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Takeaway: We will provide a comprehensive overview of our #ACATaper/#ACA2.0 and Healthcare Deflation themes with new datasets and analysis.

CALL INVITE | THE SIREN SONG OF A V-BOTTOM | HEALTHCARE THEMES (1/18/17 AT 1:00PM ET) - Insured Population Slowing


We hope you can join us for our 1Q17 Healthcare Themes Call on Wednesday, January 18th at 1:00 PM ET.  We will provide a comprehensive update of our #ACATaper and Healthcare #Deflation themes with new datasets and analysis.  We'll also share new work that more definitively links insured medical consumers by payor, medical consumption, and employment across the US Medical Economy, and as always updates on our current longs and shorts as well as new themes and stocks we are working on for 2017.


The U.S. Medical Economy remains extended even after a terrible 3Q16 earnings season which stock prices seem to have completely forgotten.  While the negative tone from 3Q16 has all but evaporated following the Presidential Election followed by the improved tone at the JP Morgan Healthcare Conference this week (indicating a less-worse 4Q16 earnings season), 2017 guidance remains a sector risk.   After the largest expansion in insured medical consumers in a generation between 2014 and 2016, growth in medical consumers revert to pre-ACA levels in 2017, alongside continued deterioration in affordability, payment reforms, company leverage at 15-year highs, and multiples still near 10 year highs, is a recipe for downside.  


Emily Evans, Director of Health Policy at Hedgeye, will be joining our presentation and sharing her views on major policy initiatives including block grants, Medicaid expansion and Repeal and Replace, among other topics that will significantly impact our fundamental views.  For example, the #ACA2.0 environment so far has added more Congressional scrutiny and oversight of Medicaid eligibility and enrollment determination.  We see this as a developing risk as many states have enrolled more people into Medicaid than live at or below 138% of the poverty level.  California, for example, has 12 million Medicaid enrollees, but only 9 million people at or below 138% of the federal poverty level.  We've identified 28 states that have similarly over-enrolled at the expense of federal outlays.



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


#ACATaper/#ACA2.0 Update and Review


Data updates since our October 2016 presentation

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

  • Insured consumer growth leads medical consumption and US Medical Economy Employment
  • JOLTS, HC Employment, Insured medical consumers, Hospital Employment - everything is slowing with a lot of downside from here
  • Exchange Enrollment - no evidence that consumer fears of Repeal & Replace is driving fear-based enrollment
  • Exchange disenrollment and member churn remains high
  • Premium/Deductible Affordability - HDHP hitting new highs

#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

#Employment Decelerating 


Employment affects EVERYTHING!

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

#CapEx Slowdown Seems Likely

  • Impact to Hospitals and companies that sell to them
  • Healthcare IT Headwind
  • Hospital PCE

#Repeal and Replace

(Emily Evans will provide her outlook on block grants and the Repeal and Replacement of the ACA

  • Repeal and Replace Process Timing and Implications
  • The Uncertainty Ahead
  • Block and Per Capita Grant Reform for Medicaid - new money flows likely negative for Hospitals
  • Increased Congressional oversight of Medicaid enrollment and eligibility

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
  • Position Monitor - Longs and Shorts


Please call or e-mail with any questions.


Thomas Tobin
Managing Director



Emily Evans
Managing Director



Andrew Freedman, CFA



Alexander Ross

Cartoon of the Day: The Education of A Permabear

Cartoon of the Day: The Education of A Permabear - THE FACTS cartoon 01.12.2017


Stock market permabears have been getting shellacked. In the past three months, the S&P 500 is up +6% and Russell 2000 is up +10.6%. What they haven't figured out yet is that U.S. economic growth is accelerating.



Click here to receive our daily cartoon for free.

ICYMI: Why We’re Bullish on the S&P 500


Are you bullish on U.S. equities? You should be.


In addition to U.S. economic growth supporting higher equity markets, a number of market signals confirm the bullish setup for stocks. The S&P 500 is currently in what we call a “bullish trend” (i.e. a market environment that should cause the asset to rise over the next 3-months plus). 

the Basic playbook for why U.S. equities can head higher:


Stocks + Volume + Volatility = Bullish Trend


As you can see in the brief video above, volume was up 10% yesterday versus it’s one-month average, continuing the general trend of increased volume on up days. (Basically, this confirms that a broad swath of people are buying when the market heads higher. Conversely, but similarly, a bearish signal is when volume accelerates on down days.)


Meanwhile, the CBOE Volatility Index (VIX), which shows the market’s forward-looking 30-day expectations of S&P 500 volatility, has fallen -27% in the past three months to 12.17.

What to Buy

Our proprietary algorithm suggests buying U.S. equities, as long as the VIX remains at the towards the middle to top-end of its immediate-term risk range of 13.39 to 10.16. On the flipside, a reading of VIX below 11 might signal it’s time to take some gains.


