Health insurance plans

Insurance companies will have to return more than $1 billion this year to consumers and businesses, thanks to a new requirement in President Barack Obama's health care overhaul, a report released Thursday concludes.
That's real money, says Larry Levitt of the Kaiser Family Foundation, which analyzed industry filings with state insurance commissioners. The law requires insurers to spend at least 80% of the premiums they collect on medical care and quality improvements — or issue rebates to policyholders.
"This is one of the most tangible benefits of the health reform law that consumers will have seen to date," said Levitt, an expert on private health insurance. The nonpartisan foundation is an information clearinghouse on the nation's health care system, and its research is widely cited.
The report comes with a caveat. It lacks data on the nation's most populous state, California, because complete filings there were not available. Nonetheless, the analysis estimates that consumers and businesses in other states will receive rebates of $1.3 billion, in some cases in the form of a discount on next year's premiums.

Among the leading stocks

Stocks have shown better action this week, helping switch IBD's market outlook to "in confirmed uptrend."
That switch came after Wednesday's session, when the S&P 500 delivered a follow-through day.
Still, the follow-through day was on the marginal side. Investors following IBD's CAN SLIM strategy should proceed with caution.
Among the leading stocks that are acting well, one common theme is a rebound off support near the 10-week moving average.
Some of the main indexes are displaying that same behavior, so it's no surprise to also see it among highly rated stocks.
Remember that in a rising market, 10-week pullbacks can provide a chance to buy a winning stock or add shares to an existing position.
Credit-card networks MasterCard (MA) and Visa (V) both have executed 10-week rebounds. MasterCard's actually looks a little better. You prefer to see active turnover in a rebound, and MasterCard has that, while Visa has rallied in below-average volume.
Longtime leader Priceline.com (PCLN) also has lifted off support at its 10-week line. Its IBD industry group, Leisure-Travel Booking, continues to sport a strong ranking, standing at No. 13 out of 197 groups as of Thursday.
Genesco (GCO) has staged a 10-week rebound, too. The shoe and hat retailer tried to clear a 75.65 buy point from a flat base April 17, but it couldn't close above that level.
The stock then fell back near its 10-week line before jumping Thursday. It now has managed to close above 75.65.
Other leading stocks have at least regained their 10-week lines, even if they haven't lifted above them at this point. Take Lululemon Athletica (LULU), for example.
Lululemon could be working on a new base as it finds 10-week support. The seller of high-end athletic clothing has been consolidating for about three weeks.

U.S. Federal Reserve forecast

Copper rallied Thursday to its highest level in more than two weeks, fueled by a more optimistic economic outlook from the Federal Reserve and by strong technical momentum that may drive prices back toward their 2012 highs.
Copper is higher for a third straight day, extending gains from the previous session during which the U.S. Federal Reserve forecast U.S. growth to "remain moderate over coming quarters and then pick up gradually."
The Fed also said it was ready to launch another round of bond buying if the U.S. economy weakens.
Copper prices moved through two lines of technical defense — the 100-day moving average at around $3.72 per pound and the 200-day at $3.76.
Matthew Zeman, head of trading with Kingsview Financial in Chicago, said the market's ability to hold above the 200-day should attract more buyers and again challenge the upper end of this year's trading range near $4.
"We're going to re-challenge the top end of the previous trading range ... just under $4 (per pound)," Zeman said.
July copper jumped 6.60 cents, or 1.8%, to $3.7735 per pound, after dealing between $3.6960 and $3.7845, another high dating back to April 10.
Comex volumes were heavy once again, with over 101,000 lots traded in late New York business, more than 40% above the 30-day average, according to preliminary Thomson Reuters data.

