You're watching...
Highland Capital portfolio manager Michael Gregory and BMO Capital Markets analyst Dave Shove on how the Supreme Court’s health-care law ruling will...
Also in this playlist...
Auto-advance: ON
Auto-advance
This transcript is automatically generated
Michael first to you if we can't hospitals.
Doing well but you say that even though they didn't -- -- fairly well from the get go today.
Even uttering the the decision itself you say that the time to sell those stocks are now walk.
Well I was on the show.
About a week and a half ago suggesting buying hospitals they've moved up around 15% since then and clearly today is all about the hospital.
I would exercise caution not to chase the hospital from here.
And that's because investors are gonna have to look past the Supreme Court towards the outcome of the elections and also the fiscal -- debate.
Which requires one exercise some caution.
All right so it gave a -- you tell me what you're looking at here is are there real opportunities that you were in on before the news today that have surprised you one way or another.
Well our surprise from the news today was mostly that the managed care stocks were down as much as they were.
Admittedly the law remains in place but that these companies have been prepared for this.
One of our favorite games is UnitedHealth.
And it is -- has held up quite well.
In the hospital space you know we we are also cautious here we think they've -- a lot a lot of this political noise just keeps.
Getting kicked down the road the next things the election and after that is the legislature.
But Dave I wanna stick with you for a second now because the one thing that is intact and again Justice Roberts did did change some of things -- health care law but.
The taxes are all -- are and there are a whole new list of taxes of course starting with the individual mandate tax and it is now.
Called for what it is which is attacks and not a penalty the employer mandate Texas gonna cause a lot of management changes in companies were just talking about that was and I whether or not you want to.
Just pay the penalty and put it all on the government all these changes cost money right.
And nobody knows how that's gonna work to be honest review the you know the insurance companies are prepared for the mandates they're prepared for the exchanges they've been building on this the hospital companies are happy.
Just because more people have insurance.
But a lot of the other sectors there's a lot of unknowns.
But our point is.
That all of these sectors have political risk all the time.
As we were saying.
First of all it's -- -- then it becomes the election and after the election next legislature.
So we what we try to do is just what -- the underlying fundamentals that brings us the names like united or Universal Health Services.
Companies with strong fundamentals regardless of the politics.
OK so let's now go to -- find out you know what are your preferred companies at this point -- you have some other favorites to add to that list.
You know we are also recommending WellPoint now this one's a little shorter term the company has struggled a lot but they are blue cross blue shield.
And that means that when we go to this world where we have state exchanges or whatever it looks like.
In people -- -- -- insurance more individuals buying it at home.
The blues are always the biggest player in the market and that's what they're gearing up for they -- 203040%.
Market share in some of these states.
And they ought to come out on top Michael -- -- you wanna get it but I wanna bring in a trader from the CME because I'm interested in knowing what the psychology what's in the trading pits today.
When that news came -- what what was the what was the mood in -- -- traders Jared Levy.
What was the mood in their bond traders when the decision came down.
More of a shock I think was probably the first emotion hit us and you know like any trader we take our -- we move on and we sort of deal with what's coming -- us.
Now we know what's happening -- forward the plan now trying to figure out like the other guys are talking about.
Who's gonna be the beneficiary.
And who's gonna have the issue where I think some of the issues are gonna lie with some of the higher priced drug stocks and Biotech stocks companies like vertex -- saw him get hit pretty hard today.
You know companies like Medtronic going to be difficult for them to maneuver through here with both the excise tax -- have today and also the price of equipment.
On the flip side I agree UNH is a nice stock it's -- fundamentally it's out and I think -- -- I'm -- look at -- that.
Interview with -- as CEO I think the insurers are gonna farewell.
Throughout this whole thing and they have been already preparing and implementing certain.
Forces Michael Gregory what do you make of the market's behavior initially it's sold off.
Was down for much of the day I -- quite good shock 130 -- -- 170 points.
And -- in just the last couple of minutes of the market we really fought back here.
Yeah absolutely I think the hostile movement was totally justified.
The insurers sell off was a bit extreme that was fairly -- priced in as evidenced by the rebound at the end of the day.
But the market was moved today by Angela Merkel and news coming out of Europe and also a reaction to the health care bill that was a bit more in line with expectations.
Michael -- I see it relatively simply in terms of the movement of these stocks those health care companies.
That are now guaranteed.
Incumbent at least according this decision lord knows what's gonna have with the election but those companies based on the decision.
That are guaranteed income by taxpayers ultimately.
They're going to do well correct because they get paid no matter what.
My question is for how Long Will that perception exists.
If Romney wins the White House the Republicans already have control of the house.
And right now it's 53 to 47 the Democrats have control of the Democrats and 23 seats to twelve that are up for grabs.
So there's a Republican House and senate and potentially Romney in the White House.
There -- be changes from -- already said that he's gonna look to deprive us feel.
Of the funding that's required -- to implement -- he's gonna you get older children of the order more than that Michael Asia Asia's gonna flip it a 180 degrees he's gonna get rid of it that's what -- If he has house and senate he can overturn a major part of it if not you can use appropriations.
As well as budgetary gimmicks to try to deprive the bill and push it out and I would say.
That the expectation is that the -- is going to be implemented on time in 2014.
Were of the view that whether or not Romney or Obama in the White House the end of this year.
It's still going to be pushed out about a year because of our massive fiscal -- have -- Mr.
okay that's another -- the massive part of this discussion certainly but at Jared at as far as the trading pits behavior.
We're still trying to figure out into the big comeback in that last hour we talked about how the dollar started to weaken just a bit in the last couple -- Moments -- that of course help certain.
Stocks with the global footprint but what else wasn't mean we know that all Angela Merkel may have canceled the meeting we're gonna talk -- actually just a minute about that.
But at what -- did you see that grabs your attention on that floor.
What caught me and it was -- just -- today watching the Italian and Spanish -- -- bonds right but remember that I got a ten year bond auction today.
That went fairly well -- didn't spike up that much it actually saw a later date is yields coming gala that both Spanish and Italian.
Also the Italian.
Finance minister said -- we will do whatever is necessary to sort of stabilized and I'm paraphrasing there.
That could be a little clue.
Into Angela Merkel is.
Shift here and may be a rescheduling of that conference so I think that traders saw that Euro rallied against the dollar that's in -- -- other than that we really see other new.
-- day by just sold my next child in order get this question because we've literally run out of time so as quick as you can but.
Unless you believe that the government is more innovative and more efficient than the private sector.
Doesn't any move to put more of health care in the public sector make things more expensive.
That's current there's no doubt about that the question is is it already priced into the.
