Takeaway: We're adding AHS to our short bench as a way to play the ACA Tailwind/ACA Headwind Theme. Dropping DGX to Long Bench.
AHS is a nurse staffing company who's current sentiment rank is among the highest across our universe of companies (short signal) and may be a good candidate for our ACA Tailwind/ACA Headwind Theme. The theme assumes that the ACA Tailwind, which brought with it a massive one-time expansion of insured medical consumers, will mean revert in terms of enrollment growth and per member spending. Our ACA Tracker looks at monthly data which currently shows slowing enrollment and flattening per enrollee spending which is significantly elevated compared to pre-ACA levels. AHS has done well as the marginal supplier of nurse staffing while the ACA drove demand across the Healthcare landscape, including HCA and other hospitals where volume growth is at multi-year highs. We expect the ACA Headwind will emerge as early as 2H15 and carry into 2016 as new enrollment and pent-up demand work through the medical delivery system. Below are specific monthly time series which we'll use to track AHS business trends as we build out the work on AHS and while monitoring our ACA Tracker for deceleration.
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Earlier today Healthcare Sector Head Tom Tobin and Healthcare Analyst Andrew Freedman discussed new developments to their Best Ideas and shared updated analysis.
A few of their Best Ideas report this week including CPSI (Best Idea short), HOLX (Best Idea long), and ZBH (Best Idea short). They also touched on ATHN and answered questions from viewers.
***Below is a brief excerpt from this morning's Early Look by Hedgeye CEO Keith McCullough.
...Uh, maybe we should be long, “decoupling”? Nope. We’ll stick with the #Quad4 asset allocations, which should have you long low-beta and yield chasing sectors (short Commodities). Currently I like Healthcare (XLV), REITS (VNQ), and Utilities (XLU); not the following:
If you’re levered long to inflation expectations another way to look at your risk...
Takeaway: We are adding the U.S. Dollar to Investing Ideas on the long side.
Editor's Note: The note below was written by Hedgeye CEO Keith McCullough.
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With the Euro overbought here, the US Dollar Index is signaling immediate-term TRADE oversold within it's bullish intermediate-term TREND.
Catalyst for the US Dollar this week could be the GDP report (Thursday). It's obviously a lagging report (it's a Q2 report and most of the economic #deflation has been in Q3) but the way Wall St reads it is sequentially vs. the Q1 bomb. That report will be good.
It won't be until Q3 GDP is reported that GDP looks as bad as it did in Q1 (to headline chasers). Net net, being bearish on Euros and Yens (and Emerging Market FX) keeps us long-term bullish on USD anyway.
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