax obligation to pay for this bill.

Basically, the reason a "Deferred Tax Asset" or "Deferred Tax Liability" is booked, it because there is a difference between GAAP and tax accounting, which creates an asset or liability for the company. It's a timing issue. Companies have to account for this, based on GAAP and SEC rules. There is no "shell" game involved, and no "Fake" Dollars. These are very real dollars, that the company would have realized in the future (thru the tax subsidy). When the government changed the rules, so did the company's tax asset. They will not be realizing these dollars in the future, so they have to take the "loss" that is generated by this change. They will not be realizing these dollars anymore, so it's created a loss.

When analyzing a companies health, you have to look at the overall picture. This is why it's important to review financial statements, including reading the notes to the financial statements of a company. Also, the health of a company can largely be analyzed through the statement of cash flows. If they are generating cash from operations and reinvesting it wisely, you can typically tell a lot from the cash flows.

You can't always take what you read in an article at face value. They didn't "create" an asset, and they definitely are not losing "fake" dollars. It's called accrual accounting.

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Subject: RE: US businesses cannot afford the HC bill

Here is my prediction. Companies will start dumping their employees insurance sending them to the exchanges and paying the fine. I do believe that this was a planned part of the HC bill as that is exactly what this bill incentivizes companies to do. The fine is 2k to 3k depending on the situation. So, I ask you, how much does your company pay for your health insurance and how much do they pay for family coverage for employees with spouses and/or children? There is no increase in the fine if they drop family coverage it is still the 2-3k. If your company pays 10K for your family coverage and the fine is only 3k they are on the winning end of the equation. They may give you an increase in salary but I doubt it will be their entire savings. Add to that that if you do offer coverage and if an employee's portion is greater than 9.8% of their salary then you still get fined. Why bother to offer coverage any more. People say it is to attract good talent but that was when it was much more difficult to get coverage outside of work, now that will not be the case, we hope. Think about it, your work does not offer you car insurance because you can get it easily elsewhere. I will give you that one of the reasons employers offer HC is that a healthy workforce is a productive work force. However, you are mandated to have insurance under this bill so they don't have to worry about you not having insurance.

The last part of my prediction will be that gold plated health plans will be kept as part of executive pay schemes, the executives will be the only one's left with HC coverage while the rest of the employees are on the exchanges. This makes sense as it is tax exempt (for the person) compensation. With the dust up lately over bonusues and executive compensation this will be a way to sweeten executive pay deals without getting hammered for cash and bonus compensation.

This is just a prediction but we shall see in the coming years I really hope I'm wrong.

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Subject: RE: US businesses cannot afford the HC bill

trinnas - 2010-03-29 3:15 PM Here is my prediction. Companies will start dumping their employees insurance sending them to the exchanges and paying the fine. I do believe that this was a planned part of the HC bill as that is exactly what this bill incentivizes companies to do. The fine is 2k to 3k depending on the situation. So, I ask you, how much does your company pay for your health insurance and how much do they pay for family coverage for employees with spouses and/or children? There is no increase in the fine if they drop family coverage it is still the 2-3k. If your company pays 10K for your family coverage and the fine is only 3k they are on the winning end of the equation. They may give you an increase in salary but I doubt it will be their entire savings. Add to that that if you do offer coverage and if an employee's portion is greater than 9.8% of their salary then you still get fined. Why bother to offer coverage any more. People say it is to attract good talent but that was when it was much more difficult to get coverage outside of work, now that will not be the case, we hope. Think about it, your work does not offer you car insurance because you can get it easily elsewhere. I will give you that one of the reasons employers offer HC is that a healthy workforce is a productive work force. However, you are mandated to have insurance under this bill so they don't have to worry about you not having insurance.

The last part of my prediction will be that gold plated health plans will be kept as part of executive pay schemes, the executives will be the only one's left with HC coverage while the rest of the employees are on the exchanges. This makes sense as it is tax exempt (for the person) compensation. With the dust up lately over bonusues and executive compensation this will be a way to sweeten executive pay deals without getting hammered for cash and bonus compensation.

This is just a prediction but we shall see in the coming years I really hope I'm wrong.

Can't argue with your logic here, but you could also argue that when companies start to not offer health care another company will want the good employees and offer health care. That will give them an incentive that other companies do not have and then 'earn' the good talent.

The free market will then correct itself because these companies want to keep their good talent and therefore have to pay them accordingly.

The above scenario is just as likely as the one you have proposed.

