They are called general practitioners or primary-care doctors. Overworked, suffocating under mountains of paperwork, they see more than 30 patients a day in one of the most underpaid areas of the medical field.

 

An estimated one-third of all physicians in the U.S. are primary-care doctors, according to the Robert Graham Center, which studies the primary-care market. They include medicine physicians, general internists, and pediatricians. Depending on the definition, other researchers, like the Peterson-KFF Health System Tracker, say that number is far lower, around 12 percent. That compares with a range of 23-45 percent of primary care doctors in Europe.

 

My doctor, whose office is a stone-throw away from my house, fits the profile of most doctors in her field. She is meticulous, saved me from serious health issues several times, and knows my family intimately. I trust her implicitly and don't know what I would do without her.

 

Through the COVID-19 pandemic, her doors were always open, and she did it alone since finding anyone willing to work for her was impossible. With no help, she spent her evenings entering patient data into the nation's cumbersome electronic health record systems, scheduling appointments, and checking on patients.

 

Today, a smaller and smaller percentage of medical students are even considering the field. Salaries are a big reason why other medical and surgical specialties are promising far more income. Retirement is further depleting the nation's stock of GPs. At the same time, the demand for primary care is growing, thanks to record enrollment in Affordable Care Act programs. 

 

This results in longer and longer waiting times between visits to see your primary-care doctor. The average wait time is now about 21 days and growing. If, God forbid, your doctor retires, most people are faced with a "not taking new patients" electronic message from most physicians.

 

In response, over the last five years, large primary care and urgent care groups have sprung up across the nation. They are flourishing. Patients can usually walk in to see a doctor (although not necessarily the same doctor) on each visit. Many times, they will not even see a doctor. They will instead see a nurse practitioner or a physician's assistant.

 

Retail clinics like CVS Minute Clinics, offer in-person and virtual care seven days a week. Changes in Medicare and state laws have loosened the requirements for physicians and billing. This has boosted the growth in these areas, making them one of the fastest-growing segments of the medical arena.

 

The trend has grown so fast that roughly 46 percent of all primary-care physicians are currently working in practices they do not own. And two-thirds of those doctors do not work for another doctor, but a different entity altogether — Corporate America.

 

Given the present state of the primary-care field, why would the country's largest health-care insurers, drug store chains, and other billion-dollar corporations want to get involved in this business? Names like CVS, Amazon, Aetna, and Amazon are all buying up primary-care centers, doctor groups, and even the practices of individual doctors.

 

The simple answer — to create one-stop shopping for all your health-care needs. Corporations want access to the nation's huge number of consumers who need all sorts of health care and medical insurance. Primary-care doctors hold the pulse of millions and millions of patients. These patients will continue to generate a steady flow of business and profits to hospital systems, health insurers, and pharmacies.

 

In addition, Medicare, the federal health insurance program, is gradually being privatized. As it stands now, more than 30 million beneficiaries have policies with private insurers under the Medicare Advantage program. That is worth $400 billion a year for insurers and is growing every year.

 

Corporations entering the field say they are bringing coordinated health care to patients. Health insurers and others want to institute "value-based care" where the insurer and doctor are paid a flat fee for individual patient care. They argue that fixed payments will act as an incentive to maintain the health of the patient and provide access to early care, which in turn will reduce hospital stays and visits to expensive specialists.

 

Critics, however, worry that the economies of scale invading patient care will destroy the personal doctor-patient relationship. It may also end up in situations where corporate owners begin to dictate and limit services from the patient's first visit to extended hospital stays.

 

Given the growing scarcity of primary-care physicians, many millennial patients, especially those who are younger and generally healthy, are unfazed by the changes in health care. A video call or a no-wait visit at their local drug store or big-box store beats waiting for weeks to see a doctor. As for me, I am both lucky and grateful for my primary-care doctor.

 

Bill Schmick is the founding partner of Onota Partners, Inc., in the Berkshires. His forecasts and opinions are purely his own and do not necessarily represent the views of Onota Partners Inc. (OPI). None of his commentary is or should be considered investment advice. Direct your inquiries to Bill at 1-413-347-2401 or email him at bill@schmicksretiredinvestor.com.

The American work culture has shifted radically since COVID-19. The idea that there is more in life than work is catching on among many workers. Working from home, quiet quitting, and "missing Mondays" are all symptoms of this change as is a four-day workweek.

 

Most full-time workers and job seekers, when asked, say a four-day workweek is at the top of their wish list. That is what a recent study by Bankrate, a consumer financial services company, discovered. Fully 81 percent of 2,367 adults polled, supported such a move, and 89 percent of workers were willing to make sacrifices to achieve that goal. Those surveyed said they would work longer hours, change jobs, take a pay cut, have fewer vacation days, switch industries, and even sacrifice advancement for the chance to reduce their days of toil.

