The NeverEnding Greek Story

Market Roundup Dow -75.71 to 17,890.36 S&P -6.27 to 2,102.31 NASDAQ -10.22 to 5,112.19 10-YR Yield +0.022 to 2.393% Gold -$0.50 to $1,172.40 Oil -$0.65 to $59.62 It’s one of those big news days again, with two key storylines dominating market action. First, Greece. Remember the “NeverEnding Story”? I watched the movie at a friend’s birthday party when I was 9. I loved everything about it – from the flying dog/dragon Falkor to the fantasy storyline to the well-done (for the early 80s, anyway) special effects. This NeverEnding Greek Story? Not so much! I doubt I’m alone in wishing the darn thing would finally come to an end one way or another … and it appears most of Europe is on the same page now. Malta’s Finance Minister Edward Scicluna told Bloomberg that “We have run out of comments and also run out of patience.” The Greek crisis never seems to end, but the battle over Obamacare might finally be settled with the Supreme Court ruling. Finland’s Finance Minister Alexander Stubb added: “It’s quite the ping-pong back-and-forth … the worst case scenario for now is that we continue this tomorrow.” Over at the Financial Times, you can find the headline “Creditors issue bailout ultimatum to Greece.” And at USAToday.com, there’s the headline: “Greece faces final ‘take it or leave it’ debt moment.” If anything, creditor nation demands have gotten even more stringent in the past day or two. They’re looking for more spending cuts, fewer exemptions from Value Added Taxes, and more pension reforms. Greek officials reportedly responded that those would bring “Armageddon” to their country. Not exactly the kind of thing you’d hear if a deal was closer rather than farther off. It all leads me to believe we are literally a day or two, at most, from the endgame. Either … Greece caves and accedes to creditor demands, in a way that Prime Minister Alexis Tsipras’ party will support. That would ensure the country stays in the euro for now, even as it wouldn’t prevent us from being back in the same mess a year or two down the road. Or Greece defaults on its June 30 1.5 billion euro payment to the International Monetary Fund, and its European bailout program expires. That would likely result in capital controls for Greek banks, an exit from the euro currency union, and turmoil across European markets. I may have enjoyed fairy tale and fantasy stories as a young kid. But I don’t believe in them anymore. And the cold, hard reality is that the NeverEnding Greek Story looks like it won’t end anywhere near as well as the NeverEnding Story did. The second major news item of the day: Obamacare survived its Supreme Court challenge. In a 6-3 vote, the nation’s highest court ruled in the King v. Burwell case that subsidies are permissible in both states that have their own exchanges and states where consumers need to use the federal insurance exchange. More than 6 million Americans could’ve lost the government tax credits that make Obamacare insurance much more affordable had the vote gone the other way. That, in turn, would’ve led many to cancel their coverage – forcing premiums even higher on remaining customers and ultimately calling the entire program into question. Obamacare has now survived two Supreme Court challenges, making it much likely to endure. There’s always the chance a future president or Congress could modify the program. But for now, it removes a huge amount of uncertainty for health insurers, hospitals, and other parties. “Hospital shares soared on the news.” Hospital shares soared on the news, because expanded insurance coverage will bring more patients in the door. It also means fewer bad debts will pile up, since insurers will be covering their bills. It’s also likely good news in the longer term for health insurers, pharmaceutical firms, and medical device makers. So now it’s your turn to weigh in. Are bond and stock markets destined to tank if Greece gets kicked out of the euro? Is a last-minute deal still possible, and what market impact are you expecting from that? Is Greece a sideshow to the market, and if so, what should we be focusing on instead? What about the Obamacare ruling? Do you think the Supreme Court did the right thing? Or should the subsidies have been rescinded? Do you have any health care investments that are benefitting from the ruling, or are you considering adding them? Source: Mike Larson MoneyandMarkets