Earnings keep stocks afloat

One week into second quarter earnings, the S&P 500 Index of companies are growing at 8.6%. Earnings “beats” are in line with past quarters with almost 75% of companies beating both earnings and sales estimates. Stocks haven’t really gained as a result, but; they haven’t gone down either. Recall that money-center banks reported great earnings last week, but it was a classic “sell-on-the-news” moment. Financials fell as traders took profits in the group.   Individual stocks in most sectors have responded in the same way this week.  Of course, there are always exceptions to the rule (Netflix for one, up 14% in one day), but the profit-taking has not been enough to send the averages appreciably lower. As I wrote last week, we are officially in no-man’s land where, in order for markets to gain any traction, we need a spate of new unexpected news. That’s a tall order as we enter August-September; traditionally slow months worldwide for financial markets. The most important story this week has been the continued decline in the U.S. dollar. It has reached a two-year low against the Euro, which is now trading at 116 Euros to the dollar. Part of the reason for the fall is the expectation that the European Community’s economic prospects are getting stronger. Yet, inflation, like elsewhere in the world, is still below the European Central Bank’s (ECB) targeted rate. As a result, the ECB has delayed the decision to wind down their bond buying program, which has been in place for the last few years. This follows a similar decision by the Bank of Japan earlier in the week....

How overworked nurses hurt you and your hospital

  Nurse throughout the country are complaining about their hours. Some critics say that they should be happy to have so much work and overtime. After all, plenty of people are working for minimum wage–if they can find a job at all. The problem is that nursing requires a heck of a lot more than your usual service job. Given that almost 90% of the care you receive in a hospital comes solely from nurses, the ratio of nurses-to-patients is a critical factor for you, the patient, and the hospital you enter. The higher the ratio of nurse to patients, the higher the risk that something unpleasant may happen to you during your hospital stay. Here are some of the risks. The more overtime a nurse works, the higher the chance of infection you have. The CDC says over two million hospital infections occur annually. On average, ICU nurses work overtime 5.6 % of the time in most major hospitals. So you do the math. When overworked nurses are stressed beyond their ability to cope, the chances of errors in medications increase and with it the mortality rate of patients. Then there is “The failure to rescue” syndrome. That’s when the patient goes into critical mode. On TV, the heart rate monitor beeps out a warning, the intercom screams out that the patient is coding, a dozen nurses rush in, armed with every conceivable medical device and bring you back from the dead. But in real life there may not be anyone available to rescue us. It happens more times than you know. Hospital accidents do happen and errors...

Game time for the markets

  It is earnings season once again. Banks kick off second quarter earnings today; so far, so good. Right now, investors are thinking that where the financials go, on a short-term basis, so goes the markets. The financial sector overall has rallied 7% so far this year and it is close to yearly highs. Why are financials suddenly key to the future? A lot of that has to do with the Fed. Two weeks ago, the Fed gave the green light to most of the large, money-center banks to pay dividends and buy-back their stock after the group successfully passed the central bank’s latest “stress test.” The sector gained about 3% on the news. This week, Janet Yellen, the Chair of the Federal Reserve Bank, testified twice during its semi-annual monetary policy report to Congress. The message was clearly slow-as-she-goes; moderate rate hikes, growing economy, and subdued (maybe too subdued) inflation. In short, a goldilocks picture of the U.S. economy. Stocks rallied worldwide largely on her statements. Now, the hope is that banks will profit by the rise in interest rates. Earnings will grow, bad loans will shrink, and after years and years of ho-hum profit growth, financials will shine once again. These quarterly results were supposed to give us a taste of the future for financials. Although the first few earnings reports have exceeded Street expectations, we have seen a classic “sell on the news” reaction from traders. Three of these money-center banks are all down 1-2% Friday morning. At the same time, the overall market is once again at the top of its trading range. The S&P...

Front-line nurses have had enough

The ratio of nurses to patients in this country is a battleground. It is such a life or death problem that it has spilled over into the state legislatures around the United States. The concept of “safe-staffing,” rather than “more pay” has now become the rallying cry for nurses and non-nurses alike nationwide. It should be. Owing to the combination of a huge nursing shortage and massive cost-cutting by our nation’s health facilities, nurses feel they have been overworked to the point that they can no longer safely do the jobs they have been assigned. “Safely” is the key word here. Make no mistake—I love nurses. Over the past few years, I owe my life to them and the care they have given me while in the hospital. In addition, I get to see and visit with nurses all the time because many of the local nursing staff are my clients. I manage their 403(b) s for them. I get to see their daily stress, the dark-circles under their eyes, and the trembling in their hands when they sign papers or use the keyboard. At the moment, these 800-plus heroes of mine are deciding whether or not to strike Berkshire Medical Center. I hope that doesn’t happen, but if it does, I will be here for them. My universe of nurses is dedicated, highly-experienced, and totally overworked and they are not alone. Nationwide, nurses are experiencing the same thing. They are through waiting for legislatures or hospital auditors to change what they see as an out-of-control trend, towards reducing nursing staffs further in an effort to contain costs at...

Global interest rates rise, global stocks fall

It is something we really haven’t seen in quite some time. Back in the day, before the financial crisis, interest rates and stocks most often moved in opposite directions. This week investors got a taste of what the future might hold. U.S Treasury yields on the ten year note (the benchmark average) ticked up to 2.39% at one point. Across the pond, the German Bund (their benchmark) rose .50%. Those were big moves in the debt world. Why are interest rates on the rise all of a sudden after years of declines? Some would say it just had to happen. Global central bank policy has just been too loose for too long. I don’t necessarily agree with that view, but at the same time, our own Fed has given the markets ample warning that the time to tighten is upon us. But before we bid adieu to their past policies, let’s give all those central bankers a hand. In the absence of any fiscal help from the world’s politicians, these heroes single-handedly not only pulled us away from the brink, but have guided global economies to their present state of growth. What is different this week from other weeks is the perception among investors that other central banks may now be following our lead. Throughout the first half of the year, I wrote that it was not Trump and his promises, but low interest rates, a growing economy, and declining unemployment that was supporting the stock market. I also warned that the real arbiter of further equity gains would be the Fed and how they implemented their new tighter,...