This one speaks for itself.
After a busy week of earnings, our Healthcare analysts Tom Tobin and Andrew Freedman provided a recap and takeaways of our top ideas athenahealth (ATHN), MEDNAX (MD), Hologic (HOLX) and Zimmer-Biomet (ZBH).
Takeaway: Well into earnings season, six of ten S&P 500 sectors have negative earnings growth.
Permabulls on Wall Street are terribly fond of the narrative that "Ex-Energy" earnings look great! We understand this proclivity, Energy earnings are terrible (down -132% so far). Just look at the chart below.
Click to enlarge
But what this narrative lacks is cohesiveness. In fact, six of ten S&P 500 sectors have negative earnings growth so far, with Financials (-14.1%) and Materials (-14.8%) companies putting up double-digit earnings losses.
In other words, Energy has company.
Here's a thought... Since permabulls are more than happy to strip battered sectors out of earnings, why not (for the sake of consistency) just go ahead and strip out the performance of Energy, Financials and Materials companies from the recent market rally as well? Oh yea, because those sectors have led the pack.
Bottom Line: Stripping out sectors of the S&P 500 to fit some permabull narrative is as nonsensical, as it is wrong.
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In this complimentary edition of About Everything, renowned demographer and Hedgeye Sector Head Neil Howe discusses why "mental health services spending is riding a long-term attitudinal shift that has brought mental health issues out into the open." Howe explains why it's happening and explores the broader societal and investing implications.
Click here to read Howe’s associated About Everything piece.
Takeaway: Wall Street consensus has been consistently out to lunch on U.S. growth slowing, as our bearish expectations continue to play out.
The Hedgeye Macro team has been predicting dour U.S. economic growth for over a year. Our contrarian economic call has been pretty close to spot on. Meanwhile, this #GrowthSlowing reality has consistently confounded Wall Street consensus.
As you can see in the chart below, Wall Street economists were predicting almost 3% growth for Q1 2016 last April.
To be clear, Old Wall consensus was forced to ratchet back its inflated estimate to 2.5% in February 2016 ... all the way down to 1.1% most recently. Of course, the initial Q1 GDP reading today came in at 0.5%. That surprised even us to the downside, as we have been predicting 1%.
Wall Street doesn't think so. The consensus estimate for Q2 2016 is a (drum roll please)...
Meanwhile, here at Hedgeye we're predicting 0.3%.
Watch Hedgeye Senior Macro analyst Darius Dale explain why we're so bearish in the video below:
Takeaway: We warned our subscribers about #GrowthSlowing well before the rest of the street. We think it gets worse from here.
You've heard and read all the Wall Street hand-wringing and Fed jawboning that U.S. growth is just fine...nothing to worry about... maybe even accelerating?!... well it's not, and we've been consistently warning subscribers otherwise. Today's GDP report coming in at 0.5% for Q1 2016 confirms our Macro team's call.
Hang on, though. We're sticking with it. In fact, we believe the most difficult quarters for U.S. growth are yet to come. For more insight, check out the three videos below featuring Hedgeye CEO Keith McCullough and Senior Macro analyst Darius Dale.
In this brief excerpt from The Macro Show, Hedgeye Senior Macro analyst Darius Dale discusses how the U.S. economy has entered the toughest part of the cycle and why our growth estimate remains so bearish.
In this animated excerpt of The Macro Show, Hedgeye CEO Keith McCullough and Senior Macro analyst Darius Dale discuss why Barron’s is wrong on U.S. economic growth and why Q1 2016 GDP report will have a “0” in front of it.
In this brief excerpt from The Macro Show last week, Hedgeye CEO Keith McCullough and Senior Macro analyst Darius Dale discuss U.S. third quarter GDP and why our non-consensus 2016 growth outlook is looking grim.
This indispensable trading tool is based on a risk management signaling process Hedgeye CEO Keith McCullough developed during his years as a hedge fund manager and continues to refine. Nearly every trading day, you’ll receive Keith’s latest signals - buy, sell, short or cover.