COVID-19 UPDATE: Daily cases 7D delta slowed last 2 days (weekend effect) but WIINSU still surges. College cases falling!

Click HERE to access the FSInsight COVID-19 Daily Chartbook.

STRATEGY: Big week ahead
This upcoming week is a biggie.  Equity markets have struggled with equilibrium (stability) in the past few weeks because of the upcoming 2020 Presidential elections coupled with surging COVID-19 cases (wave 3 here, wave 2 Europe).  The UK announced lockdowns Sunday, so it looks like policymakers in Europe are pursuing the same strategy.  Let’s hope it works long term–in the short term, this will certainly cause cases to hit a wall.

In the US, polls continue to show a sizable lead for Biden, even greater than Clinton in 2016.  So, prediction models based upon polls are pointing to a “blue wave” and betting markets show similar odds.  But at the same time, one cannot wonder if polls are accurately capturing what voters will actually do.  I think the best example of this is the wide disparity between the passionate and massive crowds for Trump rallies compared to the “socially distant” rallies for Biden.

But the more relevant issue for markets is how markets might react to variant outcomes.  Because Biden is expected to win, this is what I view as the base case:

  Scenario                                               Markets

– BASE CASE Biden wins decisively.     Post-election rally
– SURPRISE   Trump wins decisively.    Bigger post-election rally
– CONTESTED a few weeks contested  Focus will be on Senate.  Muted rally

I don’t know how to assign the probabilities, because I don’t think polls are reliable.  Why would markets rally stronger under Trump?

– fiscal stimulus timeline faster
– capital gains tax off the table
– tax cuts coming, and income tax increase off the table
– specter of increased regulation off the table
– Biden might be viewed as “owning” the more liberal left elements of the party, thus, less risk of the US shifting left

So for these reasons, we think a surprise Trump victory likely is the strongest risk-on.  But these are just guesses.

The news on COVID-19 over the weekend was actually positive on balance.  Europe is taking action to stem the surge = good.  And in the US, COVID-19 cases have been “cooling off” the last two days.  Cases Sunday came in at 72,630 which is up +10,016 vs 7D ago.  The pace of increases in the past two days is way down from last week. 

– last week, it looked semi-parabolic
– last two days, it looks a lot better
– is this the weekend effect?

– But wave 3 is centered in 6 states, WY, IL, ID, ND, SD, UT, or WIINSU, accounting for 60% of daily case increase.  These 6 states are not cooling off.

Source: COVID-19 Tracking Project  and Fundstrat

Source: COVID-19 Tracking and Fundstrat  

And while US overall positivity rates are creeping up, we can see this rise is really due to those 22 states in wave 3.  Positivity there is well above 12% and nearly matching F-CAT (FL, CA, AZ, TX) at its peak.  So, we still are waiting for panic from WIINSU and US policymakers.

Source: COVID-19 Tracking Project  and Fundstrat

In Point #2, we also discuss IHME current forecast for US COVID-19.  A forecast for US infections is just below:

– IHME sees US infections peaking in mid-Feb at ~300k/day
– this matches US wave 1
– 57% of infections “detected” as confirmed cases, which implies daily cases 170,000 by mid-Feb
– Europe currently >250,000 per day, so the US will peak well below Europe

Source: IHME





POINT 1: Daily cases 72,630, +10,016 vs 7D ago — Nice break vs last week trend
The latest COVID-19 daily cases came in at 72,630, up +10,016 vs 7D ago. This is a huge number, but it is actually an improvement in trend:
– Daily cases are rising but at a slower pace the last two days
– is this the weekend effect?
– or are states beginning to take action to stem case growth?

Source: COVID-19 Tracking Project  and Fundstrat


7D delta cooled off the last two days… the weekend effect?
Again, the daily change vs 7D ago, in our view, is the leading indicator as it is what influences the 7D moving average.
– Daily cases are rising vs 7D ago,
– last week, it looked semi-parabolic
– last two days, it looks a lot better
– is this the weekend effect?

Source: COVID-19 Tracking and Fundstrat  


Wave 3 centered in WY, IL, ID, ND, SD, UT, or WIINSU — still surging…
As we highlighted last week, 6 states account for ~60% of new cases.  These are:

WY
IL
ID
ND
SD
UT
or WIINSU

And below show the 3 counties in each state where COVID-19 is surging the most.  As you can see, these 6 states have not yet contained COVID-19.  So, we think this remains a key set of states to watch. 

– when WIINSU states peak
– we can better assess if this marks the peak of wave 3
– but Winter is coming, so things could keep getting worse

Source: Johns Hopkins and Fundstrat  

Source: COVID-19 Tracking and Fundstrat  

Source: COVID-19 Tracking and Fundstrat



POINT 2: Wave 3, per IHME, peaks mid-Feb 2021 with infections (not cases) peaking at 300k, matching wave 1 peak
With US daily confirmed cases moving to all-time highs, we thought it worthwhile to revisit the trend in infections.  Recall, “confirmed cases” are infections that have been detected due to testing:

– infections are COVID-19 positive
– cases are infections confirmed, primarily via PCR tests
– testing has increased, so % of infections detected are higher in wave 2 and wave 3

Since PCR testing is only testing for active cases, and antibody tests have not been done for the entire US or for recovered patients, there is no real way to quantify true infections.  But the IHME model has been fairly accurate, led by Dr. Chris Murray, and we have found their infection models quite useful.


