The Dow Waits for the Fed as UnitedHealth Climbs; Are JPMorgan and Goldman Ready for Tapering?

All eyes were on the Federal Reserve, with further guidance on monetary policy expected this afternoon. What it will mean for stocks today.

Mar 19, 2014 at 11:00AM

Stocks were little changed Wednesday morning, as the major market benchmarks stayed close to the unchanged mark while investors wait for the latest word from the Federal Open Market Committee. As of 11 a.m. EDT, the Dow Jones Industrials (DJINDICES:^DJI) were up 14 points. With an announcement expected this afternoon, most analysts anticipate further tapering of the Fed's quantitative easing program, confirming the slow but steady economic recovery that has kept investors happy for years. UnitedHealth (NYSE:UNH) was the biggest gainer in the Dow this morning, rising 1.9%. But from a longer-term standpoint, one big question facing the market is whether JPMorgan Chase (NYSE:JPM), Goldman Sachs (NYSE:GS), and other financial stocks are truly ready for tapering to continue.

UnitedHealth's rise comes as the last days tick away before the March 31 deadline for Americans to get health insurance under Obamacare or face penalties for not having qualified coverage for at least nine months of 2014. Obamacare enrollment figures have thus far continued to fall short of early optimistic assessments, but a report from the Kaiser Family Foundation suggests that any concerns about added competition coming from the Affordable Care Act have largely been unwarranted. According to the report, existing players in the industry have largely protected their market share, although WellPoint (NYSE:ANTM) reportedly lost ground in some key states such as New York and California. At this point, all the uncertainty over Obamacare points to the wisdom of UnitedHealth's more conservative strategy of easing into the health insurance exchanges rather than making an all-out push.

While the Fed doesn't necessarily have a big direct impact on UnitedHealth, it definitely is more important for JPMorgan and Goldman. Both institutions have direct exposure from the central bank's monetary policy initiatives, as well as extensive related risk from the market movements that can follow Fed decisions. The big banks find themselves in an awkward position, though, as they navigate a changing regulatory environment while still facing negative public opinion. For instance, JPMorgan today announced a $3.5 billion deal to sell its physical commodities business after getting scrutiny from regulators questioning whether big banks should have a major presence in commodities trading. Similarly, both Goldman and JPMorgan are faced with the prospect of a tax on large banks proposed by a usually bank-friendly Republican Party. Although the 0.035% amount of the tax might seem minuscule, the fact that it applies to all assets above $500 billion shows the extent to which the government and the American public still want payback from the financial crisis.

The Fed's decision could have a big impact not just on Goldman and JPMorgan, but on the entire stock market. But even though the banks are ready for whatever the Fed decides, JPMorgan and Goldman investors need to consider the headwinds they'll face from regulatory behavior and public opinion.

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Dan Caplinger owns warrants on JPMorgan Chase. The Motley Fool recommends Goldman Sachs, UnitedHealth Group, and WellPoint. The Motley Fool owns shares of JPMorgan Chase and WellPoint. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

4 in 5 Americans Are Ignoring Buffett's Warning

Don't be one of them.

Jun 12, 2015 at 5:01PM

Admitting fear is difficult.

So you can imagine how shocked I was to find out Warren Buffett recently told a select number of investors about the cutting-edge technology that's keeping him awake at night.

This past May, The Motley Fool sent 8 of its best stock analysts to Omaha, Nebraska to attend the Berkshire Hathaway annual shareholder meeting. CEO Warren Buffett and Vice Chairman Charlie Munger fielded questions for nearly 6 hours.
The catch was: Attendees weren't allowed to record any of it. No audio. No video. 

Our team of analysts wrote down every single word Buffett and Munger uttered. Over 16,000 words. But only two words stood out to me as I read the detailed transcript of the event: "Real threat."

That's how Buffett responded when asked about this emerging market that is already expected to be worth more than $2 trillion in the U.S. alone. Google has already put some of its best engineers behind the technology powering this trend. 

The amazing thing is, while Buffett may be nervous, the rest of us can invest in this new industry BEFORE the old money realizes what hit them.

KPMG advises we're "on the cusp of revolutionary change" coming much "sooner than you think."

Even one legendary MIT professor had to recant his position that the technology was "beyond the capability of computer science." (He recently confessed to The Wall Street Journal that he's now a believer and amazed "how quickly this technology caught on.")

Yet according to one J.D. Power and Associates survey, only 1 in 5 Americans are even interested in this technology, much less ready to invest in it. Needless to say, you haven't missed your window of opportunity. 

Think about how many amazing technologies you've watched soar to new heights while you kick yourself thinking, "I knew about that technology before everyone was talking about it, but I just sat on my hands." 

Don't let that happen again. This time, it should be your family telling you, "I can't believe you knew about and invested in that technology so early on."

That's why I hope you take just a few minutes to access the exclusive research our team of analysts has put together on this industry and the one stock positioned to capitalize on this major shift.

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David Hanson owns shares of Berkshire Hathaway and American Express. The Motley Fool recommends and owns shares of Berkshire Hathaway, Google, and Coca-Cola.We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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