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The Dreamers By Charles Payne

"Dreamer of dreams , born out of my due time,
Why should I strive to set the crooked straight?
Let if suffice me that my murmuring rhyme
Beats with light wing against the ivory gate,
Telling a tale not too importunate
To those who in the sleepy region stay,
Lulled by the singer of an empty day."
-William Morris

There are dreamers that conjure up things that change the world. From the wheel to the computer chip, what began as a glimmer in one mind's eye soon became reality. Then there are dreamers that sleep through life, escaping reality while burdening their fellow man. And then there are dreamers whose visions blur reality and whose dreams blend the realms of sleep and conscience. For them, it's about making the straight crooked in route to pushing an agenda that beats with heavy wings against what was the ivory pillars of American success. We heard a couple of tales yesterday that put a rally to sleep and left investors feeling empty and alone.

On what planet do President Obama and Fed Chairman Ben Bernanke reside? The master of the obvious, is this what everyone was so excited about when Ben Bernanke was selected to replace Alan Greenspan?

"Although the jobs market remains quite weak and progress has been uneven, overall we have seen signs of gradual improvement."

"I expect hiring to pick up from last month's pace as growth strengthens in the second half of the year, but, again, the recent data highlight the need to continue monitoring the jobs situation carefully."

"As you all know, over the past year, prices for many commodities have risen sharply, resulting in significantly higher consumer prices for gasoline and other energy products and, to a somewhat lesser extent, for food."

"As in all countries, the primary objective of monetary policy in the United States should be to promote economic growth and price stability at home, which in turn supports a stable global economic and financial environment."

"Although it is moving in the right direction, the economy is still producing at levels well below its potential; consequently, accommodative monetary policies are still needed."

The above comments, and others, just didn't do enough to get the Street stoked about accommodation. Toss in the fact that Bernanke doesn't think the economy is headed for a double-dip and the Street was deflated; all the air came out of the rally as well. President Obama said there is no double-dip but couldn't put a finger on what's exactly wrong with the economy other than from time to time people thinking about George Bush and to stop spending. But, this leaves the market in a quandary. If stocks are to rally it has to happen by one of two ways.

1. Signs the economy is picking up steam as we are well past the green shoots period of positive rationalization.
2. Federal Reserve pumping money and indirectly manipulating stocks higher through a variety of programs.

The market limped out of yesterday's session thinking the Fed might cut off the punch bowl while the economy drags along.

Eyes Wide Open

There was a big research piece released by McKinsey that is a direct rebuke of the new healthcare law and the CBO. I find it almost amusing when politicians say non-partisan CBO as if that was the same as always right CBO, because they're numbers rarely add up to match reality. Giving President Obama's healthcare law the green light, the CBO estimated only 7% of employees currently covered by employer-sponsored insurance (NYSE:ESI) would have to switch to subsidized policies in 2014. Say what?! Do you really have to be an economist to know those assumptions are completely off the mark?

Turns out in the survey of 1,300 employers, 30% will definitely or probably stop offering ESI in the years after 2014.

Among employers with high awareness of reform, the number that will definitely or probably stop offering ESI leaps to 50% to 60%.

Here's the thing; 30% of employers would gain economically from dropping coverage even if they had to offer other benefits or higher salaries. Yet, this might not make those employers uncompetitive for talent as 85% of employees would remain at their jobs without ESI but 60% would expect increased compensation. But, the fine of $2,000 per employee for those businesses with more than 50 employees (less the first 30) is just not enough, even with extra pay, for many businesses to offer ESI. It really becomes a very simple business decision. So these workers move on to those individual state health exchanges.

Households that make less than 400% of the federal poverty level are eligible for subsidized insurance purchases from state exchanges. These plans will offer individual and family policies:

 Bronze * Silver * Gold * Platinum

 Families whose household income is less than 400% of the federal poverty level they will see their spending on health insurance capped at 9.5%. 

 

In 2009, the Kaiser Foundation found businesses spent $13,375 to provide family healthcare coverage. The number is higher now. So, who's going to pay for all this healthcare coverage? I would be shocked if 50% of employers don't opt out in the first few years after it officially kicks in, it just makes sense to let the government pay the bill. If the government pays, that means taxpayers (those that pay federal income tax) will be the ones that pay. Oh, say goodbye to your doctor and hello to long lines, massive frustration, and trouble for the government.

Today's Session

Stocks look vulnerable again today as buyers have gone into hibernation and economic news gets direr. Germany's industrial production came in at -0.6% versus the consensus of +0.2%. Chinese stocks are getting hit over concerns about accounting, and this is for their largest and most success publicly traded companies. McDonald's (NYSE:MCD) just posted same-store sales that missed consensus. The restaurant chain saw same-store sales miss globally and for U.S. locations (+2.4% versus +2.9% est).

The market is lurching into being deeply oversold, but it's also very weak and in need of a catalyst. We have to refer back to the key support points featured in yesterday's update.