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Takeaway: Must-see insights from Hedgeye's non-consensus Healthcare team.
IN CASE YOU MISSED IT. Our all-star Healthcare team was live and interactive in our HedgeyeTV studio earlier today presenting their latest update and answering viewer questions in real-time.
Sector Head Tom Tobin and analyst Andrew Freedman discuss key topics below:
CLICK HERE to access the associated slides.
Editor's Note: Below is a brief excerpt and chart from today's Early Look written by Hedgeye CEO Keith McCullough. Click here to learn more.
"... Notwithstanding the newfound bull market narrative that rising gas prices are going to stimulate the consumer, here’s what you had to be long last week (in US Equity Style Factor terms) to have crushed my bearish view:
*Mean performance of Top Quintile vs. Bottom Quintile (SP500 Companies)"
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“Who was the first guy that looked at a cow and said, I think that I’ll drink whatever comes out of those things?”
-Calvin & Hobbes
Well, if you want to believe that this 3-week squeeze off of the mid-February 2016 Global Equity #crash low is sustainable, drink up! High Leverage and Low Liquidity (Small Cap) is back, baby.
Of all the bad weeks I’ve had since the US profit cycle peaked (when US and Japanese stocks peaked in July of 2015), last week ranked right at the top of them.
And, to be clear, since I was telling you to buy the Long Bond at 2.53% on the 10yr (in July), I’ve had some really bad weeks. But you’ve had to be able to endure those to have been right for the last 8 months.
Back to the Global Macro Grind…
Actually, there was one move that was more impressive than this most recent 3-week squeeze: October 2015. Imagine you got sucked into owning those highs (and kept averaging down from November to February)?
No one said getting this big macro phase transition right (as the economic, profit, and credit cycles are moving from bullish to bearish) was going to be easy. But if you’re just chasing moving monkey charts, it’s going to be super hard.
Notwithstanding the newfound bull market narrative that rising gas prices are going to stimulate the consumer, here’s what you had to be long last week (in US Equity Style Factor terms) to have crushed my bearish view:
*Mean performance of Top Quintile vs. Bottom Quintile (SP500 Companies)
Yep. Non-pasteurized. Straight from the cow’s nipple. Since most American farmers are in #Recession right now, you should be able to get some cows “cheap” and squeeze yourself as much “value” out of these exposures as you need.
Since the SP500 and Nasdaq were only +2.7% and +2.8%, respectively, last week (to -2.2% and -5.8% YTD), you’d have underpeformed the weekly chart chasers if you bought those exposures or, God forbid, Healthcare stocks.
Here’s how the US Equity Sector Styles did last week:
I know. Isn’t it odd that the “economy feels like it improved” while Consumer Confidence, Pending Home Sales, and ISM Services all slowed to multi-month lows? Healthcare: no bid in a “recovering” economy too? Totally weird.
Reality is that unless you have a bullish view on Oil and its related (and crashing) equity and fixed income exposures, you probably sucked wind like I did last week.
The real “reflation” bulls (who have lost 20-60% of their capital chasing headfake rallies for the last 18 months) had an awesome week last week – check this out:
Yeah, I know. Lula (Brazil) went to jail (sort of). So you would have had to know that was coming (and see a +9.6% weekly ramp in crude oil coming too) to have nailed all of that – but everything is doable. Mooo!
While we’re ignoring anything that actually went down last week (Natural Gas prices dropped another -7% on the week, crashing to -30.2% YTD) we should definitely give some rant time to European Equities.
On some of the worst European Economic data we’ve seen all year:
*Note: negative YTD returns
But you don’t have a complicit US-style Establishment Financial Media that cheerleads European market moves with cherry picked economic data, so we’ll just have to call Greece and Spain rallying something that feels bullish.
It’s all about how the economy “feels”…
And while I did not enjoy the squeeze part, I’m not feeling too good about sucking on whatever came out of those things last week.
