🇺🇸 The Stock Market Today

The Dow was the only major American index in the red today (-0.83%), driven lower largely by UnitedHealthcare (-19.61%). The Nasdaq led with a 0.91% gain.

Technology (+1.42%) and Utilities (+1.25%) led the day's action. As you may be able to anticipate from $UNH tanking $DJI today, Healthcare brought up the rear with a -1.66% loss, with Financials (-0.74%) as the only other red sector.

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🇺🇸 Preliminary and Final Medicare Advantage Rates 2020-2027

The Centers for Medicare & Medicaid Services released their advance notice projection of the increase in Medicare Advantage reimbursement rates in 2027, and insurers are not happy.

The preliminary number is an increase of 0.09%. This is well under the 4-6% increase Wall Street was expecting from the latest sleepy, corrupt Administration in D.C. as well as being well below the 5% increase they saw for 2026.

This immediately compressed earnings-growth assumptions and forced insurers to think about benefit cuts, premium hikes, and cost controls.

The final rate increase will be announced in early April. Since 2018, that number tends to be higher than the preliminary projection, but only by 1-1.5 points. Last year is a notable exception to this; we jumped from 2.2% to 5.1%.

Any such increase in April is likely to spark a relief rally. If we get massive increase like last year's, it could be significant. While it's theoretically rare, I wouldn't overly handicap the possibility given how political such decision-making is increasingly becoming.

In fact, there's a high likelihood this tiny increase in the reimbursement rate is itself an attempt by regulators to push back on industry tactics like up-coding & risk score-boosting.

If that's the case, I would expect insurance lobbyists to be buying their way into the Oval Office for the next few months...

Note: Don't for a second think I'm underestimating the massive impact of CMS regulation & auditing on the trajectory of healthcare pricing growth. I'm not.

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🛢 WTI Crude Oil seems to be waking up, as anticipated.

Over the past three weeks, it's gained 13.23%. What's going on with black gold?

🛑 On January 4th, the 8 core members of OPEC+ reaffirmed their intent to pause any production hikes through at least March.

🛑 EIA reported crude stock declines of -3.8mb (January 10th) and -2.3mb (January 24th). These substantial American inventory draws signal firmer demand. At around 11.08M (2.5%) below the five-year average, stocks are bullishly constrained.

🛑 The geopolitical premium continues to increase as American-Iranian tensions remain aggravated. Reasonable fears of supply shocks due to war are pushing up the price.

🛑 Ansarallah added to the aforementioned premium when they recently began highlighting their martial successes in the Red Sea & the Gulf of Aden. The Houthis are threatening to engage America & Israel should they choose to attack Iran again.

I would expect initial resistance around $65-66/barrel. I would expect more meaningful resistance between $70-72. And if it were to pull back, I'd be positive about a higher low that holds up at or above $60.

This is in no way, shape, or form any sort of financial advice...

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