{+++}On Monday President Obama launched a fresh effort to bring healthcare reform back from the dead. The administration is prodding Congress to put together a package from the various bills that passed the House and Senate last year, which then may be pushed through using “budget reconciliation” (this parliamentary dodge would mean the legislation would only need a simple 50-vote majority to pass the Senate, rather than the 60 votes usually required). Obama’s proposals include notable changes and additions to existing bills. His plans would limit increases on health premiums and do not include a public option, instead utilizing the health insurance exchanges to stoke competition. His proposals would also increase fees on drug makers, raises the threshold for taxing more expensive “Cadillac” plans (a concession to unions), and provides various tax cuts and tax credits. Large health insurance names have gained all week long on the news, while certain pharma and medical device names have lost ground.
– A spurt of notable M&A deals was seen this week. Schlumberger (we’re long WFT) confirmed widespread media speculation and announced it would buy Smith International in an all-stock deal valued at more than $11B. The deal is expected further consolidate Schlumberger’s position as the leader in the oil-services industry, giving Schlumberger revenue double that of its nearest rival, Halliburton.
US housing data this week was not pretty, deepening fears that a weak real estate market could undermine the recovery. On Thursday, the December house price data missed expectations and declined again, then on Friday the January Existing Home Sales index fell to its lowest level since June 2009. Housing-related earnings reports added color to the outlook for housing.
In Europe, the sovereign debt story shows no signs of going away, and although the spot light remains on Greece, contagion fears are lingering.
EUR/USD managed to hold above the 1.36 handle after testing 1.3450 last week. Dealers had plenty of time to analyze the situation in Europe as news flow was light and data releases were sparse. The waves of risk aversion-provoking headlines failed to give the greenback enough momentum to push beyond established ranges.
I have added AB tonight as a long and have moved some stops, please stay updated. I also re-entered DNDN and added HPQ as longs intraday on Friday.