How Many Americans are Below 133% of the Federal Poverty Level?

I promise this will be my last constitution/healthcare relevant post today…

A portion of the healthcare law that was loosened by the Supreme Court revolved around Medicaid.  The Supreme court ruled that the Federal government could not withhold funding to States that choose not to increase the scope of their Medicaid programs to include all those who have income below 133% of the Federal Poverty Limit (FPL).  Below is a chart of the population of the US broken down relative to the poverty limit.

The chart includes buckets up to 138% of FPL.  There are 88m Americans below that level.  The current non-elderly Medicaid population is 45m, implying that if all states adopt the expanded Medicaid limits the medicaid population could increase by 30-40m people.  Currently Medicaid spend is about $4000 per covered per year.  On the low end, an incremental 30m people would cost $120B per year at that rate.  State and Local governments have combined budgets of $2.1T per year, so $120B would be ~5% increase in spending.

Article I Section 9

Section 9 – Limits on Congress

The Migration or Importation of such Persons as any of the States now existing shall think proper to admit, shall not be prohibited by the Congress prior to the Year one thousand eight hundred and eight, but a tax or duty may be imposed on such Importation, not exceeding ten dollars for each Person.

The privilege of the Writ of Habeas Corpus shall not be suspended, unless when in Cases of Rebellion or Invasion the public Safety may require it.

No Bill of Attainder or ex post facto Law shall be passed.

(No capitation, or other direct, Tax shall be laid, unless in Proportion to the Census or Enumeration herein before directed to be taken.) (Section in parentheses clarified by the 16th Amendment.)

No Tax or Duty shall be laid on Articles exported from any State.

No Preference shall be given by any Regulation of Commerce or Revenue to the Ports of one State over those of another: nor shall Vessels bound to, or from, one State, be obliged to enter, clear, or pay Duties in another.

No Money shall be drawn from the Treasury, but in Consequence of Appropriations made by Law; and a regular Statement and Account of the Receipts and Expenditures of all public Money shall be published from time to time.

No Title of Nobility shall be granted by the United States: And no Person holding any Office of Profit or Trust under them, shall, without the Consent of the Congress, accept of any present,Emolument, Office, or Title, of any kind whatever, from any King, Prince or foreign State.

Article I Section 8

Section 8 – Powers of Congress

The Congress shall have Power To lay and collect Taxes, Duties, Imposts and Excises, to pay the Debts and provide for the common Defence and general Welfare of the United States; but all Duties, Imposts and Excises shall be uniform throughout the United States;

To borrow money on the credit of the United States;

To regulate Commerce with foreign Nations, and among the several States, and with the Indian Tribes;

To establish an uniform Rule of Naturalization, and uniform Laws on the subject of Bankruptcies throughout the United States;

To coin Money, regulate the Value thereof, and of foreign Coin, and fix the Standard of Weights and Measures;

To provide for the Punishment of counterfeiting the Securities and current Coin of the United States;

To establish Post Offices and Post Roads;

To promote the Progress of Science and useful Arts, by securing for limited Times to Authors and Inventors the exclusive Right to their respective Writings and Discoveries;

To constitute Tribunals inferior to the supreme Court;

To define and punish Piracies and Felonies committed on the high Seas, and Offenses against the Law of Nations;

To declare War, grant Letters of Marque and Reprisal, and make Rules concerning Captures on Land and Water;

To raise and support Armies, but no Appropriation of Money to that Use shall be for a longer Term than two Years;

To provide and maintain a Navy;

To make Rules for the Government and Regulation of the land and naval Forces;

To provide for calling forth the Militia to execute the Laws of the Union, suppress Insurrections and repel Invasions;

To provide for organizing, arming, and disciplining, the Militia, and for governing such Part of them as may be employed in the Service of the United States, reserving to the States respectively, the Appointment of the Officers, and the Authority of training the Militia according to the discipline prescribed by Congress;

To exercise exclusive Legislation in all Cases whatsoever, over such District (not exceeding ten Miles square) as may, by Cession of particular States, and the acceptance of Congress, become the Seat of the Government of the United States, and to exercise like Authority over all Places purchased by the Consent of the Legislature of the State in which the Same shall be, for the Erection of Forts, Magazines, Arsenals, dock-Yards, and other needful Buildings; And

To make all Laws which shall be necessary and proper for carrying into Execution the foregoing Powers, and all other Powers vested by this Constitution in the Government of the United States, or in any Department or Officer thereof.

How Big Can Amazon Get?

After a brief malaise, AMZN’s stock has started to outperform the market again.  It now sports a market cap of over $100B.  WMT, by contrast, which does almost 10x AMZN’s sales, has a market cap that is only 2.3x AMZN’s.  The AMZN thesis continues to be that internet retailing will take more and more share from brick and mortar and that AMZN will be the dominant online site.  E-commerce sales are now just below 5% of total US retail sales.

Still, there are certain consumption expenditures that are highly unlikely to ever move online (e.g. Restaurants, Gas and Groceries).  Below is a chart of US retail sales broken down by category and likelihood of online spend.  Red categories are those that I subjectively labeled as unlikely to be purchased online, blue are those that are more likely to have some share online.  I’ve faded the color on categories that may lean one way or the other.  By my analysis, nearly 3/4 of US retail sales are unlikely to be made online.  Only a portion of the remaining 25% is likely to be spent online too.  
US retail sales are ~$4T.  WMT sells for 0.5x sales, implying that AMZN would need to do $200B worth of sales to justify its current market cap with WMT’s multiple.  AMZN has ~25% of e-commerce market share with $40B+ in sales, so if it keeps that market share, online sales would need to be about $800B to justify AMZN’s current market cap.  That’s 20% of current US retail sales.

Growth Stock Graveyard

In the past 6 months there have been more than a few former momentum darlings that have completely broken down.  For some value investor schadenfreude, below are the charts of TPX, NFLX, DECK and GMCR.  And for a blast from the past, two old favorites: CROX and KKD are also included.  It took about 1.5 years for CROX to bottom, while Krispy Kreme took about 2 years before it reached a near term bottom.  KKD went from 7x book value to 1.9.  CROX went from 13x book to 0.3x.  By comparison:

Months Supply of Housing

New Home sales data was reported this morning slightly better than estimates at 369k on a seasonally adjusted annualized rate in May vs. 343k for April.  At that pace, there are 4.7 months of supply of new houses, which is the lowest level since 2005.  That’s still a little elevated compared to where supply was in the 90s, but it’s much better than it was in 2009 when the figure peaked at 12.2.  On average, the housing market has carried 6.6 months of supply since 1963.