Expectations and the smallest increase

The Dow Jones industrial average tacked on 0.5%, while the Nasdaq and S&P 500 each added 0.2%. Turnover was tracking lower across the board.
As earnings season keeps rolling, a number of leading stocks were making big moves on their quarterly reports.
Texas Capital Bancshares (TCBI) jumped 6% in fast trade, clearing a 36.71 buy point from a square-box base. The regional bank said quarterly EPS climbed 126% to 70 cents, beating views, as sales rose 32% to $102 million. It also scored an upgrade to buy from Sterne Agee.
SolarWinds (SWI) was up 18% in huge turnover after gapping above its 50-day line to an all-time high. The software maker said quarterly EPS grew 43% to 30 cents, topping forecasts and accelerating from a 21% jump in the fourth quarter of 2011. Revenue, including acquisitions, jumped 39% to $59.7 million. SolarWinds has lifted off support at its 10-week moving average.
O'Reilly Automotive (ORLY) was up 5% in strong volume and carved a new high before giving up some gains. The car parts retailer said quarterly EPS gained 37% to $1.14, ahead of estimates, as revenue jumped 11% to $1.5 billion. Its guidance was roughly in line. The stock hit a new high early Thursday, but has given up gains. It's well extended past its last buying range.
On the downside, Nu Skin Enterprises (NUS) shed 8% despite topping views. Before the open, the skin care products firm reported that its Q1 profit climbed 32% to 74 cents a share vs. expectations of 70 cents. Revenue grew 17% to $462 million, also above estimates. But Nu Skin sees Q2 earnings coming in at 79 cents to 83 cents a share, below expectations of 85 cents.
Celgene (CELG) gapped below its 50-day moving average, losing 4% after reporting disappointing Q1 results. The biotech earned $1.08 a share, up 30% from a year ago. But it missed views by a nickel. Sales rose 13% to $1.27 billion, below expectations and the smallest increase in 11 quarters. It was also the fourth straight quarter of sales growth deceleration.
In economic news, pending home sales jumped by a much better-than-expected 4% in March. Economists had expected a 0.5% gain. New jobless claims declined by 1,000 to a seasonally adjusted 388,000 last week, worse than forecasts for 375,000.

Experiment in economic policy

Investors Business Daily opines that “Big government threatens our well-being with irresponsible health care “reform,” higher taxes on entrepreneurs, a tax-filled cap-and-trade energy bill, a host of new business-strangling regulations and trillion-dollar deficits as far as the eye can see.” Then they go on to say: “In late July, economist J.D. Foster of the Heritage Foundation put it succinctly: ‘This is no longer an experiment in economic policy. The results are in: Keynesian stimulus does not work.’ This GDP report doesn’t change that conclusion a bit”.
It is difficult to be more pessimistic than that. However, they do state that we have “stepped back from the abyss.” and that “our only hope going forward is the private economy. Though hindered by massive government intervention in housing, banking and industry, it’s still the most resilient in the world. Given the list of problems they cite, it is difficult to reconcile the optimism and pessimism contained in the piece. I suspect that we will slip back into recession in another quarter or so. I found little reason or justification for their, admittedly muted, optimism.

The stock cleared

The S&P 500 snapped a two-week losing streak, but the Nasdaq failed to do the same. Top-rated stocks also showed some mixed action. Some marquee names further weakened, but a few of them managed gains amid choppy market conditions.
Apple (AAPL) logged a second straight weekly loss. The stock is now in its first test of its 10-week line since it cleared a cup-with-handle base in January. But its pullback came in heavy trading, which is not ideal.
The bellwether has had a long, steep ascent and has been above its 10-week line since December. Apple reports after the market's close Tuesday.

Most understand economics only experientially

The bailout fiasco is just now starting to show up for the act of desperation that many suspected it was. Instead of allowing markets to resolve a severely over-leveraged and distorted economy, the government decided to try to “bluff” its way through one more time. This strategy has been one used for almost 5 decades. Each time the credit stimulus required is bigger than the last. Each time the distortions to relative prices is made worse. Each time the misallocation of resources becomes greater. Each time the credit levels of individuals and government expand. Each time inflation becomes a bigger problem. Finally, a time comes when malinvestment and credit burdens are too large to be supported. It is probable that we have reached that point. To appreciate how far we have come regarding the abuses of credit creation, one need only note that since the Federal Reserve was created in 1913, the dollar has lost about 96% of its purchasing power. Most of that loss (probably in excess of 90%) has occurred since 1980.
There are still many that believe that government actions will get us out of our predicament. They won’t. When we come out of this mess, it will be in spite of these actions. They will serve to make the problem worse and cause it to last much longer. Japan has been employing similar stimuli for two decades, and its economy has still has not recovered.
As time passes, it will become apparent to all but the dullards that these interventions were non-helpful and actually harmful. Most understand economics only experientially. Events as discussed in the following post by Rolfe Winkler today are what will continue to surface with the passage of time and provide enough instances for the experiential learners.
Besides being a terrible decision that will cost taxpayers dearly, the article also talks about the unintended consequences of drawing deposits away from smaller, solid banks to the weaker GMAC. The unintended consequence is to weaken the stronger banks.