The Intelligence Report

20 Mar 2017

  • A positive view of the correction in cyclical commodities – looking at the practical impediments to overhauling Obamacare extensively, the likely shape of any reform, and what this might mean for the health care sector
  • Political clouds merely obscure what is a bright outlook for healthcare investing – exploring whether the sharp correction experienced over the past couple of weeks in oil prices, metals and commodities is a correction in a structurally positive market, or the beginning of a renewed secular downturn

The intertwined themes of reflation and the impact of Trumponomics have driven global markets over the past few months, and have assumed a preeminent place in investor thinking. Commodity prices, and oil in particular, have recovered notably as supply and demand have moved closer to equilibrium, reversing the adverse headwinds that had previously buffeted high yield, emerging markets and the energy and basic material sectors of developed equity markets. Over the past couple of weeks, oil prices, metals and commodities more generally, have suffered a sharp correction. In the first of our articles, Guillermo Felices explores whether this setback is a correction in a structurally positive market, or the beginning of a renewed secular downturn.

As discussed in our previous Intelligence Report, whilst President Donald Trump’s overall political agenda has slowly grown clearer since his election and inauguration, markets remain hungry for more details on specific proposals in such key areas as fiscal policy, tax reform, immigration, deregulation and trade. His address to Congress proved to be a missed opportunity to provide greater granularity and clarity to voters and investors. However, there is one area in which President Trump has been a little more specific – healthcare. We know that the current administration has stated its intention to repeal the Affordable Care Act (ACA, also known as Obamacare), and the House Republicans last week tabled the first version of its attempted replacement, the American Health Care Act. In the second of our articles, Jon Stephenson looks at the practical impediments to overhauling Obamacare extensively when the Republicans only have a slim majority in the Senate, the likely shape of any reform, and what this might mean for the health care sector, a sector which has been in a powerful secular bull market.

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