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Subject: RE: US businesses cannot afford the HC bill

trinnas - 2010-03-29 2:15 PM Here is my prediction. Companies will start dumping their employees insurance sending them to the exchanges and paying the fine. I do believe that this was a planned part of the HC bill as that is exactly what this bill incentivizes companies to do. The fine is 2k to 3k depending on the situation. So, I ask you, how much does your company pay for your health insurance and how much do they pay for family coverage for employees with spouses and/or children? There is no increase in the fine if they drop family coverage it is still the 2-3k. If your company pays 10K for your family coverage and the fine is only 3k they are on the winning end of the equation. They may give you an increase in salary but I doubt it will be their entire savings. Add to that that if you do offer coverage and if an employee's portion is greater than 9.8% of their salary then you still get fined. Why bother to offer coverage any more. People say it is to attract good talent but that was when it was much more difficult to get coverage outside of work, now that will not be the case, we hope. Think about it, your work does not offer you car insurance because you can get it easily elsewhere. I will give you that one of the reasons employers offer HC is that a healthy workforce is a productive work force. However, you are mandated to have insurance under this bill so they don't have to worry about you not having insurance.

The last part of my prediction will be that gold plated health plans will be kept as part of executive pay schemes, the executives will be the only one's left with HC coverage while the rest of the employees are on the exchanges. This makes sense as it is tax exempt (for the person) compensation. With the dust up lately over bonusues and executive compensation this will be a way to sweeten executive pay deals without getting hammered for cash and bonus compensation.

This is just a prediction but we shall see in the coming years I really hope I'm wrong.

^^ completely agree with companies and individuals forgoing having insurance to pay a fine instead.

I can't find the chart which details how this bill is going to be paid for but a nice chuck of money is coming from the fines from business and individuals. So i would think they (govt) realize people will make the decision to just pay the fine instead

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Subject: RE: US businesses cannot afford the HC bill

One of the main reasons companies started offering health coverage was due to government regulation.

Government put a cap on salaries in several industries around the time of the Great Depression and WWII. So, for companies to differentiate themselves, they had to offer fringe benefits, namely health coverage. Over time, this became a standard practice.

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Subject: RE: US businesses cannot afford the HC bill

Gaarryy - 2010-03-29 2:27 PM

trinnas - 2010-03-29 2:15 PM

The last part of my prediction will be that gold plated health plans will be kept as part of executive pay schemes, the executives will be the only one's left with HC coverage while the rest of the employees are on the exchanges. This makes sense as it is tax exempt (for the person) compensation. With the dust up lately over bonusues and executive compensation this will be a way to sweeten executive pay deals without getting hammered for cash and bonus compensation.

This is just a prediction but we shall see in the coming years I really hope I'm wrong.

^^ completely agree with companies and individuals forgoing having insurance to pay a fine instead.

I can't find the chart which details how this bill is going to be paid for but a nice chuck of money is coming from the fines from business and individuals. So i would think they (govt) realize people will make the decision to just pay the fine instead

Probably that same health plan that Congress gets.

Edited by BbMoozer 2010-03-29 2:35 PM

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Subject: RE: US businesses cannot afford the HC bill

Everything is too expensive in america. My former CEO of a health insurance software company felt nation would lose employer based healthcare and go into more individual plans. Figured it would either be Single Payer or Healthcare savings accounts but the current system would be gone.

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Subject: RE: US businesses cannot afford the HC bill

Marvarnett - 2010-03-29 3:22 PM

trinnas - 2010-03-29 3:15 PM Here is my prediction. Companies will start dumping their employees insurance sending them to the exchanges and paying the fine. I do believe that this was a planned part of the HC bill as that is exactly what this bill incentivizes companies to do. The fine is 2k to 3k depending on the situation. So, I ask you, how much does your company pay for your health insurance and how much do they pay for family coverage for employees with spouses and/or children? There is no increase in the fine if they drop family coverage it is still the 2-3k. If your company pays 10K for your family coverage and the fine is only 3k they are on the winning end of the equation. They may give you an increase in salary but I doubt it will be their entire savings. Add to that that if you do offer coverage and if an employee's portion is greater than 9.8% of their salary then you still get fined. Why bother to offer coverage any more. People say it is to attract good talent but that was when it was much more difficult to get coverage outside of work, now that will not be the case, we hope. Think about it, your work does not offer you car insurance because you can get it easily elsewhere. I will give you that one of the reasons employers offer HC is that a healthy workforce is a productive work force. However, you are mandated to have insurance under this bill so they don't have to worry about you not having insurance.