Our immediate-term Global Macro Risk Ranges are now:
UST 10yr Yield 1.67-1.90%
Oil (WTI) 29.86-36.98
Best of luck out there this week,
Keith R. McCullough
Chief Executive Officer
Our deep bench of analysts take to HedgeyeTV every weekday to update subscribers on Hedgeye's high conviction stock ideas and evolving macro trends. Whether it's on The Macro Show, Real-Time Alerts Live or other exclusive live events, HedgeyeTV is always chock full of insight.
Below is a taste of the most recent week in HedgeyeTV. (Like what you see? Click here to subscribe for free to our YouTube channel.)
1. Demographer Neil Howe On The “New Normal” In Housing (3/5/2016)
Hedgeye Demography Sector Head Neil Howe discusses how demographics impact the housing market and why the rise of multi-generational households isn’t a sign of pent-up demand in this excerpt from a recent institutional presentation.
2. The Last Commodity Bubble Still Standing (3/4/2016)
Blue Pacific Partners founder Chris Sommers sits down with Hedgeye CEO Keith McCullough to discuss the huge risk embedded in agricultural commodities. According to Sommers, excessive investment has caused overcapacity, while global demand growth projections have been reduced. Meanwhile, major agricultural commodities are still trading 50-75% higher than their long-term average levels … before the commodity boom.
3. The (Compelling) Short Case on Deere and Monsanto | $DE $MON (3/4/2016)
In this second installment of his conversation with Hedgeye CEO Keith McCullough, Blue Pacific Partners founder Chris Sommers lays out his high-conviction bear case in granular detail.
4. McCullough: Do Not Buy This Market (3/3/2016)
In this brief excerpt from The Macro Show this morning, Hedgeye CEO Keith McCullough cautions subscribers against buying stocks right now and offers a contrarian alternative which continues to reward investors. If you like this clip, you’ll love our research.
5. SPECIAL INSIGHT | Demographer Neil Howe Discusses Key 2016 Election Trends (3/3/2016)
Neil Howe, best-selling author of "The Fourth Turning" and Demography Sector Head at Hedgeye, discusses important generational shifts, the role of millennials and boomers at the polls and many more key developments to keep a close eye on during this heated election. He is joined by Director of Research Daryl Jones.
6. Washington on Wall Street: Super Tuesday Preview with JT Taylor and Daryl Jones (2/29/2016)
Potomac Research Group's Chief Political Strategist JT Taylor joins Hedgeye Director of Research Daryl Jones for a Super Tuesday preview. The Republican establishment hopes that Rubio or Cruz can capture some delegates in the face of Donald Trump's seemingly insurmountable leads in nearly every Super Tuesday state. Meanwhile, Hillary Clinton seeks to build on her momentum from a big South Carolina win to effectively seal the deal on the Democratic side.
7. McCullough: Listen Closely to the Bond Market’s Message (2/29/2016)
In this brief excerpt from The Macro Show this morning, Hedgeye CEO Keith McCullough explains why we “remain right and contrarian” on the bond market and why investors should be buying Utilities (XLU), Gold (GLD) and Long Bonds (TLT). If you like this excerpt, you’ll love The Macro Show.
8. REPLAY: The Macro Show *SPECIAL FREE EDITION* (2/29/2016)
You don't want to miss this. Earlier this week we hosted a special *FREE* edition of The Macro Show with Hedgeye CEO Keith McCullough and Senior Macro analyst Darius Dale. You'll get a front-row distillation of all the key global market and economic developments and how to position yourself accordingly. In addition ... Keith answers viewer questions during our interactive Q&A.
Hedgeye Demography Sector Head Neil Howe discusses how demographics impact the housing market and why the rise of multigenerational households isn’t a sign of pent-up demand in this excerpt from a recent institutional presentation.
Hedgeye CEO Keith McCullough handpicks the “best of the best” long and short ideas delivered to him by our team of over 30 research analysts across myriad sectors.