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We took a look at the HRM Index’s average year-over-year sales growth and compared it against the S&P 500 (SPX). What we found was that healthcare outperformed the SPX when growth is accelerating relative to the index. Two points made by Hedgeye Healthcare Sector Head Tom Tobin are below, illustrating headwinds that may occur heading into the back half of the year and onward:

• Consensus growth estimates, however, look too optimistic given how fast the macro is slowing; job growth, industrial production, and GDP are all pointing lower into Q412

• QE3 could help, but history suggests Federal Reserve actions are weak and largely equivocal as it relates to its impact on employment.

Healthcare Vs The S&P 500 - healthcareSPX