Financial Review

Face Mask Shortage

Sinclair Noe — October 12, 2017

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DOW – 31 = 22,841
SPX – 4 = 2550
NAS – 12 = 6591
RUT – 1 = 1505
10 Y – .02 = 2.32%
OIL – .64 = 50.66
GOLD + 2.00 = 1294.10

Cryptocurrency

• Number of Currencies: 877
• Total Market Cap: $164,996,772,967
• 24H Volume: $5,136,518,497

Top Cryptocurrencies

	Name	Symbol	Price USD	Market Cap	Vol.	Total Vol. %	Price BTC	Chg. % 1D	Chg. % 7D
	Bitcoin	BTC	5,422.1	$90.30B	$2.77B	53.86%	1	+12.38%	+25.32%
	Ethereum	ETH	302.78	$28.93B	$525.92M	10.24%	0.0562321	-0.20%	+2.84%
	Ripple	XRP	0.24670	$9.65B	$243.79M	4.75%	0.00004618	-6.02%	+5.83%
	Bitcoin Cash	BCH	310.66	$5.25B	$261.82M	5.10%	0.0581277	-0.71%	-12.08%
	Litecoin	LTC	58.950	$3.17B	$334.89M	6.52%	0.0109966	+16.11%	+15.25%
	Dash	DASH	293.87	$2.23B	$42.68M	0.83%	0.0540024	-1.40%	-4.04%
	NEM	XEM	0.20478	$1.85B	$4.40M	0.09%	0.00003806	-4.80%	-2.78%
	NEO	NEO	28.353	$1.38B	$59.75M	1.16%	0.0050969	-5.80%	-15.13%
	BitConnect	BCC	187.652	$1.34B	$15.57M	0.30%	0.0346751	+12.59%	+34.78%
	Monero	XMR	87.00	$1.32B	$32.67M	0.64%	0.0160682	-0.55%	-4.89%

For the past 7 years, Republicans have been trying to repeal Obamacare. This year they tried repeal and replace, skinny repeal, and basic repeal – all failed. Now Trump has signed an executive order directing federal agencies to look for ways to expand the use of association health plans, groups of small businesses that pool together to buy health insurance, and to broaden the definition of short-term insurance, which is exempt from the Affordable Care Act’s rules.

The ultimate impact will depend on any new regulations written because of the order, but overall, the Trump administration could make cheaper plans with skimpier benefits more available. The clear intent of the executive order is to create a parallel insurance market exempt from many of the consumer protections in the Affordable Care Act.

An association health plan is a way for a group of small businesses to pool together to buy insurance, giving them more purchasing power and access to cheaper premiums. The most famous examples have been farm bureaus, which allowed independent farming businesses to band together and get insurance. National associations could skirt state mandates, and pick plans with cheaper premiums.

The problem with those plans is that they provide almost no coverage. Think of them as don’t get sick plans. Small businesses left in Obamacare’s marketplace would face higher costs and fewer options as the market became less attractive to insurers. The individuals likely to flee the Obamacare markets for association plans would probably be younger and healthier, leaving behind an older, sicker pool for the remaining ACA market.

That has the makings of a death spiral, with ever-increasing premiums and insurers deciding to leave the market altogether. This has the potential to siphon off healthy people with skinnier benefits and cheaper premiums, leaving behind a sicker pool of people under ACA plans.

We have an actual example in Tennessee, where a Farm Bureau association has been operating through a state loophole; some 23,000 people are in the association – they don’t have to be farmers. Those 23,000-people buying the skimpier health plan are presumably younger and healthier.

Segmenting those people out of the Obamacare marketplace raises premiums for everyone else left behind. The Society of Actuaries estimated in 2016 that Tennessee’s marketplace has the sickest enrollees in the entire country. The state also has some of the highest Obamacare premiums in the entire country, too. The basic rule of insurance is the law of large numbers – the bigger the insured pool, the more evenly risk and cost is spread.

Trump’s executive order also looks to expand what’s called short-term limited duration insurance. These short-term policies typically have higher out-of-pocket costs and cover fewer services than traditional insurance. They were designed for people who, for example, expect to be out of work, and therefore without insurance, for a limited period.

That kind of coverage is totally free from the health care law’s insurance regulations: the mandate to cover essential health benefits, the prohibition on charging sick people more than healthy people or denying people coverage based on their medical history, and so on.

Trump has technically asked federal agencies to consider issuing new regulations that achieve the executive order’s goals. That’s all. Federal rule-making takes some time, months upon months. Don’t expect any changes before the end of the year. We don’t know if the changes would be compliant with the individual mandate. Expect challenges to the order. So, for now at least, the effect of the order is to sow confusion and uncertainty in the health insurance market for insurance companies and customers.

