Independent Financial Research & Analysis
Daily briefings, 7,400+ real-time charts, and macro insights from Dr. Ed Yardeni and his research team.
Research
Latest Research
Recent insights from our research team
On Challenges Facing Mexico & Brazil
Mexico’s economy faces a lot of headwinds at this point: sluggish growth and rising inflation, a central bank that’s divided on how to address stagflation, geopolitical and trade-related uncertainties, a sliding peso, a surging budget deficit, a Moody’s debt downgrade to just one tier above junk, and a domestic investment picture that William calls “quietly alarming.” Defeating stagflation and boosting confidence will be an uphill climb. … Also: Brazil’s central bank has signaled more interest-rate cuts even as it forecasts high and climbing inflation. It’s a bold bet that the inflation problem will prove temporary. But another rate cut could entrench it and jeopardize the bank’s credibility.
Will the Real Kevin Warsh Please Stand Up?
Kevin Warsh’s first press conference as Fed chair after last week’s FOMC meeting settled a question that the markets had been debating for a year: Which Warsh would show up? In the past, Ed and Elias explain, Warsh hawkishly prioritized fighting inflation, but he presented himself as a dove when auditioning for the Fed chairmanship. Would Chair Warsh be some new hybrid? The hawk won: The FOMC swung to a tightening bias as expected, and Warsh’s rhetoric was hawkish point for point. The bottom line: Investors would be well advised to position for a chair who will advocate for raising rates if the data demand it, not for lowering them just because the President demands it. … Also: Ed reviews “The Drama” (+ + +).
Healthcare: Pockets Of Alpha
We recommend a market-weight position in the S&P 500 Health Care sector. It is down 3.8% ytd, the worst among all 11 S&P 500 sectors, and remains one of the clear laggards of the bull market that began in October 2022 (chart). That underperformance has created selective opportunities. The aggregate sector still lacks a near-term earnings catalyst, carries the second-lowest forward profit margin in the index, and has the weakest 2026 EPS growth outlook of any S&P 500 sector. However, some of the industries within the sector have improving outlooks. Pharma is rerating as GLP-1 economics mature into a durable earnings base, while Biotech is benefiting from M&A activity, patent-cliff pressure, and improving risk appetite. Health Care has quietly held up month-to-date, eking out a small gain, while the S&P 500 sits modestly in the red and high-beta pockets like the Consumer Discretionary, Communication Services, and Information Technology sectors have all dropped more than 4.5%. The sector also trades at a 17.1 forward P/E, below the S&P 500’s 20.4. We would own the areas where earnings, margins, and catalysts are improving, not the whole index. Consider the following: (1) Composition. Health Care accounts for 8.8% of the S&P 500’s market capitalization, the lowest weight the sector has carried in three decades. The S&P 400 MidCap and S&P 600 SmallCap sectors carry larger weights of 8.9% and 11.5%, respectively (chart). SmallCap Health Care is up 8.7% ytd, and MidCap Health Care is up 4.3%, both well ahead of LargeCap Health Care’s 3.8% decline. Smaller companies have benefited from M&A premiums and are less exposed to the mega-cap pharma and equipment drag. (2) Breadth. Health Care’s performance gap is unusually wide. Managed Health Care leads the sector, up 22.1% ytd, while Health Care Equipment is down 23.8% (chart). Managed Care has rallied on a stronger-than-expected 2027 Medicare reimbursement rate, while Equipment has been pressured by litigation overhangs and dilutive acquisitions. The earnings picture is just as uneven. Health Care Services is up 14.4% ytd, supported by a 2026 EPS growth forecast of 7.2%, nearly triple the sector’s 2.5% forecast (chart). Pharmaceuticals are the exception. The industry’s 4.0% ytd gain rests on only 1.0% expected 2026 EPS growth. (3) Earnings trough. Health Care is in its own earnings cycle. The sector’s 2026 EPS growth forecast of 2.5% is the lowest of any S&P 500 sector and far below the S&P 500’s 24.3% forecast (chart). Prospective growth in 2027 looks better, with expected EPS growth rebounding to 19.2%. The trough reflects Pharma’s compliance reset following 2025’s 32% earnings surge, while litigation continues to drag on Health Care Equipment. Net earnings revisions for 2027 are turning higher. (4) Margin compression. The sector's forward profit margin has fallen to 8.2%, the second lowest in the index, down from a peak of 11.5% in February 2022 (chart). (5) Pharma's rerating. Pharmaceuticals remains our preferred pocket within Health Care. The S&P 500 Pharmaceuticals index is up 4.0% ytd and accounts for 37.6% of the sector's market capitalization. Its forward profit margin has climbed to 30.1%, near a record high, almost four times the sector average (chart). Pharma trades at an 18.2 forward P/E, below its 18.7% expected 2027 EPS growth rate. That makes it one of the cleaner growth-at-a-reasonable-price opportunities in the sector. (6) Biotech. Biotech has recovered, but the recovery has been selective. Equal-weighted XBI and FBT show better breadth than cap-weighted IBB, while speculative ARKG remains far below its 2021 peak (chart). Biotech’s fundamentals are still mixed. Forward earnings has stalled since peaking at $433 per share in January 2022, while the forward profit margin has compressed from above 40% to 30.1% (chart). Longer term, AI-driven drug discovery could lift R&D productivity, but that upside is not yet visible in reported earnings. Health Care is no longer a sector to ignore, but it is still not a broad overweight. The index-level numbers remain weak, with slow earnings growth and compressed margins. The opportunity is underneath the surface.
Archive
Our Research Library
19 years of daily research, charts, and analysis
Topics
QuickTakes Topics
Timely commentary covering the most important market themes
Charts
Find Any Chart in Seconds
Search across 7,414+ real-time charts with instant visual previews
TARGET: STOCK PRICE INDEX, EARNINGS & P/E
PHILIP MORRIS INTERNATIONAL: STOCK PRICE INDEX, EARNINGS & P/E
NETFLIX: PRICE, FORWARD EARNINGS & VALUATION
MORGAN STANLEY: FORWARD LTEG, STRG & STEG
Sample charts from our collection of 7,414+ visualizations
Tools
Research Tools
Interactive dashboards for tracking economic conditions and market trends
Beige Book Monitor
Fed economic conditions across 12 districts with traffic-light signals.
FOMC Policy Meter
Dovish-to-hawkish policy stance tracker across FOMC meetings.
FOMC Minutes Monitor
Hawk/dove signal extraction across 10 economic themes.
FOMC SEP Monitor
Fed projections and dot plot distributions across meetings.
FOMC Statements
Every FOMC policy statement since 1997 — full text, rates, and voting records.
Private Credit Monitor
Auto-updating chronology of the private credit liquidity crisis.
Release Calendar
Major publications from the Fed, ECB, IMF, and 12 global institutions.
Try Yardeni Research free for four weeks.
Full access to everything we publish. No credit card, no obligation.