PM update: Dow tumbles 200 points, Buffett moves on US healthcare, Carillion-auditor relationship under fire

US stocks today continued their lower mood with the Dow slipping 250 points earlier. Healthcare equities took the greatest battering with UnitedHealth Group slumping almost -5% mid-afternoon London time while Pfizer was down -3.50%. Nike was up +0.90%. The Nasdaq was down -1.24%. 

In the background the CBOE Volatility Index or VIX pushed up +5% to its highest point – 14.50 – of the past three years. In Europe more red ink washed across trader screens with the Dax and Cac 40 both down more than -0.82%. Both the euro and pound were up +0.36% against the dollar on more renewed selling of the US currency.

One nugget of interesting US healthcare news: Amazon, Berkshire Hathaway and JPMorgan announced they are to join forces with the creation of a new healthcare operation (more detail below). 

The FTSE 100 finished tonight at 7,587.98, down -1.09% with several banks suffering: Standard Chartered, Barclays and RBS all took chunky falls (-2.9%, -2.8% and -2.7%) as investors took profits; Finish maker Reckitt Benckiser was the Big Board's major riser, up +1.3%.

• UK FTSE 100 7,587.98 -1.09%
• DAX 13,213.48 -0.83%
• CAC 40 5,484.02 -0.68%
• Euro Stoxx 600 396.67 -0.78%
• Dow 26,158.00 -1.08%
• S&P 500 2,825.54 -0.98%
• Nasdaq 7,389.99 -1.01%
• Nikkei 225 23,291.97 -1.43%
• Gold 1,349.90 +0.36%
• Oil WTI 64.24 -2.01%

Buffett attempts US healthcare fix 

Earlier billionaire investor Warren Buffett revealed he was throwing energy behind a US employee healthcare operation, along with Amazon and JPMorgan Chase. Explaining the move, the ballooning costs of healthcare was, said Buffett in a statement, a hungry tapeworm on the American economy. 

“Our group does not come to this problem with answers. But we also do not accept it as inevitable. Rather, we share the belief that putting our collective resources behind the country’s best talent can, in time, check the rise in health costs.”

Buffett made clear the operation is still in the early planning stages. But the move is needed. Some Americans have taken to crowd-funding their healthcare costs – often very basic needs that citizens in the UK, Europe, Canada and Australia take for granted. Last year the US came last for overall healthcare outcomes from 11 high-income countries, a New York-based research foundation found.

Frank Field is exasperated with the consequences of the Cariillion collapse bringing massive pensions worry to many: Wikimedia Commons

Carillion collapse - auditor relationship clarity (and competition) needed

More unflattering news flow is seeping out of the Carillion collapse. Some of the focus is turning on the role of the UK’s biggest accountancy operators, Deloitte, EY, PwC and KPMG. Should the four be broken up?

KPMG had close links to Carillion as its auditor for almost two unbroken decades. Carillion finance directors also had close KPMG employment links themselves. Either way, it looks as if too few companies were bidding for work. 

“We feel there should be more competition in the major accounting and audit area,” said Financial Reporting Council (FRC) chief exec Stephen Haddrill today in Westminster, addressing a parliamentary select committee. “I think the CMA [Competition and Markets Authority] at some point will need to review the effectiveness of what they recommended.”

Haddrill is to ask the CMA to exert a close eye on the sector which previously came under attack from the Competition Commission back in 2013. The FRC is girding itself for its biggest ever investigation with hoards of lawyers and accountants despatched into the ruins of the collapsed infrastructure operator.