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TODAY @ 1:00 PM ET | HEALTHCARE THEMES CALL

Takeaway: We will provide a comprehensive overview of our #ACATaper and Healthcare Deflation themes with new datasets and analysis.

TODAY @ 1:00 PM ET | HEALTHCARE THEMES CALL - 111111111InsuredPopSlowing

4Q16 healthcare themes conference call

We hope you can join us for our 4Q16 Healthcare Themes Call Today at 1:00 PM ET.  We will provide a comprehensive update of our #ACATaper and Healthcare #Deflation themes with new datasets and analysis, including a detailed look at the population of insured medical consumers by month, state, and payor type (chart above).  

 

The U.S. Medical Economy remains extended after the largest expansion in insured medical consumers in a generation.  Slowing growth in medical consumers, continued deterioration in affordability, aggressive payment reforms, company leverage at 15-year highs, and multiples at 10-year highs is a recipe for downside.  We don't believe that the U.S. Medical Economy growth recovery of 2014 -2015 is durable, but rather a temporary boost in consumption driven by massive government stimulus.

 

We are also extremely pleased to announce that Emily Evans, Director of Health Policy at Hedgeye, will be joining the presentation and sharing her views on major policy initiatives including Alternative Payment Models, MACRA, and post-acute reform, among other topics that significantly impact our fundamental views.

 

Please contact  for further information.  An invite with dial-in instructions will be sent to subscribers ahead of the conference call.

key topics WILL include

#ACATaper Update and Review

 

Data updates since our JULY 2016 presentation

(continue to progress in line with our expectations for slowing demand)

  • JOLTS and Medicaid Pent-Up Demand
  • Exchange Enrollment
  • Premium/Deductible Affordability 

#Demographic Headwinds (YES HEADWINDS!)

Incremental medical spending for the US Medical Economy

(the most profitable in the world, will be sourced almost exclusively from Medicare, one of the least profitable payors with mounting deflationary pressures.)

  • Impact of Aging Population
  • Per Capita Spend by Age Cohort
  • Utilization History

#Recession Risk

 

Hedgeye Macro Has Been Highlighting Risk to U.S. Growth

(which is negative for the U.S. Medical Economy)

  • Employment vs. Privately Insured
  • Hospital Bad Debt Expense
  • Real Private Fixed Investment
  • Biotech Fundraising Cycle

#Cleansweep Policy Post Election

(Emily Evans will provide her outlook for post-election policy pressures which are likely to deteriorate further if Democrats make a clean sweep in November)

  • Major healthcare issues that have crystalized during campaign including affordability of health insurance, drug prices and public option
  • Implications to those issues if:
    • Democrats win White House and gain majorities in House and Senate
    • Republicans win White House and retain majorities in House and Senate
    • Government remains divided
  • Major healthcare issues that have not moved to the fore but have bi-partisan support include addressing mental health and substance abuse, elimination of certain ACA-related taxes and payment and delivery reform

#Defensive Long Healthcare Positioning Looks Like Consensus...

(and likely a bad idea here)

 

Healthcare As A Safe Haven Looks Like Consensus...

(likely to unwind if we are right on emerging fundamental and policy headwinds)

  • Style Factor and Surprise Analysis
  • Estimate Revisions
  • Relative and Absolute Valuation

Please call or e-mail with any questions.

 

Thomas Tobin
Managing Director


@HedgeyeHC

 

Andrew Freedman, CFA
Associate


@HedgeyeHIT 

 

Alexander Ross
Analyst

 


Trump vs Clinton: Who Wins (And What It Means For Markets)

Trump vs Clinton: Who Wins (And What It Means For Markets) - z jones

 

Hedgeye Director of Research Daryl Jones discusses the U.S. election, possible outcomes and implications for investors with BNN's Andrew McCreath.

 

CLICK IMAGE above TO WATCH FULL INTERVIEW

 

Some key observations from Jones:

 

  • "This is Hillary Clinton's race to lose. It's very unlikely Trump can come back from his deficit."
  • "Setting the election aside, the fundamental macro economic backdrop is really negative."
  • "Stock valuations are sky high." 
  • "This isn't like any other cycle. What happens in the short term with resolution of this election soap opera will be positive. But then we have to deal with the Fed again."
  • "We actually have U.S. GDP slowing into Q1. That will be bad for the stock market." 
  • "The one area that's going to benefit under almost any scenario is infrastructure spending. Both candidates want to invest here."

 


CHART OF THE DAY: A Tough 2016 For Equity Investors

CHART OF THE DAY: A Tough 2016 For Equity Investors - 10.17.16 EL Chart

 

It's been a rough year and half for equity investors.

 

After selloffs in July and December of 2015, a lot of people are playing performance catchup and chasing the returns of indices like the S&P 500 and Russell 2000. That's been a losing bet for some time now.