Fox News And Media Leaks May Boost AT&T-Time Warner Deal

Fox News And Media Leaks May Boost AT&T-Time Warner Deal - time warner

More media reports that the President-elect may look for reasons to fight the T-TWX deal. Ironically, the reports boost the deal's prospects.


3 Reasons Why You Should Sell GrubHub | $GRUB

3 Reasons Why You Should Sell GrubHub | $GRUB - Restaurants GrubHub 1 12 2017 NO TEXT

Wall Street loves GrubHub. But should it? Check-out the three reasons why we think GrubHub is a short.

Guest Contributor: 3 Tips for Stressed-Out Traders To Bolster Financial Success (Part 1)

By David Rosenblatt, Psy.D., MarketPsych


Guest Contributor: 3 Tips for Stressed-Out Traders To Bolster Financial Success (Part 1) - stress2

I’m a psychologist in a hospital for the criminally insane. 


You might wonder why I’m writing about financial markets.


Most traders acknowledge there is a “soft” side to trading. Yet it is anecdotal and generally ill-defined. I assert that that soft side is all about how we handle uncertainty in a rapidly changing environment.  In other words, stress management.


Traders’ need for stress management surged last year. The plot below shows the price of the S&P 500 and Stress about the S&P 500 expressed in social media (a 500-day average represented by the blue line). Data is provided by the Thomson Reuters MarketPsych Indices and covers financial social media such as tweets, message boards, and blogs.


Guest Contributor: 3 Tips for Stressed-Out Traders To Bolster Financial Success (Part 1) - rosenblatt image


Data show that stress about the S&P 500 expressed in social media hit a two-year high last year, despite the bullish environment for stocks.


Working in the hospital environment I became a specialist in stress management. Success required navigating uncertainty, managing risk, and following a plan. In short, making the unpredictable predictable.


And my stress reaction to a patient’s glare is the same – biologically speaking – as a trader’s stress response to investment uncertainty. The reaction can be visceral and distracting. However, predicting the unpredictable is best done with a clear mind.

Dealing with Stress: Identify What Can You Control

In this 4-article series I will share what I’ve learned about stress management that can be of benefit to traders. To illustrate this point, I’ll share a story about an incarcerated young man with whom I worked named John.


John came from a broken home and he spent most of his time on the streets where he assaulted numerous people. Once locked up, he had difficulty adjusting. All day he scanned people and the surroundings for danger. All night he was tormented by visions of his maimed victims. Conversation was difficult because his mind was either racing or blank. Once he could trust me, he tried a few simple stress-management techniques.


Guest Contributor: 3 Tips for Stressed-Out Traders To Bolster Financial Success (Part 1) - rosenblatt callout


John learned that to manage his stress. He needed to take control.  Being incarcerated, however, he could not control his environment. So, what could he control?  Features of his thought process and specific behaviors.


This is also true for traders in the market. Traders cannot control prices, but they can intervene in their thought processes and take specific actions. Domains where they can take control include directing focus, managing downtime, and engaging in deliberate mental exercises.

3 Tips For A Stronger Mind, Stronger Trades

First, focus needs to be flexible. To help keep the mind loose and limber, vary the eyes’ focal point a few times an hour. Look away from the screen, to the wall near you, then gaze out the window.  Setting a periodic alarm as a reminder to look away can be helpful to break unhelpful thought patterns that form during a day of looking at screens.


Second, quality sleep is paramount to health. With constant scanning and thinking, the mind becomes a runaway train. Sleep is a station blown past. A winding-down ritual cues the mind and body that sleep is the destination. To slow that mental momentum, dim the lights, make some herbal tea, and jot down a few light-hearted ideas.


Third, and paradoxically, one way to take control is to let go of control. A clear mind allows one to choose the contents. To create clarity, find a quiet space, close the eyes, and focus on breathing for two minutes.


So, what happened to John? He’s still in prison. But once he learned to manage his mind, he was able to obtain a formal education and get a job. He could read for pleasure. His sleep improved.


You can take control of your psychological well-being to bolster financial success. This article is a brief introduction into taking control. I’ll follow up with three articles that further explore each mental dimension - focus, sleep, and mindfulness.



This is a Hedgeye Guest Contributor piece written by David M. Rosenblatt Psy.D. Dr. Rosenblatt is an investor coach for MarketPsych, an expert in stress management, and an avid individual investor. Additionally he works with the California Department of State Hospitals treating Mentally Disordered Offenders. This piece does not necessarily reflect the opinion of Hedgeye.

Hedgeye Statistics

The total percentage of successful long and short trading signals since the inception of Real-Time Alerts in August of 2008.

  • LONG SIGNALS 80.46%
  • SHORT SIGNALS 78.35%