The last part of my prediction will be that gold plated health plans will be kept as part of executive pay schemes, the executives will be the only one's left with HC coverage while the rest of the employees are on the exchanges. This makes sense as it is tax exempt (for the person) compensation. With the dust up lately over bonusues and executive compensation this will be a way to sweeten executive pay deals without getting hammered for cash and bonus compensation.

This is just a prediction but we shall see in the coming years I really hope I'm wrong.

Can't argue with your logic here, but you could also argue that when companies start to not offer health care another company will want the good employees and offer health care. That will give them an incentive that other companies do not have and then 'earn' the good talent.

The free market will then correct itself because these companies want to keep their good talent and therefore have to pay them accordingly.

The above scenario is just as likely as the one you have proposed.

If unemplyment goes back to prerecession levels before the fines start to kick in you may be right. If the economy is still tight and companies need to find ready places to cut costs my prediction will likely be right. I hope your scenario is correct but I think the incentives go my way. If it does go your way, however, I will gladly buy you a beer or may be some bacon.

Edited by trinnas 2010-03-29 2:58 PM

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Atlanta, Ga

Subject: RE: US businesses cannot afford the HC bill

trinnas - 2010-03-29 3:41 PM If you does go your way, however, I will gladly buy you a beer or may be some bacon.

I like BACON!!!

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Subject: RE: US businesses cannot afford the HC bill

I disagree...as do the markets. Stocks are up over 5% in a little over a week. If this was a doom and gloom scenario stocks would be getting hammered (stocks are buisnesses) and if this was going to be so bad for their bottom line the markets would be slammed.

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Subject: RE: US businesses cannot afford the HC bill

mfilan - 2010-03-30 12:23 PM I disagree...as do the markets. Stocks are up over 5% in a little over a week. If this was a doom and gloom scenario stocks would be getting hammered (stocks are buisnesses) and if this was going to be so bad for their bottom line the markets would be slammed.

1) The stock market is not particularly forwad looking.
2) Stock market is coming off dropping for just over a year and bottoming out just a year ago so it still has some room to move. @ the end of 2007 DJA was at ~14k now it is just shy of 11K
3) The Cap gains tax increase goes into effect next year not this year so look for a sell off towards the end of this year as people get out what they can before the hike, then look for slower trading.
4) Stocks are still riding the earnings high we've seen but, this was more due to cost cutting than any truly improved outlook and now may be priced into the market. It is earnings time now so some people are still chasing gains.

Edited by trinnas 2010-03-30 12:10 PM

158

Subject: RE: US businesses cannot afford the HC bill

trinnas - 2010-03-30 12:05 PM

mfilan - 2010-03-30 12:23 PM I disagree...as do the markets. Stocks are up over 5% in a little over a week. If this was a doom and gloom scenario stocks would be getting hammered (stocks are buisnesses) and if this was going to be so bad for their bottom line the markets would be slammed.

1) The stock market is not particularly forwad looking.
2) Stock market is coming off dropping for just over a year and bottoming out just a year ago so it still has some room to move. @ the end of 2007 DJA was at ~14k now it is just shy of 11K
3) The Cap gains tax increase goes into effect next year not this year so look for a sell off towards the end of this year as people get out what they can before the hike, then look for slower trading.
4) Stocks are still riding the earnings high we've seen but, this was more due to cost cutting than any truly improved outlook and now may be priced into the market. It is earnings time now so some people are still chasing gains.

Yeah but the down was in the 6's on March 9th 2009 so we've had 80% reversal. 14,000 was long gone at that time. By that logic the NASDAQ at 5000 (NASDAQ at 2400 now) in 1999-2000 is long over due but we're still nowhere close to that.

Earnings season....things have been priced for perfection and stocks continue to improve.

Stock market is always looking forward trading on future predictions of earnings, that is why companies forecasts are so important. No one cares about last months profits, it's next month/quarter/year that is important.

When there is fear in the air money always comes out of stocks and goes to safe investments (bonds/cash) look at the fears on Greece (who's economy is smaller than many California counties such as Riverside County....so not that significant in the overall world picture..)

If this was percieved to be a big burden on buisnesses stocks would be getting slaughtered right now.

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Highlands Ranch, CO

Subject: RE: US businesses cannot afford the HC bill

trinnas - 2010-03-30 11:05 AM

mfilan - 2010-03-30 12:23 PM I disagree...as do the markets. Stocks are up over 5% in a little over a week. If this was a doom and gloom scenario stocks would be getting hammered (stocks are buisnesses) and if this was going to be so bad for their bottom line the markets would be slammed.