 

At the same time, more than half of American employers offer, or plan to offer, a four-day workweek, according to a poll of 976 business leaders by ResumeBuilder.com. In that survey, 20  percent of those businesses already offer a four-day week and another 41 percent are planning to implement a similar week at least on a trial basis.

 

Several large trials are already occurring both here and abroad to explore the possibilities of a shortened work week. Studies have shown that for those who have implemented the change employees are happier, have less burnout, and it is also easier to attract new talent. In a Canadian trial, researchers found that revenue increased by 15 percent in many of the 41 companies that decided to continue with the approach after the trial ended.

 

Some large private-sector companies in the U.S. including Shopify, and even Amazon and Microsoft, are experimenting with a shorter workweek. California, Massachusetts, Missouri, Pennsylvania, Texas, and possibly Vermont have introduced legislation to reduce the standard workweek as well.

 

You would think that with this much support from both employee and employer, why hasn't it happened already?

 

The facts are that the lion's share of U.S. companies and organizations still operate under a five-day work schedule. It happens to also be a labor law and has been for more than 80 years. Changing that would require a large adjustment and require a great deal of planning. Just think for a moment about how downsizing the working week might impact you. Everything from taking the kids to school, to when you go grocery shopping might change.

 

From the perspective of your company, there is a lot that needs to be assessed. Staffing needs, concerns over productivity gains or losses, increased costs, and complex changes to operations are all legitimate concerns. None of those issues can be overcome quickly. Experts estimate a complete changeover could take five years or more.

 

Back in 1926, Henry Ford was credited for standardizing the five-day workweek (down from six) in response to pressure from the labor movement. Unions have long been instrumental in fighting for most of today's worker benefits like weekends off, overtime, and health benefits.

 

In 1940, an amendment to the Fair Labor Standards Act mandated pay for any time worked beyond 40 hours per week. Since then, not much has changed in labor laws.

 

While remote workers, office jockeys, and the salaried bunch are lobbying for a change in the workweek, the United Auto Workers are putting the four-day workweek on the map for hourly workers. Today's striking autoworkers union, in addition to wanting better pay and benefits, are asking for a four-day workweek. The deal they want is to put in a 32-hour week and get paid for 40 hours. In addition, anything clocked over the 32-hour limit would count as overtime.

 

Part of the union's effort is due to the auto industry's transition from building gas-powered vehicles to electric. It takes less time to assemble EVs on the line, so assembly workers wouldn't necessarily see their weekly take-home pay take a hit.

 

Most labor experts do not expect the UAW will win on that demand. And not all workers want a reduction in their hours worked anyway. Hourly workers across many industries are fighting for more, not less, hours to work. It is a sad fact in this country that many employers actively try to keep workers' hours under certain thresholds to avoid paying fringe benefits. It would take a concerted effort by labor unions, corporate executives, and politicians to pull off something like a four-day workweek. Nonetheless, the idea is gathering steam across the nation, and at some point, we should expect it to become a fact, possibly in my lifetime.

 

Bill Schmick is the founding partner of Onota Partners, Inc., in the Berkshires. His forecasts and opinions are purely his own and do not necessarily represent the views of Onota Partners Inc. (OPI). None of his commentary is or should be considered investment advice. Direct your inquiries to Bill at 1-413-347-2401 or email him at bill@schmicksretiredinvestor.com.

As the market enters October, there is both good and bad news. The sell-off that started in September is continuing. The good news is that we should be close to the bottom.

 

Blame the waterfall decline in the price of the 10-year U.S. Treasury bonds, the continuing gains in the U.S. dollar, and the seasonal pattern in the equity market. Throw in the absolute mess in Washington and the market's free fall can be understood.

 

None of this should be new to readers because this is exactly what I predicted would happen back in August. I expected markets to correct into the second week of October and here we are with one week to go. The argument over government spending levels and the potential shutdown has forced investors to focus on not only the amount of our national debt but also the rising cost of servicing it.

 

The fiscal deficit this year is more than $1.5 trillion. Overall, the U.S. government debt is roughly $33 trillion with a debt-to-GDP ratio of 120 percent. Estimates are that we are now paying 8 percent of Gross Domestic Product (GDP) to holders of Treasury bonds worldwide just to service this debt. That number could easily rise to 9-10 percent, or more.

 

I suggest that you take a peek at my Thursday column. It will explain the background and risk to the markets caused by the dysfunction in Washington. Bottom line: we can expect Moody's credit agency to cut its rating of our government debt unless the country and its politicians can get their act together.

 

The Fed's policy of keeping short-term interest rates higher for longer doesn't help. But the bond market is now also bidding up the yields on the longer-end of the bond curve as well. The 30-year bond is almost 5 percent. This is shaking investors' confidence in the soft-landing scenario popular among many economists.

