Markets/Interest Rates/Medicare Advantage

Stocks climbed higher last week continuing to anticipate the economic re-opening will release an abundance of pent-up demand. The belief is this massive demand is expected to increase corporate profits, which will justify the continuation of an elevating market.

For the week, the Dow moved higher by 1.11%, the S&P 500 1.28% and the Nasdaq Composite 1.73%.  Breaking the2% plus move for the week, was the Russell 2000 Small-cap increasing 2.54% and International stocks rising over 2%.

For the Year, here are where the Major Indexes stand:

  • Dow Jones 3.00%
  • S&P 500 4.94%
  • Nasdaq 9.37%
  • Russell 2000 16.01%

International Developed stocks are up 3.80%, year-to-date and Emerging Market equities up 10.81%.

Interest Rates

The 10-Year US Treasury yield rose to 1.20% and the 30-year to 2.01% last Friday.  Many believe that the unleashing of the pent-up demand, combined with economic and monetary stimulus will cause inflation, forcing market interest rates higher. I certainly agree this is inevitable, so where do we stand?

The last time the 10-year hit 1.2 and the 30 year US hit 2 was back in February 2020.  On 12/31/2019, the 10-year yield stood at 1.91%.

On December 31, 2019, the Coronavirus was unknown, and the economy was in good shape.  I think it makes sense to see the 10-Year US Treasury move back toward its pre-crisis level of 1.91% at some point.   Hopefully, not too soon!

As long as rates move up gradually, and not significantly, the stock markets should continue to move higher, although a correction or two should be expected at some point.

Medicare Advantage Physician Coverage

The Kaiser Family Foundation did a 2017 study of Medicare Advantage Networks.  Here are some noteworthy findings:

  • On Average, Medicare Advantage networks included 46% of all Physicians in the county.
  • 35% of Medicare Advantage enrollees were in narrow-network plans, defined as having less than 30% of the doctors in the county. Insurers may create narrow networks in order to have greater control over the costs and quality of care.
  • Broad-network plans tended to have higher premiums than narrow-network plans.
  • Network size difference: In Erie County, while enrollees had access to 60% of physicians in their county, on average, 16% of the plans had less than 10% of the physicians while 36% of the plans had more than 80% of the physicians in the county.

The major point, please choose carefully between Original Medicare and Medicare Advantage.  Nothing should be taken for granted!

Here is a short, 90-second video on how to choose Medicare coverage in retirement:



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