The other (Very important) reason stocks are taking a hit:
Bottom Line: It’s very easy, actually too easy, to blame the Federal Reserve for everything that has been taking place in the stock market selloff of the past week. Yes the Federal Reserve started the selloff by indicating that times were getting ready to change but once investors began to look at fundamentals of companies once again… That’s what led to the fast and furious selloff.
The Federal Reserve’s super accommodative policy has kept stocks and real-estate heading in pretty much one direction. I’ve broken down how the stock market has been trading at a greater than 20% premium on a P\E basis vs. its historic average (currently 18.18 vs. 14.5 historic average – that’s still 20% higher than average even after the selloff we’ve had thus far). With the Fed indicating that they likely would begin to back away from the current policy later this year, it’s forcing investors to consider fundamentals more seriously than perhaps they have been. And as for those fundamentals… Well the news isn’t great.
Before each earnings season we have a preannouncement period. Because most companies provide some kind of guidance to the investment community with regard to their expectations for the upcoming quarter, if something materially changes that will affect their performance that hadn’t been factored into their guidance – they usually will disclose it prior to their earnings announcement. These events or business climate changes can be good or bad. That’s where the rest of the story with stocks is coming into play.
So far the earnings preannouncement period has been negative by a measure of 7 to 1. That’s seven negative preannouncements for every positive one. To put it a different way, that’s the largest negative to positive ratio we’ve seen since the first quarter of 2009. That’s certainly not the quarter you want to compare to if you’re long stocks. Now that doesn’t mean that we’re entering recession or something close to it but it is a clear indication that the economy is slower now than it was in the first quarter of this year. That’s means slower earnings growth generally than expected and thus stock prices that may not be justified. Hence the selloff.
Reality once again matters. The reality that the upcoming earnings season looks to be a disappointing one is starting to set in.
How healthcare costs may be lowered from the corporate level:
Bottom Line: I’ve long argued that we won’t be effective at moderating healthcare costs to a sustainable level until and unless we become better consumers of healthcare. I specifically believe that we must break the current insurance model in which we have no idea how much anything costs and it’s a game that played between a medical facility and the insurance company. It’s silly to think that most of us sign a sheet saying we’ll pay whatever our insurance company doesn’t for care and costs that won’t be determined until after we sign that sheet. CALPERS may be the first major organization to help change the trend.
In an ideal world we would begin to shop for healthcare services on our own, without being forced into it by our healthcare provider and/or insurance company, but if that’s the only way we’ll do it – then so be it.
Here’s how CALPERS, which is the
With CALPERS taking the leap into this new methodology expect other organizations and companies look towards this model as a way to mitigate the unsustainable rate of growth of healthcare costs.
Have interns? How about legal ones?:
Bottom Line: If you have unpaid interns that work within your business are they legal? The knee jerk reaction is likely yes but… Check your current system twice. Here’s why…
The founder of the intern service, Intern Queen (think Monster of intern sites), said that she currently seeing a “shocking” level of illegal use of interns. The number could be more than 50% of all internships that aren’t legal. Many employers aren’t properly versed in the musts according to FLSA (The Fair Labor Standards Act). Those minimum standards are:
It’s the 3rd and 4th provisions where most companies who trip up – do fall short. You should review your current intern programs for two reasons. One to ensure you’re doing the right thing and two, to ensure you don’t end up being sued.
It appears as though a dam may soon break with law firms looking for current and former interns who have been improperly handled during an internship program and suing the businesses. Many interns are more willing to join a legal proceeding as they are struggling to find employment and desperate for money.
What’s also important is that the standards outlined above are the base minimum standards. Many indrustries have other regulations they must adhere to for intership programs.
Truly internal medicine is almost here:
Bottom Line: Proteus Digital Health is likely not a company you’re familiar with. You just may be in the not so distant future.
Last year I discussed the new health tech that Proteus had created and how it just may one revolutionize health check ups. That day may soon be here. Proteus creates mini computers that provide vital information about your body internally. The computer is swallowed in pill form and travels through your body providing information about everything it comes across along with way. This is truly internal medicine.
Last year Proteus was a small start-up lacking the ability to mass produce their product and perhaps become a mainstream product used by doctors. That could quickly change as Proteus recently received about $65 million from investors looking for Proteus to begin to mass produce their pill technology. With a cost of only about $50 per capsule (and they’re reusable – not that I’m willing to try for $50), this could be a big hit and help doctors with better, faster, more comprehensive info about your internal health.