 

As such, all eyes are on the employment numbers. These are the keys some believe to what is happening to the economy. Stronger job numbers and wages mean more tightening from the Fed. Weaker data is okay, but if it is too weak, that would set off fears of a deeper recession. That leaves investors in an impossible situation where they are looking for a Goldilocks scenario where jobs are neither too hot nor too cold. Good luck with that.

 

This Friday's non-farm payroll numbers were almost double the 171,000 job gains expected. The U.S. economy added 336,000 jobs, which sent yields even higher, and stocks lower on the news. And yet, yields, the dollar and stocks all reversed during the day. That should tell readers that we are in the bottoming process.

 

Yield-wise, the benchmark 10-year, U.S. Treasury bond hit 4.83 percent, which was its highest level since 2007. And we all know what happened in 2008 (the financial crisis). Not that I am expecting something similar, but a lot of the investment community is freaking out at where interest rate yields can go from here.

 

I think we may be close to a short-term top in yields, at least in the short-term. That is one reason I am expecting a bottom in the equity markets. And where yields go, so does the U.S. dollar. The two asset classes have moved together over the last month. Friday's jobs number pushed the greenback up .65 percent on the news but it quickly gave all its gains back. The dollars’ gains have trashed just about everything from commodities, foreign markets, U.S. equities, and precious metals. That could be changing.

 

Underlying the rise in yields has been the avalanche of U.S. Treasury auctions that began in earnest this quarter. I'm guessing that yields have risen in anticipation of that event. Could we therefore see a "sell on the news" event where bond traders cover their shorts and buy back bonds at some point soon? Stanger things have happened.

 

Last week I targeted the 4,200 area on the S&P 500 Index, which is the 200-day Moving Average as a level we could look for in the bottoming process. I also said that looking for a perfect number like that is not usually the end of the story, since markets overshoot on the upside and the downside. We could easily slip below that number before all is said and done.

 

Keep an eye on the dollar and yields because they are the big dog wagging the tail of the equity markets. When they roll over, as they may be next week, stocks will have reached a bottom.

 

Bill Schmick is the founding partner of Onota Partners, Inc., in the Berkshires. His forecasts and opinions are purely his own and do not necessarily represent the views of Onota Partners Inc. (OPI). None of his commentary is or should be considered investment advice. Direct your inquiries to Bill at 1-413-347-2401 or email him at bill@schmicksretiredinvestor.com.

The ongoing partisan battles in Congress over a government shutdown are making daily headlines. However, whether a shutdown ultimately occurs or not may not be the most important outcome of this squabble.

 

Over the weekend, at the 11th hour, Congress and the White House passed a continuing resolution to postpone a government shutdown until Nov. 14, 2023. Axing funding for Ukraine was the price Republicans demanded to kick this spending can down the road. This was somehow hailed as a bipartisan victory, one of the few in this deeply divided Congress. It seems to me that the only victor in this mess was Russia. 

 

Since then, a handful of radical right Republicans in the House, led by Matt Gaetz, a Republican congressman from Florida and the subject of an ethics probe, forced a vote to push House Speaker Kevin McCarthy out of his post. Combined with most Democrats, the House voted to oust McCarthy.

 

Gaetz and the radical right had accused McCarthy of breaking his word to conservatives on spending bills and how he would run his house. They pointed to McCarthy's behind-the-scenes, side deal with the Biden administration to restore funding for Ukraine as just another reason not to trust the speaker. The straw that broke the radical's back, however, was when McCarthy reached out across the aisle to come up with a compromise that would keep the government's lights on at least temporarily.

 

Democrats were divided on their response to the turmoil within the Republican Party. But few Democrats trusted the speaker, given his partisan track record. In the end, partisan politics dictated they voted to oust the speaker, even though it meant that no work could be done in Congress until a new speaker was elected.

 

If one steps back from the hour-by-hour circus in Washington and looks at this debacle from the perspective of others, the U.S. government appears to be in a precarious state. Many developed countries plan their budgets, their spending levels, the level of debt, etc. in five-to-10-year increments. Our government can't even agree on whether they will be able to pay its employees next month.

 

It is also becoming increasingly apparent that the U.S. government is unable to control spending on both the short-term and long-term levels. This failure to manage continues to happen under both parties. This is not just my opinion. Two of the three largest credit agencies, Fitch and Standard and Poor's, have come to the same conclusion.

 

Back in 2011 Standard and Poor's reduced our long-held triple-A credit rating to AA, citing a weakening in the effectiveness, stability, and predictability of American policymaking and political institutions. 

 

This year, thanks to the debt ceiling debacle spawned by this same group of dysfunctional politicians, Fitch, another big credit rating agency, downgraded our debt as well. Fitch cited a "steady deterioration in standards of governance over the last twenty years." They went on to explain that "repeated debt limit political stand-offs and last-minute resolutions have eroded confidence in fiscal management."

