Major COVID-19 Case Deceleration, Curve Flattening Seen
Last week’s message from both NY (the epicenter) and the White House is that COVID-19 is on track to undershoot “peak” utilization of the healthcare system, a critical development. Earlier in this crisis, the risk to the country was an overburdened healthcare system, leading to needless deaths. The other message remains that NY State does indeed seem to be moving through the apex of the crisis and the other side is a flattening of case growth, decreasing hospitalization admissions and eventually a tapering of deaths.
This is good news primarily for humanity but for markets, too. As the intensity eases of the crisis in New York, 35% of the 435,000 U.S. cases, the key for seeing a decline in overall USA case growth depends upon:
– other cities, counties, states seeing COVID-19 curves below NY;
– local governments using best practices to contain spread via testing or social distance;
– and optimized treatment regimens.
We are seeing widespread deceleration of case growth seen across the U.S., based on county-level data, so it is useful to track that rather than state level. Our tireless data scientist (Ken Xuan) enhanced some of the county level data (coming from John Hopkins) and several interesting insights emerge.
Point #1: Widespread deceleration of U.S. daily case growth (see diffusion chart below). As of 4/8, counties representing 51% of the population saw daily case growth below 10%, compared to 21% a week ago. So, 30% more of the U.S. falls into this tier.
Only Detroit, Philadelphia, Washington, D.C., of the top 50 cities are seeing case growth worse than NYC. In other words, the curves are already flatter for the rest of the country. This could change, but this is a good thing.
We grouped daily case growth of the more >3,000 U.S. counties into five tiers. The highest rate is >41% (2X in 3 days) and the slowest is <5% (a doubling every month).
-On 3/19, a plurality of the U.S. saw growth >41%, arguably “peak” COVID-19 velocity spread.
Source: FS Insight, Johns Hopkins University
– On 4/3, 2 weeks later, the plurality of the USA saw case growth between 10%-19% (15% mid-point), or cases doubling every 5 days.
– As of 4/8, 51% of the USA has daily case growth <10%. And the green bar (<5%) is now 16% of the population.
I realize the above chart is a little hard to read, but the point is that across many U.S counties, we see the benefit of social distance, leading to a nationwide slowing of cases.
Source: FS Insight, Johns Hopkins University
POINT #2: Most other major cities are outperforming NY. Of the 50 largest counties in the US, 16 of these have daily case growth >10% (which means cases double <1 week). And these are probably the places to watch for the next major case outbreaks–that is, these are cities large enough (~1mm mostly) that could result in widespread healthcare utilization. Overall, Detroit, Philadelphia and Washington, D.C. are seeing steeper curves than NYC (rebased to day 0 = 100 cases). These three cities bear watching over the coming weeks, and the White House is monitoring them.
Forgive me if this sounds insensitive, but the health of the economy is important for Americans too: every death is terrible but the COVID-19 economic impacts of some counties are less consequential than Los Angeles, NYC, etc.
Point #3: A recent study (not yet peer reviewed) by Tamma Carleton (University of Chicago) and Kyle Meng (UC Santa Barbara) assert that COVID-19 transmission is very seasonal. Basically, the authors suggest that each 1-degree Celsius rise in temperatures reduce transmission by 13%. Is weather a factor behind why Los Angeles, San Francisco and Seattle saw flatter curves than NYC? I hope warmer weather does indeed slow transmission, but I realize many are skeptical of this.
Point #4: NY State and NYC remain passing the apex, but counties around NYC are worse than NYC now. Many NYC workers and families live in surrounding counties. We would expect NYC to have the highest cases per 1mm residents, given its high population density (multiples of other counties).That is not the case. Of six surrounding counties, five show considerably higher cases per 1mm residents. The suburbs did EVEN WORSE than NYC. How is this possible?
What could go wrong? To conclude, COVID-19 remains extremely puzzling in its spread, as you can see in the data from areas surrounding NYC.
Bottom Line: The good news is that U.S. county-wide data is showing widespread slowing of COVID-19. And we hope warmer weather does indeed slow transmission. Please remain safe and healthy.”
Figure: Comparative matrix of risk/reward drivers in 2020
Per FS Insight
Figure: FS Insight Portfolio Strategy Summary – Relative to S&P 500
** Performance is calculated since strategy introduction, 1/10/2019
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