Today Trump lashed out at hurricane-devastated Puerto Rico, insisting in tweets that the federal government can’t keep sending help “forever”. In a series of tweets, Trump added, “electric and all infrastructure was disaster before hurricanes.” He blamed Puerto Rico for its looming financial crisis and “a total lack of accountability.”

At the same time, the House passed, on a sweeping 353-69 vote, a $36.5 billion disaster aid package that includes assistance for Puerto Rico’s financially-strapped government. House Speaker Paul Ryan, R-Wis., said the government needs to ensure that Puerto Rico can “begin to stand on its own two feet” and said the U.S. has “got to do more to help Puerto Rico rebuild its own economy.”

About 85 percent of Puerto Rico residents still lack electricity and the government says it hopes to have electricity restored completely by March. More than one-third of the population does not have access to potable water. At least 4 deaths are reported linked to infections from dirty water. Though officials say 45 people have died in Puerto Rico in the aftermath of Hurricane Maria, anecdotal reports suggest that number is much higher.

A recent Vox investigation tallied over 500 deaths that could be linked to the hurricane, in addition to another 69 people who are still missing following the storm. We don’t know an exact number – but it will be more than 45 and it will grow in coming weeks.

There is a face mask shortage in San Francisco. This morning, the air quality in the Bay Area was worse than in Beijing, which is notorious for having some of the unhealthiest air in the world. In what is being called one of the worst firestorms in California history, smoke heavy with soot continues to blow across the state.

In San Francisco, more than an hour’s drive south from the epicenter of the blazes in Santa Rosa, many people are wearing face masks to shield themselves from the pollution that hangs like a curtain in the hazy air. Local hardware stores have sold out of face masks. The forecast for the next few days in the region is that the air quality is going to get worse.

The death toll from California’s wildfires continues to increase, with a total of 29, matching California’s deadliest blaze, the 1933 Griffith Park blaze in Los Angeles. The number is expected to climb. Officials say there are around 8,000 firefighters currently fighting the flames with more help pouring in from neighboring states every day.

Dangerous winds have been whipping up off and on, not only in Napa but in Sonoma County, too. Despite the threat, officials are sending targeted search teams into burned areas to find hundreds of people still unaccounted for. Some 3,500 homes and businesses have been destroyed by the blazes.

As the wildfires raged for a fourth day, they have continued to grow and cross county lines, as 45 miles per hour winds whipped the flames and negated almost all efforts to contain the fires. A total count of 22 fires on Wednesday changed to 21 today because two large fires had merged together.

JPMorgan Chase easily beat Wall Street’s third-quarter profit expectations, with loan growth and higher interest rates more than offsetting weakness in its markets-related unit. Overall, JPMorgan’s profit rose 7.1 percent in the third quarter compared with the year-ago period, to $6.73 billion, or $1.76 per share. Analysts had expected earnings of $1.65 per share.

Citigroup reported third-quarter earnings of $1.42 per share, a nearly 8% beat. Wall Street estimated earnings of $1.32 per share. Revenues grew 2% year-over-year to $18.2 billion, beating estimates of $17.8 billion. The bottom line benefited from the $355 million gain on the sale of its fixed-income analytics business, which added $0.13 in earnings per share. EPS was down 2%, excluding this item. Fixed-income trading took a 16% hit year-over-year.

Both JPMorgan and Citigroup say that they boosted their reserves for consumer-loan losses by the most in more than four years. Both lenders set aside money last quarter because they expected write-offs for credit-card lending to climb in periods ahead, with Citigroup saying the increase is coming faster than it had anticipated.

AT&T, the No. 2 U.S. wireless carrier, which owns satellite television service DirecTV, said that it lost 90,000 U.S. video subscribers in the quarter due to intense competition in traditional pay TV markets and the impact of the recent hurricanes.

AT&T said it added roughly 300,000 subscribers to DirecTV Now, its cheaper option for customers who want to stream television over the internet. That means the company lost 390,000 subscribers to its satellite and U-verse services, which are considered higher-value customers.

Rising energy costs led prices at the wholesale level to climb 0.4% in September. The producer price index, which measures inflation pressures before they reach the consumer, has risen 2.6% over the past 12 months. September’s burst of inflation is likely the result of oil refineries shuttering along the Gulf of Mexico due to Hurricane Harvey toward the end of August. As a result, gasoline prices surged 10.9% in September.

Initial jobless claims fell by 15,000 to 243,000 in the first week of October to mark the lowest level in six weeks.

Equifax has taken one of its customer help website pages offline as its security team considers reports of another potential cyber breach at the credit reporting company, which recently disclosed a hack that compromised the sensitive information of more than 145 million people.

The move came after an independent security analyst found part of Equifax’s website was under the control of attackers trying to trick visitors into installing fraudulent Adobe Flash updates that could infect computers with malware. So, people who were afraid their data had been stolen, went to the site and infected their computers with malware.