 

And here we are again — more than two months later — repeating the same suicidal behavior. The actions among U.S. legislators befit a banana republic economy, not the U.S. Only one credit agency is left, Moody's, that still maintains a AAA rating for our sovereign debt. How long that status remains is my concern.

 

Politicians of both parties fail to realize (or don't care) that these rating changes have a real cost to the nation and taxpayers for decades to come. The cost of issuing U.S. debt and paying bondholders interest is climbing year after year. As it stands today, interest payments alone are costing the country 8 percent of GDP. That percentage is expected to increase exponentially. We are talking billions of dollars, readers, if not trillions, when we consider the cost that we will have to bear (as will our children and their children).

 

Moody's has already commented that a shutdown would have credit implications. A downgrade in their rating based on "the weakness of U.S. institutional and governance strength," as well as "the fractious bipartisan politics around a relatively disjointed and disruptive budget process" indicates to me that unless things change dramatically next week, we could see yet another downgrade.  

 

Bill Schmick is the founding partner of Onota Partners, Inc., in the Berkshires. His forecasts and opinions are purely his own and do not necessarily represent the views of Onota Partners Inc. (OPI). None of his commentary is or should be considered investment advice. Direct your inquiries to Bill at 1-413-347-2401 or email him at bill@schmicksretiredinvestor.com.

September has been a story of higher-bond yields, a stronger dollar, and spiking oil prices. The higher these assets climbed, the lower the stock market fell. And now we enter October, a month that is notorious for providing negative returns at least in the first weeks of the month.

 

"Tread cautiously" was how I described September-October several weeks ago. History indicates that those are the two worst months for stocks. So far that advice has proven accurate. The stock market has had its worst decline all year and the prospects that this sell-off will continue are high despite the dead cat bounce we are enjoying right now.

 

While yields, the dollar, and oil are separate asset classes, they are interrelated when it comes to explaining the "why" of this present downturn. Let's start with the price of oil. As I explained last week, since oil is used worldwide in practically everything it is an important element in gauging future inflation.

 

 Oil is now trading above $90 a barrel and some expect it to hit $100 a barrel shortly. The spike in energy prices therefore has convinced many traders that the decline in inflation we have enjoyed may reverse and as it does bond yields need to rise to compensate for the real rate of return bond holders should demand.

 

In addition, readers may recall my warning that the U.S. Treasury needs to replenish the government's general account by auctioning more than a trillion dollars in various bonds. In anticipation of that auction program, bond traders had already pressured yields higher.

 

By the way, that avalanche of government bond issuance will begin in earnest during this quarter, so yields could continue to move higher. As it is, the U.S. 10-year Treasury is yielding 4.60 percent, its highest level since 2007 while mortgage rates have hit a 23-year high.

 

The U.S. dollar has strengthened to 10-month highs as yields have risen. Currency traders still expect that the U.S. economy will remain more resilient to higher interest rates than other economies. The combination of all three elements has conspired to pressure stocks downward.

 

By mid-week the markets were exhibiting extreme oversold readings. Sentiment as measured by the AAII Sentiment Survey gave the highest bearish reading and the lowest bullish score since May 2023. The "Fear" Index, according to CNN, was showing extreme fear.

 

These are all short-term contrarian indications that tell traders to expect a countertrend bounce. Yields fell slightly and the dollar followed suit which gave equities some breathing room to rally. Stocks could continue higher for a day or two, especially on the back of the latest Personal Consumption Expenditures Index (PCE), which is the Fed's preferred inflation measure. The PCE came in cooler than expected. The Algo traders took that to mean inflation was not as strong as the markets expect and pushed stocks higher.

 

I still think the markets have more to fall before this sell-off is said and done. The 200-Day Moving Average for the S&P 500 Index is about 125 points below at 4,200. However, stocks do not usually bounce off that line perfectly. Many times, the averages will overshoot to the downside, so that we could see 4,100 or maybe lower before we regain the 200 DMA.

 

It is a process that I am expecting to play out between now and the second week of October before we begin to rise once again. But to do so, we would need to see yields drop as well as the dollar. If things do develop the way I see it, I would be a big buyer of that pullback, but probably not in the same sectors that had been winners in the first half of the year. A declining dollar and lower yields would be beneficial to overseas markets, especially emerging market countries, as well as mines and metals, precious metals, and other sectors that have an inverse relationship with the dollar.  

 

Bill Schmick is the founding partner of Onota Partners, Inc., in the Berkshires. His forecasts and opinions are purely his own and do not necessarily represent the views of Onota Partners Inc. (OPI). None of his commentary is or should be considered investment advice. Direct your inquiries to Bill at 1-413-347-2401 or email him at bill@schmicksretiredinvestor.com.