Court Ruling Would Allow States To Opt Out Of Much Of ACA

A three-judge panel on the DC Court of Appeals ruled yesterday 2-1 that individuals receiving health insurance on federally-operated exchanges are not eligible for subsidies. A couple hours later a three-judge panel in the Fourth Circuit ruled unanimously that those subsidies are permissible under the ACA. If the Supreme Court ultimately decides that the ACA does not permit subsidies for those receiving insurance on federally-run exchanges, red-state governors would have the ability to opt out of much of the ACA – and many of them probably would.


Polls In Individual Senate Races And Obama Approval Suggest GOP Edge

Less than four months from the election, polls in the closely contested Senate elections and Obama’s approval rating suggest Republicans retain an edge to win a majority in the Senate come November. Obama’s approval rating has remained remarkably constant this year. But it is low, and that means a rough overall political environment for Democrats. Of the eight most competitive Senate races, six of which are currently held by Democrats, the polls are within three percentage points using the RealClearPolitics average in every one of those races. We also comment on corporate inversion, a Senate report on tax avoidance, Texas … Read More »


Defense Spending Would Get A Boost From GOP Senate

Growing threats to US national security and general global unrest is leading to only marginally more congressional support for higher defense spending. Events in Ukraine and Israel during the past few days probably haven’t made much of a difference, and defense spending levels for next fiscal year are very likely to track the Ryan-Murray agreement from last year. For defense spending to rise above the budget caps agreed to in 2011 (which are well above the sequester levels), would probably require a broad-based budget deal that also cuts entitlements, which has zero chance of happening this year and is unlikely … Read More »


Roberto’s Video Update: Geopolitics And Monetary Policy – What Ukraine Could Mean For Global Central Banks

Main Points:
– It’s too soon to assume major central banks will shift policy – it depends on sanctions.
– Which economies and banking systems are the most exposed to Russia?
– The Fed and BOJ can wait before making any decisions.
– The ECB has less time to react if the situation deteriorates. Read More »


Implications Of Escalating Tensions Over Ukraine

Early evidence strongly suggests Russian-backed separatists are responsible for shooting down the Malaysian commercial airliner over Ukraine yesterday. If Russia doesn’t take steps to ease tensions immediately, the US will support and the Europeans are likely to at least consider much tougher economic sanctions on Russia. In today’s report, we consider how yesterday’s events could impact economic policy in the US and Europe.


Corporate Inversion Q&A

Treasury Secretary Jack Lew’s letter put a greater focus on the issue of corporate inversions, raising a number of questions for investors. We continue to think the odds are very low Congress acts on this issue this year. In today’s report, we field some of the questions we received from clients yesterday.


More Talk On Corporate Inversions And Repatriation, But No Action

Sen. Ron Wyden announced a Senate Finance Committee hearing next Tuesday, July 22 to examine the growing number of corporate tax inversions and broadly consider the treatment of corporate income earned overseas. Treasury Secretary Lew also weighed in on the issue yesterday. And any conversation about taxing overseas income almost certainly means a repatriation holiday will also be raised. We continue to believe it is very unlikely that Congress will change the tax treatment of overseas earnings in any meaningful way this year. Legislation restricting corporate inversions or granting a repatriation holiday probably won’t happen except as part of a … Read More »


Quick Take — What To Make Of Yellen’s Controversial Equity Valuation Sentence?

The written remarks that Yellen delivered today were unremarkable and devoid of any news; they were simply a repetition of concepts expressed before. The Q&A was equally underwhelming. Clearly Yellen wanted to avoid making news and, at least as it pertains to her actual appearance before the Senate committee, she succeeded. However, the excitement was all in the long Monetary Policy Report that accompanied the testimony. That document contains the sentence that “valuation metrics in some sectors do appear substantially stretched—particularly those for smaller firms in the social media and biotechnology industries.” This was a surprising sentence that left many … Read More »


Outlook For Global Central Bank Liquidity: Higher And Higher

One of the fears we hear most often from investors is that as the Fed brings QE to an end in October the flow of central bank liquidity will stop or even reverse, with attendant adverse implications for markets. We examine why those fears are not justified, project global central bank balance sheets over the next 18 months, and discuss the market implications.


Get-Out-Of-Town Checklist & Thoughts On The GOP Presidential Field

Deadlines are often needed for Congress to resolve key issues and the August recess is only a few weeks away. This has been an especially unproductive year for Congress, so not a lot will get done leading up to the August recess deadline. Nevertheless, there are a few issues of interest to investors, one or two of which may get resolved before the break. In today’s report, we provide updates on issues that could impact highway spending, hospital utilization, defense and domestic discretionary spending, and a range of expired corporate tax credits. We’re often asked what we think about the … Read More »