 

As you can see in the Chart of the Day, from today's Early Look, high beta, stocks that are the most likely to move with swings in the stock market, got killed last week. High beta stocks were down -2.5% versus low beta stocks which were essentially flat (circled in red). Low beta has been winning the battle in the year-to-date as well, +7.9% versus +6.7% for high beta. (See below for more on how this table is constructed.*)

 

To be clear, we've been advising that investors buy low beta stocks that are in the top 25% of market cap for well over a year now. We've been right on high vs. low beta. Here's how that's worked for market cap year-to-date:

 

  • Bottom 25%: +3.2%; versus
  • Top 25%: +4.2%

 

Based on our contrarian outlook for the U.S. economy and earnings season (here and here), we're sticking with our call to buy low beta, big market cap stocks.

That's been a winning mix all year. 

 

 

*  *  *  *

 

(*The chart above shows equity market "style factors" for companies in the S&P 500. Basically, we rank S&P 500 companies by their style factors comparing those in the top 25% versus the bottom 25% based on performance. For instance, we take the performance of S&P 500 stocks that have the "highest beta," the top 25% of the index, and compare that to the bottom 25% with the lowest beta.)


Attention Students...

Get The Macro Show and the Early Look now for only $29.95/month – a savings of 57% – with the Hedgeye Student Discount! In addition to those daily macro insights, you'll receive exclusive content tailor-made to augment what you learn in the classroom. Must be a current college or university student to qualify.

REPLAY! This Week On HedgeyeTV

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 ShowReal-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.)

 

Enjoy!   

 

1. 5 Reasons To Sell Starbucks Now | $SBUX (10/16/2016)

 

 

During a recent HedgeyeTV presentation to institutional subscribers, Hedgeye Restaurants analyst Howard Penney laid out his sell call on Starbucks. In the excerpt above, Penney gives the five reasons the company isn’t, as one of his competitors recently claimed, “the greatest growth company in all of retail.”

 

2. ‘Macro Mentoring’ Session 6: How We Analyze Economic Cycles (10/15/2016)

 

  

In this week’s edition of ‘Macro Mentoring’, Hedgeye CEO Keith McCullough shows viewers how he uses the sine curve when analyzing the Non-Farm Payrolls and why he is predicting a slowdown in the broader economy. He also explains what’s driving global bond yields. 

 

3. Howe: Why U.S. Election ‘Venom’ = Indictments & Gridlock (10/14/2016)

 

 

In this excerpt from The Macro Show earlier today, Hedgeye Demography Sector Head Neil Howe discusses his post-election outlook. It’s pretty grim.

 

4. What The Media Missed: ‘It’s Literally A Lie’ To Say US Growth Isn’t Slowing (10/12/2016)

 

 

In this brief excerpt from The Macro Show, Hedgeye CEO Keith McCullough explains what mainstream media networks missed about U.S. economic growth and the broader implications for investors.

 

5. President Trump Catalyst? Bad Jobs Report (10/10/2016)

 

 

In this brief excerpt from The Macro Show, Hedgeye CEO Keith McCullough explains why the upcoming non-farm payroll reports could tip the presidential election in Donald Trump’s favor.


PREMIUM INSIGHT

5 Reasons To Sell Starbucks Now | $SBUX

5 Reasons To Sell Starbucks Now | $SBUX - Restaurants SBUX 10.14.2016

During a recent HedgeyeTV presentation to institutional subscribers, Hedgeye Restaurants analyst Howard Penney laid out his sell call on Starbucks. In the excerpt above, Penney gives the five reasons the company isn’t, as one of his competitors claimed recently, “the greatest growth company in all of retail.”


This Week In Hedgeye Cartoons

Our cartoonist Bob Rich captures the tenor on Wall Street every weekday in Hedgeye's widely-acclaimed Cartoon of the Day. Below are his five latest cartoons. We hope you enjoy his humor and wit as filtered through Hedgeye's market insights. (Click here to receive our daily cartoon for free.)

 

Enjoy!

 

1. Turning A Blind Eye (10/14/2016)

This Week In Hedgeye Cartoons - White House economist cartoon 10.14.2016

 

Jason Furman, chair of the White House Council of Economic Advisers, actually said last week, "I don't think you're late cycle... I just don't believe in the concept of late cycle." We crowned that statement "the most glaringly irresponsible statement" of the day. 

 

2. Crude "Cuts" (10/13/2016)

This Week In Hedgeye Cartoons - Oil cartoon 10.13.2016

 

OPEC sits on ~80% of global crude reserves but has "virtually no control" over how much crude its members produce.

 

3. Economic "Growth" (10/12/2016)

This Week In Hedgeye Cartoons - sine curve cartoon 10.12.2016

 

U.S. economic growth continues down the slope, from 3% to 2% to 1% to...

 

4. Bailouts! (10/11/2016)

This Week In Hedgeye Cartoons - bankers bailing cartoon 10.11.2016

 

Central bankers are trying to bail out the sinking global economy. But the water keeps on coming in.

 

5. Economic Ills (10/10/2016)

This Week In Hedgeye Cartoons - cyclicals cartoon 10.11.2016

 

We are entering the slowest part of the U.S. economic cycle and there's no cure for these economic ills.

 

Click here to receive our daily cartoon for free.

 


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