Good morning.
The S&P 500 hit a new intraday high this morning, while the Dow is slightly down due to the price drop of one of its big holdings … but more on that in a moment.
A topic often mentioned in my notes is my disdain over the ability of members of Congress to trade stocks which their actions could affect. So, let’s take a look at a stock move today amid action by one member of Congress.
Rep. Kevin Hern recently sold his entire position in UnitedHealth Group (“UNH”), a stock that is down 20%, and weighing heavily on the Dow. And I don’t mean a few shares … as his entire position between $250,000 and $500,000 was unloaded. What is the concern? An announcement by the government that the increase in Medicare payments would be far lower than expected. The important thing, however, is to keep in mind that Rep. Hern sits on the House Energy and Commerce Subcommittee on Health. Yes, it might be coincidental … but in my industry we are not permitted to trade on items in which there might even be a sniff of knowledge of non-public information.
Somehow our leaders don’t play by the same rules.
The Fed meeting started today and while no move on rates is expected, a CNBC Fed Survey forecast calls for 2 more cuts this year of 25 bps (0.25%) each … not even close to what the President publicly is hoping for.
But if unemployment continues to pick up (as we’ve had layoffs within UPS, Amazon, Pinterest, Citi and Meta among others), anything could happen … and worries over inflation might take a back seat.
While this tariff thing might be well thought out (I said, “might” as the result might not be seen for years) … it presently appears to be good news for Beijing. While China is not making a lot of noise, they are constructing deals left-and-right … more than making up any U.S. trade loss.
It appears China is following the advice of Napolean, who is reported to have said, “never interrupt you opponent when he is making a mistake” as they let the U.S. fight things out with their own trading partners, without interference.
China tried to make an agreement with Canada (since halted by Canadian concerns over U.S. reaction) but has gone on to make special arrangements with the EU and now is in talks with India. And India is not sitting idly by either … as they also are in the process of making trading arrangements with the EU.
U.S. reaction to all of this is unknown at this point … but it appears that previous trading partners are looking for absolute certainty with their trade alliances … and feel the need to go outside the U.S. to accomplish this.
That’s it for now as I work on a high school reunion note.
I often think fondly of my high school days (I guess as we get older, we feel those days were better than maybe they actually were), but there certainly were funny and memorable moments.
A friend reminded me of the time we got detention for stealing the arm bone of a skeleton that our science teacher had positioned in front of the class.
He didn’t find that humerus.
Have a great day,
Joseph G. Witthohn, CFA
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