IHME model sees 175,000 infections per day in current wave 3 versus 300,000 in wave 1The IHME model currently estimates US daily infections are about 150,000 per day, charted below:

– wave 1 peaked at 300,000 per day
– wave 2 peaked at 175,000 per day
– wave 3 surging but similar to wave 2 so far

– IHME forecasts wave 3 to peak mid-February 2021
– IHME forecasts wave 3 to peak at 300,000 per day

Source: IHME


IHME model implies the US is detecting ~57% of infections, thus, peak cases is 175,000 per day by mid-Feb… 
So, if we used the IHME model as a proxy, the US testing effort is capturing about 57% of COVID-19 infections.  The math is simple:

– 175,000 estimated daily infections
– 100,000 confirmed cases (detected)
– 57%

And if US infections peak at 300,000 by mid-Feb 2021, this implies about 170,000 detected/confirmed cases.  In other words, expect daily cases to be surging for sometime.  To put some context on this, we compare US cases vs Europe, using data from Johns Hopkins:

– Europe currently seeing >250,000 cases per day
– US is set to peak below that figure by mid-Feb

Source: Johns Hopkins, IHME and Fundstrat



IHME forecast the wave 3 mortality to be similar to wave 1… which seems somewhat less clear, given wave 1 impact nursing homes so severely
As for mortality, IHME forecast for daily deaths is below.  Here is what we find interesting:

– wave 1 daily deaths peaked at ~2,500 per day
– wave 3 daily deaths forecast peak ~2,500 per day
– wave 1 and wave 3 infections peak at the same level

– wave 1 and wave 3 deaths peak at the same level
– wave 1 deaths were higher due to nursing home fatalities ~50% of deaths

Is IHME forecasting another wave hitting nursing homes? Maybe.  Perhaps their model suggests that COVID-19 works through the population until hitting nursing homes, resulting in a surge of deaths.

Source: IHME






POINT 3: College cases down 50% in 6 weeks, now ~4.5% of cases vs 8% 14D ago and 15% 6 weeks ago
The last time we wrote about COVID-19 cases in colleges (in early October), our takeaway had been that university systems had done a pretty good job of keeping case velocity (daily cases) below that of the surrounding communities.  And in fact, the positivity rates were shockingly low.

Our data science team, led by tireless Ken, has updated the college data, including the data from the NY Times.  Based on the latest set of data, colleges/university share of daily cases is now ~4.5% of US cases.  This figure has steadily declined in the past 6 weeks:

– 6 weeks ago  ~15%
– 2 weeks ago  ~8%
– now                ~4.5%

Source: NY Times and Fundstrat


Colleges were perceived as quite risky, given young people tend to be more cavalier about COVID-19.  Yet, few have been hospitalized and the actual number of cases is actually slowing, particularly as a share of US overall cases.  So, fears about COVID-19 in colleges have proven unwarranted, akin to airline travel, casinos and other activities.  We remember those headlines in September, blaming colleges for COVID-19 and predictions of a massive outbreak.  

– as an aside, colleges that went 100% remote might arguably have worse COVID-19 statistics, since students are exposed to their local community
– and educational quality is obviously much worse for those forced to remote learn

Source: USA Today



In total numbers, colleges account for about 2,600 cases per day, which is way below the share of daily cases in the US in early September.  And notably, take a look at the right, in the 22 states leading the US surge in cases:

– implied daily college cases are actually falling
– while that region is leading the breakout of cases across the US

Source: NY Times and Fundstrat

Source: NY Times and Fundstrat


Why are colleges seeing fewer COVID-19 cases?
There are really three potential avenues to explain why colleges are seeing a far better outcome in COVID-19 compared to the rest of the US:

– College administrators are enforcing protocols better than the local communities = probably true
– College students are more compliant, given risks of being expelled or censured = probably true
– College students are more immune to COVID-19 by being younger or healthier = probably not true

This facet of COVID-19 has not been widely covered in the media.  I personally have not seen a single article about this.  In fact, look at the top 10 results of my Google search “why colleges are handling COVID better than USA”

– not a single result is saying this is the case
– the 9th result is an article about massive outbreaks in colleges

Source: Google



If you are wondering which college has the biggest COVID-19, it is in the Pacific Northwest… 
The chart below shows implied daily cases, sorted highest to lowest, and at the moment, the college leading the US in daily cases is Washington State University, located in Pullman Washington. 

The surge in this college happened within the last two weeks. 
– The number of cases until 10/8/2020 was zero
– but since 10/3, the college has seen >1,300 cases


Large schools like Penn State and University of Florida are seeing large numbers of cases, ~50 per day, but this is down 50% to 70% from just a few weeks ago.

Source: NY Times and Fundstrat