COVID-19 UPDATE: USA cases steady at 20,874 (vs 1D ago). OH to open up 90% of the state by EOW (biggest yet). The 'sobering' of market expectations continue w/Fed's Powell and David Tepper

COVID-19 remains a global crisis and we realize that many people need to keep up with COVID-19 developments, particularly since we are moving into the more critical stage ("restart economy"), so feel free to share our commentary to anyone who has interest.


We found NY state's essential worker serology study (>6,000 essential workers) very telling.  Essential workers are transit employees (NYC), NYC healthcare, NYPD, FDNY/EMT, DOCCS, and State Police (these 6 categories broken out). These workers are front-line, exposed constantly without the PPE precautions afforded hospital employees.  And surprisingly, the prevalence of COVID-19 antibodies for these 6, 6 of 6, is lower than the general population:

- NYC transit          14.2%  vs  19.9% (NYC overall)
- NYPD                  10.5%  vs  19.9%
- NYC Healthcare  12.2%  vs  19.9%
- FDNY/EMT          17.1%  vs  19.9%  (yup, even EMTs)

One thing this argues, in our view, is that the return to the workplace may be safer than most appreciate.  Think about it.  The fact that the prevalence is lower, despite higher constant exposure (in the public entire workweek) and in high-risk areas, speaks to less risk of exposure at these locations (which is pretty much everywhere in NYC), particularly for transit workers.

But the stock market has wobbled and is now down 5% for the week in 3 sloppy days.  There has been a lot of sobering discussions this week, from famed investors like Stan Druckenmiller, David Tepper, etc and even Fed Chair Powell.  Add in the controversy from CA (Tesla, and LA opening) and we can understand why markets feel the need to 'take profits' and reset sentiment.  Moreover, as we discuss below, the battle is taking place between two key Fibonacci levels, the 50% and 62% retrace, 2,793 and 2,934.  

The stock market is 'expensive' if we look at 2020 P/E.  The 'E' this year is probably going to be $50 (vs $175-ish consensus at the start of the year) but at the bottom of the cycle, there is no 'E.'  To give the right perspective on this, we highlight market commentary from GFC, highlighting the periods between June 2009 (3M after low) to May 2010 (past 1-yr after low).  There was no visibility back then (see Point #3) and there is arguably better economic visibility today (because the cycle is in the hands of policymakers, not balance sheets, then).


POINT #1: USA essentially flat at 20,874 (vs 21,469 1D ago), expected given mid-week. UP: NY+LA+CA+KS+MA.  DOWN: IL+FL+TN+MN
USA total COVID-19 new cases was flat today at 20,874, down slightly from 21,469 1D ago and higher than the 17,653 seen Monday.  The figure is still well off the 36,116 high reported on 4/24/2020, so that remains the high watermark and was 19 days ago.  The R0 for the US (reproductive rate) is 0.71, so each new case is only resulting in 0.71 new cases.  That is good.




+ NY     2,176 vs 1,430 (1D)     +746
+ LA        612  vs    235             +377
+ KS        352 vs        0             +352 <--Kansas only reports M/W/F now
+ CA     1,759 vs 1,443             +316
+ MA     1,165 vs    870            +295
Total 5 UP                              +2,086

-  IL       1,677 vs  4,014 (1D)  -2,337
-  FL        479  vs     941            -462
-  TN       259  vs     567            -308
-  MN      423  vs     695            -272
Total 4 DOWN                        -3,379

So there is a lot 'churn' in the state numbers.  This is what happens mid-week.  But the good news is that the surges in IL and FL yesterday were retraced today (lower). And none of these states is really showing a new breakout, yet.  Massachusetts, for instance, reported 1,050 new cases on 5/9/2020, so the most recent figure is essentially flat and is down from the 1,500-ish levels seen a few weeks ago.

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