Keith McCullough points to where, even in this US equity market that seems so detached from economic reality, fundamentals are making sense — and will likely continue to going forward:
“A) 55 of the 60 SP500 Healthcare companies have reported aggregate year-over-year earnings growth of +9.3%
B) All 65 of the SP500’s Financial companies have reported an aggregate year-over-year earnings crash of -35.1%
Does that partly explain why Healthcare Stocks (XLV) are only -0.7% YTD vs. Financials (XLF) having crashed -29.0%? A: Absolutely.
The next question is, always, what’s next? Well, since the ROC of Earnings Growth mattered in Q1 (those are Q1, pre-virus EPS reports), fully loaded with all of its divergences, the macro market is telling you it’s going to matter here, again, in Q2.”
By the way, our current core allocation to healthcare is 15.2%, financials are 3.5%… I.e., we too believe that the fundamentals will ultimately prevail…