Taken together, all of these new provisions, fees and taxes are expected to push HC premiums significantly higher in 2014. The CEOs of two national health insurers told us recently that small business and individual health insurance premium rates may need to rise on average by +20-50% in 2014

Guaranteed issue (GI) and community rating (CR) are the primary drivers of expected rate increases. These new provisions only apply to small employers (<50 employees), individuals, and exchanges – meaning those who obtain insurance in these segments will be the hardest hit.

Larger employers will also likely see substantial rate increases; however, because most large employers already offer richer benefit packages (meeting EHB standards) and GI/CR will not apply, rate increases should be more in the10-15% range, in our view.

Eoin Treacy's view – Health insurers continue to benefit from the fact that Obamacare ensures that they will have 30 million new customers without capping the price of the services provided. A great deal of commentary tends to focus on the high cost of energy and its potential drag on the wider economy. However, the vast size and comparative high cost of healthcare in the USA is much less remarked on. While one can argue whether the absence of tort reform, lack of competition, lack of transparency and/or profit motivation of a private system conspire to preserve the elevated cost environment, the fact is that high costs act as an economic headwind, (Also see Comment of the Day on February 15th).

The S&P500 Insurance Index has held a progression of higher reaction lows since September 2011 and broke out to new 5-year highs in January. It continues to extend the advance and while somewhat overbought in the short-term, a sustained move below the 200-day MA would be required to question medium-term recovery potential.

Aetna, Cigna and Torchmark all continue to extend their advances as they lead the sector higher. While they are becoming increasingly overextended relative to their respective 200-day MAs, breaks in their progressions of higher reaction lows would be required to signal mean reversion is underway. WellPoint has rallied impressively of late and is closing in on the 2011 highs, below $80, which offer an area of potential resistance.

United Healthcare broke successfully above $60 in early April. It then returned to test the region of the upper side of the underlying range where it found support last week. A sustained move below $55 would be required to question medium-term upside potential. FBL Financial Group broke out of a medium-term range in March and spent six weeks consolidating the advance. It broke out again last week and a clear downward dynamic would be required to check potential for additional upside.

Humana has rallied to test the $80 area which has been a psychological area of resistance since July and a clear downward dynamic would be required check potential for a successful upward break.


WTI Crude Rises on Speculation Economic Growth to Bolster Demand by Mark Shenk and Brent Crude Oil Climbs for Third Day as European Car Sales Rise by Lananh Nguyen both for Bloomberg may be of interest to subscribers.

My view – The commodity complex remains under pressure not least as institutional investors rotate away from commodity tracking products. (Also see the chart on page 6 of Stuart Parkinson's report for Deutsche Bank posted in Comment of the Day on May 15th) However, the relative performance of oil contracts stands out as an anomaly. Both Brent Crude and WTI Crude continue to bounce. This helps to explain BHP Billiton's outperformance relative to Rio Tinto over the last few weeks since its energy unit is its second largest revenue generator.

Among the oil and gas majors there is also evidence of renewed investor interest. In the US, Conoco Philips broke out of a two-year range last week to post its highest close since August 2008. Murphy Oil has been ranging with an upward bias since September and a sustained move below $60 would be required to question potential for a successful upward break. Marathon Oil is testing the upper side of an 18-month range. Chevron continues to exhibit a mild upward trajectory since breaking out in January. Exxon Mobil has been consolidating between $85 and $93 since September and is currently testing the upper side of its range. Occidental Petroleum has been building support mostly below $90 since September and pushed back above that level last week. Following an impressive rally in January Hess Corp has been consolidating above the 200-day MA.

In Europe, Italian listed ENI appears to be in the process of completing an almost five-year base. UK and Dutch listed Royal Dutch Shell retested the 2400p level earlier this week and posted an upside key reversal today. A sustained move below today's lows would be required to question potential for some additional upside. Spanish listed Repsol broke out to new recovery highs three weeks ago and a sustained move below the 200-day MA would be required to question potential for additional higher to lateral ranging. UK listed BP continues to range with an upward bias while France listed Total has rallied to test its medium-term progression of lower rally highs.

Norway's Statoil appears to be one of the few companies where the EU's price fixing probe has had an effect on investor sentiment. It dropped abruptly yesterday to extend its yearlong decline and while it is becoming increasingly oversold, a clear upward dynamic would be required to check the momentum.