COVID-19 UPDATE: Weekend data was mostly benign = good
Overall, the trends in COVID-19 data did not materially worsen over the weekend. Daily cases came in at 62,000, flat with last week (it was >73,000 Friday). Daily deaths have started to flatten and even comparing daily deaths vs 7D ago, it looks flat. And hospitalization data did not materially surge over the weekend. In fact, the number of net hospitalized patients (18 states) was down in each of the past 2 days. And gross admissions to hospitals (33 states) were down as well.
– It is too early to be certain, but this 4-week surge in daily cases seems to be flattening, particularly in the 4 hardest-hit states, FL, CA, AZ, TX or F-CAT.
STRATEGY: JPMorgan survey shows both Retail and Institutional Investors cautiously positioned…
There is no such thing as a “triple top”…
The S&P 500 stalled this past week at 3,233. It touched that level on Wednesday and was repelled and then on Friday, it reached 3,233 again and was repelled. This level is key because it marked the intraday high on 6/8/2020 (3,233.13). See how this level is acting as a ceiling?
– Our sage head of Technical Strategy, Rob Sluymer, once said “there is no such thing as a triple top”
– Meaning, the longer we bump up against 3,233, the greater the odds this will fail.
One of the reasons we have remained constructive on equities, even in the midst of the greatest economic contraction in 5 lifetimes (even worse than the Great Depression) is that investors are positioned for downside in markets. Of course, there are multiple reasons stocks could fall to the downside:
– the path of the virus worsens, such as a renewed breakout in NY tristate
– economic recovery relapses and a contraction resumes
– markets lose confidence in central banks and deflation resumes
– financial distress worsens and banks and credit intermediaries are materially weakened
Tom Block, FS Insight Head of Policy Strategy, expects the next stimulus bill passed by August 7th…
But at the moment, the trajectory of the economic recovery is still positive. Incidentally, FS Insight’s policy strategist, Tom Block, expects a virus relief bill to start to take form next week:
– passage by no later than August 7th –> positive
– supplemental UI + stimulus checks + PPP –> positive
– other items include state and local gov’t, K-12, health insurance etc.
https://twitter.com/TomBlock_FS/status/1284536789437501447
Investors continue to favor bonds over stocks. JPMorgan’s latest Flows and Liquidity analysis shows that the spread between equity less bond flows is most extreme since even before 2007.
– in other words, 4-week flows out of equities dwarfs even those seen during the GFC
In the meantime, JPMorgan survey of its clients shows that institutional investors remain “net short” equities:
– institutions are overall short S&P 500 and Russell by 0.7 and 0.5 std deviations (1.0 is extreme)
– Macro funds, Systematic Funds and Equity L/S are particularly “short” S&P 500 by 1.0, 0.8 and 1.5 standard deviations.
In fact, the other “short” positions are US Treasuries and USD. So, the short positions are a trifecta of US-related assets.
This cautious positioning, in our view, does not reflect market’s pricing in a potential binary event from healthcare progress, either a cure or a vaccine. And this cautious positioning likely changes if the US sees any peaking/receding of COVID-19 cases from the new epicenter: FL, CA, AZ and TX, or F-CAT.
POINT #1: Over the weekend, daily cases soar to >73,000 but F-CAT cases start to rollover…
Daily US COVID-19 new cases soared to >73,000 over the weekend but eased to 62,000 by Sunday evening. The spread of COVID-19 remains largely uncontained, but the good news is that the daily cases in the nucleus states, FL, CA, AZ, TX, or F-CAT are beginning to slow. The weekend has a tendency to see slower data reporting, so we cannot read too much into the Sunday cases vs Friday highs of 73,000. But the week over week change in daily cases is down.
But one of the things within “weekend” datasets that is useful, is to look at the positivity rate. Ideally, the positivity rate is below 10% and in an environment of expanded testing, a falling positivity rate shows that detection is strong, but the level of case spread is slowing. The positivity rate over the past few days has been flattish at 8% over the past few days. So even thinking about the weekend effect, daily positive rate is flat.
Source: COVID-19 Tracking Project
We like to look at daily cases compared to the same day a week ago, as this is the adjustment for the seasonalities of daily cases. This figure dropped for the past two days to +2,000 or so, down from the >15,000 seen in the past few weeks. Thus, this is a bit of a glimpse of how the rate of spread is slowing to an extent. The fact that 7D change in daily cases is not soaring is a good thing.
Source: COVID-19 Tracking Project
The pace of daily deaths has slowed as well. This chart is the daily deaths compared to daily deaths 7D ago and as you can see, the pace of daily deaths is beginning to flatten. After a week of this pace rising quickly, this has slowed to a more modest pace.
