Whilst many analysts are bullish on the healthcare sector, there seems to be one thing most are missing out…drug pricings.
Bernie Sanders and his campaign promises of Medicare for all did indeed further a precipitous drop in the sector before the renewed confidence we have seen in it.
However, let us not forget why the sector was dropping in the first place; Trump’s White House and the bullseye they apparently have on big pharma’s pricing.
This administration has furthered their push for drug companies to lower their prices, much like the last administration did.What does it mean for the sector at-large?
It means that as we get closer to the polls, this initial spike in optimism and Sanders “Medicare for all” not really working out as his chances slim might be over-ridden by Trump and Republicans behind his drug-pricing push facing re-election rather soon.
How do you combat Bernie Sanders and his plan to cut healthcare?
Attack the cost of the drugs and follow through on it.
So watch for rhetoric from the Trump side as we get closer to the wire to switch your bias from bullish to bearish if you indeed have such a bias.
To go a step above, factor in the currency impacts of cheaper drugs (priced in USD) against a weaker or stronger dollar.
Bottom Line: The trade remains bullish for now, but be quick with your profit taking. Or sideline the trade until we get a much clearer direction.
Cheers and trade safe,