Health Care
The S&P health care equipment index has underperformed alongside most other long-duration sectors, but the share price ratio has reached a point where buying interest should emerge. Sales have been running at a healthy double-digit clip, and new order growth remains firm, providing…
Highlights The 50bps spike in the JPM global government bond yield since August constitutes one of the most aggressive tightenings since the Great Recession. Higher bond yields weaken credit growth, and weaker credit growth almost always depresses subsequent GDP growth. Maintain at most a…
Highlights Portfolio Strategy Bank profits are unlikely to match those of the broad market if the Fed hikes interest rates and loan demand cools. Sell into strength. Gold shares are looking increasingly attractive, but we will refrain from upgrading until the U.S. dollar is closer to a peak…
A reduction in the rate of drug price increases, and in the case of generics, outright price cuts, is a blessing for the S&P managed care industry. Cost inflation had been perking up, but should ease in the coming quarters as drug expenses abate. Health insurance premiums are growing at a…
A number of drug wholesalers have reported earnings misses and provided disappointing guidance, specifically citing worse than expected generic drug pricing pressure, enough to offset ongoing branded drug price increases. In the current environment of political uncertainty toward health care…
The speed at which the health care sector has sunk toward the bottom end of this year's trading range has unnerved many investors. The hit to health care stocks reflects a rise in risk premiums related to concerns that the U.S. government will exert more control over price setting if the…
Highlights Portfolio Strategy Boost restaurant stocks to neutral, as same-store sales should improve next year. A further upgrade requires evidence of top-line traction. The exodus from health care stocks represents an overreaction rather than a downshift in fundamental forces. Stay long.…
The mini-consolidation in equities reflects the ongoing tension between market-supportive liquidity and a sketchy corporate profit backdrop.
The secular bond bull market is over. Safety is in a bubble. The shift from monetary to fiscal easing is the most likely candidate to prick the bubble in safety.
In this piece we revise our yield portfolio to increase its resilience to interest rate shocks.
The previous Insight showed that top-line growth for medical equipment companies was accelerating. It is notable that manufacturers' inventories of medical supplies are contracting at their steepest rate since 2009, which bodes well for factory utilization and pricing power. Moreover, medical…