U.S. Supreme Court – 2015 Will Be A Blockbuster Year by Gary D. Halbert

FORECASTS & TRENDS E-LETTER
by Gary D. Halbert
February 24, 2015

IN THIS ISSUE:

  1. Fed is Worried About Raising Rates Too Soon
  2. 2015 Will Be a Big Year For the Supreme Court
  3. Texas Judge Blocked Obama’s Immigration Plans
  4. WEBINAR: Niemann Capital Management, February 26

Overview

The Supreme Court is poised for a blockbuster year in 2015 – and the list of high-profile cases could keep growing. Already, the Court is set to rule in a key case that threatens to wreak havoc on Obamacare. In addition, the justices will consider important cases regarding religious freedom, free speech, and limits on political fundraising.

That mix of cases poses big risks for liberals, who were caught off guard by the Court’s willingness/enthusiasm to take on another high-stakes Obamacare battle much sooner than expected.

Yet Republican governors and social conservatives have a lot on the line as well. Under mounting pressure, the High Court agreed to hear a landmark the case on same-sex marriage once again – one that could clear the way for same-sex couples to legally marry in every state.

We will take a look today at the most high-profile cases that the Supreme Court will hear this year, and what lies at stake in each of them. I wish Americans paid more attention to the Highest Court in the land.

Before we get into that discussion, let’s take a look at the minutes from the most recent Fed Open Market Committee (FOMC) meeting on January 27-28. Those minutes revealed that several members on the Committee have new concerns about the economic recovery, especially in light of falling inflation and the rising US dollar.

While the minutes didn’t say so specifically, it is clear that several members of the Committee now question whether short-term interest rates should be raised at all this year.

Finally, we’ll look at the federal court decision in Texas last week that stopped President Obama’s executive action on immigration dead in its tracks, at least for now. This is an interesting development, and it remains to be seen if Obama can get this decision reversed.

Editor’s Note: A hat tip goes to Morgan Housel of The Motley Fool for his interesting analysis on ALTRIA, the most successful public company in the world since 1968, based on share price increases, which I included in last week’s E-Letter.

Fed is Worried About Raising Rates Too Soon

The minutes from the Fed’s late January policy-setting meeting, released last Wednesday, show officials grappling to square solid US economic growth with the weakness in international markets, as well as worrying about falling inflation expectations in the US. Some Committee members also expressed concern that raising interest rates too soon could pour cold water on the economic recovery.

Many believed that the FOMC was targeting June as the month to begin raising rates. However, the latest minutes shed light on the depth of the Fed’s inflation debate and highlighted the desire of several policymakers to keep interest rates low for longer.

U.S. Supreme Court - 2015 Will Be A Blockbuster Year

In its January policy statement, the Fed voiced concern about turmoil in markets across the globe, saying it would take “financial and international developments” into account when determining monetary policy. It was the first time since January 2013 that the Fed made an overt reference to overseas economic events in its policy statement.

The minutes offered a more detailed view of the overseas concerns, with policymakers noting how China’s economic slowdown and tensions in the Middle East and Ukraine pose downside risks to the US economic growth outlook.

Even though Fed officials agreed that US economic growth was strengthening, the minutes showed the central bank continuing to struggle with whether it can move ahead with raising rates amid falling inflation expectations.

“Several participants saw the continuing weakness of core inflation measures as a concern,” the minutes said, detailing the Fed’s internal debate over the conflicting signals sent by different measures of inflation expectations and a rising US dollar.

Though policymakers expect the recent bout of low US inflation to prove transitory, they also said the different measures of expectations “needed to be monitored closely” for signs the public and/or investors are losing faith in the Fed’s ability to reach its 2% inflation target. With the consumer price index down in December, that faith could be waning.

The FOMC decided to leave the word “patient” in its January policy statement, as it pertains to when the first rate hike might occur. However, some Committee members worried openly that when ‘patient’ is dropped, investors will put too much weight on its meaning, and financial markets could overreact.

The bottom line is that the Fed doesn’t intend to raise rates anytime soon. The next FOMC meeting will be on March 17-18, with a press conference to follow by Chair Janet Yellen.

2015 Will Be a Big Year For the Supreme Court

Here are the highest-profile cases the Supreme Court will likely tackle in just the first six months of 2015, before the current term is over around the end of June, as summarized by Sam Baker at National Journal.

Obamacare

The justices will hear oral arguments March 4 in a lawsuit that threatens to cripple the health care law, just three years after Chief Justice John Roberts helped save it. This time, the challengers want the Court to invalidate the law’s premium subsidies in states that didn’t set up their own insurance exchanges.

Most states didn’t establish their own exchanges, and more than 80 percent of enrollees are getting subsidies – so a win for the challengers here would likely make insurance more expensive for about 5 million people and could make insurance markets unstable in most of the country.

Obamacare’s supporters are nervous about this case, King v. Burwell, not only because of its implications, but because of the way the Supreme Court decided to hear it. The justices took up the Obamacare case much earlier than many observers had expected, opting not to wait for a lower-court ruling that likely would have strengthened the Obama administration’s hand.

The fact that the Supreme Court decided to jump in without waiting for that lower-court ruling was seen as a sign that the Court’s conservative bloc is itching for another shot at the Affordable Care Act. The big question now is whether Roberts will save the law again.

Same-sex marriage equality

The Court hasn’t yet said whether it will act on the latest round of appeals in same-sex marriage cases, but just about everyone wants it to… Challenges to several states’ marriage laws will be on the schedule – and even more states have asked the judges to just settle the marriage-equality question once and for all.

The Court had tried to stay away from the issue since its landmark rulings last year that struck down a key part of the Defense of Marriage Act and opened the door to same-sex marriage in the states without mandating it.

When a federal Appeals Court upheld same-sex marriage in several states, the justices declined to hear an appeal. But then the Court of Appeals for the 6th Circuit upheld bans on same-sex marriage in Michigan and Kentucky, as well as

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