May 23, 2019—Four months into 2019 and the S&P 500 is up 17% (price return), making it the seventh best start to the year for the index since 1929. One sector is just barely eking out a positive return: health care. The return spread between health care and the best-performing sector—technology—over just the first four months of the year is a staggering 24%.
There are two main reasons why the health care sector appears to be on life support.
May 23, 2019 – Financial system stress comprises an important set of variables that we continually track. While not always indicative of where or when the next recession will start, we do believe it helps us find pockets of the market that may be more prone to breaking down. Importantly, the Federal Reserve now produces a biannual study, named the “Financial Stability Report,” and its second issue was released two weeks ago.
May 22, 2019 – While 2018 was a notable year for growth in the economy, with GDP expanding at a solid pace of 2.9%, it was also notable for the lack of growth coming from the housing sector. After making modest positive contributions to annual GDP growth in each year of the recovery since 2012, investment in the housing sector by businesses and households (known as residential investment in the GDP accounts) was nearly flat in 2018 (Figure 1).