1) The stock market is not particularly forwad looking.
2) Stock market is coming off dropping for just over a year and bottoming out just a year ago so it still has some room to move. @ the end of 2007 DJA was at ~14k now it is just shy of 11K
3) The Cap gains tax increase goes into effect next year not this year so look for a sell off towards the end of this year as people get out what they can before the hike, then look for slower trading.
4) Stocks are still riding the earnings high we've seen but, this was more due to cost cutting than any truly improved outlook and now may be priced into the market. It is earnings time now so some people are still chasing gains.

1) The stock market is very forward looking. Stock prices are a reflection of the present value of future cash flows.
2) Investors don't really care where the market has been, but where it's headed.
3) So are you saying that because capital gains will go up next year, investors will sell ahead of time in anticipation of lower returns? That just contradicted your first point.
4) Yeah, we are coming up to earnings season, and stocks may be votatile during the next few weeks. But no one can deny the improvement we are starting to see in the economy. Industrials/cyclicals are starting to outperform, just yesterday DHR preannounced better than expected earnings. Economists are expecting a substantial positive jobs number this Friday. The Conference Board consumer confidence up this past month and better than expected. Personal spending up last month and up for the fifth straight month. The market is just not putting any weight into the announcements from a few companies on the elimination of the tax deductibility of the subsidies. CAT outperforming the market by 1.8% since, ITW announced today and is flat with the market, AT&T outperforming by 70bps......

My Race Log

Champion

18680

Lost in the Luminiferous Aether

Subject: RE: US businesses cannot afford the HC bill

mfilan - 2010-03-30 2:59 PM

trinnas - 2010-03-30 12:05 PM

mfilan - 2010-03-30 12:23 PM I disagree...as do the markets. Stocks are up over 5% in a little over a week. If this was a doom and gloom scenario stocks would be getting hammered (stocks are buisnesses) and if this was going to be so bad for their bottom line the markets would be slammed.

1) The stock market is not particularly forwad looking.
2) Stock market is coming off dropping for just over a year and bottoming out just a year ago so it still has some room to move. @ the end of 2007 DJA was at ~14k now it is just shy of 11K
3) The Cap gains tax increase goes into effect next year not this year so look for a sell off towards the end of this year as people get out what they can before the hike, then look for slower trading.
4) Stocks are still riding the earnings high we've seen but, this was more due to cost cutting than any truly improved outlook and now may be priced into the market. It is earnings time now so some people are still chasing gains.

Yeah but the down was in the 6's on March 9th 2009 so we've had 80% reversal. 14,000 was long gone at that time. By that logic the NASDAQ at 5000 (NASDAQ at 2400 now) in 1999-2000 is long over due but we're still nowhere close to that.

Earnings season....things have been priced for perfection and stocks continue to improve.

Stock market is always looking forward trading on future predictions of earnings, that is why companies forecasts are so important. No one cares about last months profits, it's next month/quarter/year that is important.

When there is fear in the air money always comes out of stocks and goes to safe investments (bonds/cash) look at the fears on Greece (who's economy is smaller than many California counties such as Riverside County....so not that significant in the overall world picture..)

If this was percieved to be a big burden on buisnesses stocks would be getting slaughtered right now.

This is not forward looking, it's not looking much past the end of one's nose.

To put is succinctly the fear of losing out on the gains is overriding fear of the future, 2-10 years future not next quarters returns. Did you really expect armageddon to happen the minute Obama put pen to paper, that's rediculous. Just because we didn't have a black friday or monday or... event doesn't invalidate the claim that HC will be bad for business.

158	Subject: RE: US businesses cannot afford the HC bill If there is a significant policy that was just put into place (healthcare bill) that was going to greatly affect bottom line on buisness than yes, I do expect that the markets would have had a major reaction that would be negative...

158

Subject: RE: US businesses cannot afford the HC bill

I don't know how the bill is going to affect America, I have read many newspapers etc, time will tell if it will save money (insurance is a shared risk, more people on the policies = cheaper policies in theory, plus medicare/medicaid reform) or if it will cost a ton of moeny over the next 10 years and for the future....my point is experts at Goldman Sachs, Morgan Stanley and other firms that study these things and how they affect cost to buisnesses bottom lines must not think that this bill is going to hose us. Otherwise the markets would be reacting differently. It's a fact, look at the numbers of the stock market over the last week since the bill was signed.

US businesses cannot afford the HC bill (Page 3)

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