I’m not going to pretend to know all the reasons why shares of UnitedHealth Group (NYSE:UNH) popped up more than 5% on the Feb. 5 session. But I have a strong suspicion that astute Wall Street powerbrokers watched the prior evening’s State of the Union Address. The unprecedented drama that unfolded there bodes very well for our president and by logical deduction, UNH stock.
First, let me back up and provide some context. Last year saw UNH return 22% for stakeholders, which isn’t a bad deal for a big, boring blue-chip investment. Arguably, most folks buy equity in UnitedHealth for stable revenue streams and a sure dividend. Never does this name appear on a list of get-rich-quick schemes.
However, the net bullishness in UNH stock overlooks how choppy and volatile it was in 2019. By the end of the first half, shares were basically flat because, political momentum picked up for “Medicare for All” proposals. So much so that UnitedHealth Group CEO David Wichmann warned that such proposals would “destabilize the nation’s health system.”
According to CNBC, Wichmann rarely discusses politics. Therefore, his opinion stood out more than usual. Not surprisingly, it also negatively affected UNH stock, with shares sinking from mid-July to late September.
The other significant contextual factor is President Trump and his trade war against China. As you know, UNH stock responded very positively to Trump’s administration. Since inauguration day, shares have nearly doubled.
However, a poor economy represented a serious risk to a second term and that translates to potentially large-scale changes in the healthcare system that Wichmann fears.
Thankfully, House speaker Nancy Pelosi assuaged those fears.
Pelosi Stunt Will Fire-up UNH Stock
Like probably most Americans, I watched the SOTU address because I knew I was going to watch a train wreck. I wasn’t disappointed.
The fireworks started right off the bat, with Trump seemingly declining Pelosi’s offer of a handshake. Presumably, in response, Pelosi cut short the customary introduction of the President.
I can overlook the chilly interaction between the two based on the impeachment controversy. What I could not overlook – and millions of American voters would surely agree with me – were Pelosi’s childish antics in the background. Finally, after Trump concluded his speech, she ripped her copy of it in plain view of the camera.
From her point of view, she protested what she claimed were “page after page” of “mistruths.” She’s passionate, I’ll give her that. But in her childish antics, she might as well have given what the Republicans chanted earlier that evening: “Four more years!”
In the military and the various uniformed services of the federal government, we have a tradition of saluting (senior) officers. You might not personally like the officer. Ultimately, though, he or she represents the office they are holding and that is what uniformed members salute.
By ripping the speech, Pelosi dishonored the highest traditions of this country. She further disrespected the office of the Presidency of the United States. Honestly, it was one of the most shocking moments I have ever witnessed.
Now, I recognize that the nation is deeply divided politically. But our government representatives must demonstrate basic decorum and etiquette when conducting official functions of the U.S. Failure to do so is an unconscionable insult, yet here we are.
However, if you’re long UNH stock, you’re looking forward to celebrating November 2020.
UnitedHealth Shareholders Breathing a Sigh of Relief
If I wasn’t clear above, let me state it bluntly: I wholeheartedly believe that Donald J. Trump will win his second term. I’ll go a step further. I think it’ll be a landslide victory.
Americans are not the smartest creatures on this planet. But I thank my lucky stars that America’s forefathers apparently forecasted our intellectual and moral decline, and the gift they gave us, the Electoral College, will prevent the tyranny of stupidity (see progressive California’s business-killing AB 5 as an example) and emotional instability for at least the next few years.
However, it was rough going for some time for “The Donald,” which is why UNH stock was turbulent in 2019. But with a phase one trade deal signed, and headline economic numbers moving in the right direction at the right time, it’d be crazy to bet on anyone else.
It’s nothing personal…it’s just business.
As of this writing, Josh Enomoto did not hold a position in any of the aforementioned securities.