Source: COVID-19 Tracking Project
6 states saw material 3D increases
Florida 12,478 vs 11,466 (Fri) +1,012
Louisiana 3,116 vs 2,179 +937
South Carolina 2,374 vs 1,977 +397
Iowa 816 vs 590 +226
Maryland 925 vs 707 +218
Indiana 917 vs 733 +184
Total 6 states +2,974
6 states saw material 3D declines
Texas 7,300 vs 14,916 (Fri) -7,616
Arizona 2,359 vs 3,910 -1,551
California 9,329 vs 9,986 -657
Georgia 3,251 vs 3,908 -657
Ohio 1,110 vs 1,679 -569
Tennessee 1,779 vs 2,279 -500
Total 6 states -11,550
Source: COVID-19 Tracking Project
POINT #2: F-CAT daily cases did not make new highs over the weekend = good
Daily cases in F-CAT seem to be rolling over. Texas reported a pretty big number Friday of >15,000 cases but it was due to a big backlog in San Antonio. So the charts below are a more accurate picture of the daily case trends in F-CAT.
– fortunately, the surge seen in F-CAT seems to be slowing.
Source: COVID-19 Tracking Project
In case you did not see this, the Texas DSHS noted that there was 5,000 cases reported on Friday that were due to a backlog. So that 15,000 figure was distorted by this.
https://twitter.com/TexasDSHS/status/1284242708262002696
If F-CAT is peaking, the pace of improvement for NYC might serve as a template. Recall, NYC had a stubbornly high number of cases and it took several weeks for its case figures to peak. But once it peaked:
– daily cases fell -75% from its highs in 18 days
– daily cases fell -90% from its highs in 32 days.
So if F-CAT has peaked, we should see a significant improvement in the next few weeks.
Source: NYC.gov
The 4 nucleus cities within F-CAT posted mostly good case trends over the weekend. Perhaps only Miami seems to be still bumping up against new highs. And Miami’s daily cases reported of >1,200 per 1mm residents is well above NYC on its single worst day.
Source: Johns Hopkins
POINT #3: Recent research suggests “superspreaders” are 10%-20% of infected and 80% of cases…
There have been a few recent research papers talking about the role of superspreaders. These are infected who are causing an unusually high number of cases. This is one of the mysteries of COVID-19. There are many cases where a person in a household is infected and nobody else catches COVID. And then there are just as many stories of a single infected person leading to hundreds of infections.
This Washington Post story talks about a growing consensus among scientists that a small portion of individuals is responsible for the majority of infections.
https://www.washingtonpost.com/health/2020/07/18/coronavirus-superspreading-events-drive-pandemic/
This is interesting, because the article talks about how an infected is generally contagious for 3-4 days. In fact, the well-known study of a Chinese infected in Hunan, who rode two buses and infected 9 passengers on two buses during a 4-hour period. The authorities tracked his movements using video surveillance. And surprisingly, outside of that 4-hour winder, he did not infect any other person. This is the mystery of COVID-19.
https://www.washingtonpost.com/health/2020/07/18/coronavirus-superspreading-events-drive-pandemic/
And as noted above, when researchers look at the cases in Hong Kong, the spread is largely due to superspreader individuals, who account for 80% of infections.
The George Floyd protests were 10,000X chances for a superspreader event… yet, in NYC, contact tracers are not asking about it…
This leads us to the potential for superspreader events in the US. We have viewed the nationwide protests, in >350 cities, ongoing for nearly 8 weeks now, as potential super spreader events, akin to the Champions League match in Italy that is now considered the ground zero event for Spain and Italy’s outbreak.
Interestingly, NYC contact tracers are not asking infected if they were involved in a BLM protest. As the NY Post article below highlights, they are inquiring about whether the infected were at an “outdoor” dining event.
– But if “outdoor” dining is considered a risk, why wouldn’t being at a protest be a risk factor?
Contact tracing in NYC has been challenged and as we commented ~4 weeks ago, less than 37% of infected are even “contact traced.” So 2/3 of infected has no contact tracing performed.
https://nypost.com/2020/07/19/nyc-contact-tracers-will-ask-about-dining-not-protests/?utm_campaign=iphone_nyp
RANDOM: NYC MTA sees violence over mask requirement. It is not just the Southern states facing mask compliance
There is a tendency for the media and public to see mask compliance as a “Red state” issue. That is, only states that lean Republican see compliance with mask mandates. And while it may be true (we don’t have any data to verify this), NYC apparently has a problem with mask compliance.
– The MTA (Metropolitan Transit Authority) has noted a surge in attacks on MTA bus drivers due to lack of mask compliance.
– MTA has reported more attacks on bus drivers in 2020 despite ridership down 80%, that is like a 5X increase in violence per rider.
– 20% of the attacks on bus drivers are due to social distance requirements or mask compliance.
Let’s face it, Americans just like to make their own personal choices. And one of the unfortunate consequences, is the backlash against masks.
https://nypost.com/2020/07/19/violent-bus-riders-refusing-to-wear-masks-drive-surge-in-mta-attacks/?utm_campaign=iphone_nyp
This was sent to me from one of my friends via WhatsApp. This is funny but so true
Source: friend BC from Monmouth Beach, NJ
