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First Word

First Word

Click HERE to access the FSInsight COVID-19 Daily Chartbook. We are shifting to a 4-day a week publication schedule: MondayTuesdayWednesdaySKIP THURSDAYFriday STRATEGY: Curiously, inflation risk premia now negative -1.35% vs +1.25% in MarchUK cases still creeping upwards, due to the Delta variant... Daily COVID-19 cases are creeping steadily upwards in the UK.  We first wrote about this two...

VIX -28% in 2 days --> rally signal.  Curiously, inflation risk premia now negative -1.35% vs +1.25% in March, showing market believes inflation transitory = another signal against Financials
  • First Word
Nov 19, 2020

COVID-19 UPDATE: Hmmm... looking more like cases could rolling over in TX, IL and WI...10 reasons S&P 500 P/E expands into YE --> thus, raising YE Target to 3,800 (vs 3,525 prior).

Click HERE to access the FSInsight COVID-19 Daily Chartbook. _________________________________ REGISTER NOW: Exclusive Virtual Conference on Post Election Roundup and Market Strategy TODAY (11/19) at 3 PM ET... Please join us for an exclusive virtual conference as the leading strategists at FSInisght provide their insights into where the markets are headed and how to position your portfolio in a post-election world. Details and SpecificsDate: Thursday, November 19th, 2020Time: 3:00PM - 6:00PM Eastern Time Link -->  Reserve your seat via this link Should you have any questions, please do not hesitate to leave us a message or email us at inquiry@fsinsight. com._________________________________ STRATEGY: Stocks are still a good risk/reward into YE, as P/E has tailwindsWe do not want to be jumping the gun but it does look more and more like COVID-19 wave 3 could be slowing.  Take a look at the chart below:- the 7D delta in daily cases has slowed markedly from >43,000 to <20,000- and daily cases in TX, IL and WI look to be rolling over (see Point #2)- is wave 3 peaking in the next few weeks?- this is way ahead of our base case of flu season lasting until mid-FebCOVID-19 is unpredictable.  So daily cases might be slowing in wave 3 states, but it could erupt in the Northeast.  So it might be more accurate to say daily cases seem to be rolling over in TX, WI, IL and leave it at that.  We wrote about El Paso and TX yesterday.  But it seems like it is more states now. Source: COVID-19 Tracking and Fundstrat  Given the fierce move by equities in the past few weeks, it is not entirely surprising to see stocks consolidate over the last few days.  And not surprisingly, there are more than a few who believe markets have become overly exuberant.  To an extent, we understand this, as there has been both a sizable move in markets coupled with a sizable rotation into epicenter stocks. That said, we see tailwinds for P/E into year-end, and while upside to earnings revisions is muted for now (we are done with 3Q2020 EPS), we believe risk premia can fall = P/E expansion.  Below are 10 reasons we see this: 1.  COVID-19 vaccine and therapeutics take “worst case” off table. 2.  Policymakers are pursuing soft-lockdowns, not killing recovery3.  Pent-up demand in US, look at output gap4.  China seeing massive explosive economic recovery5.  Fiscal stimulus coming6.  Investors are cautiously positioned, with little conviction7.  $4.5T cash on sidelines8.  If VIX breaks below 20, double-risk on signal9.  Santa Claus rally10. Fed dovish We see S&P 500 reaching 3,800 by year-end (vs 3.525 prior) as P/E expands by 1.4X to 19.7XWith tailwinds for P/E expansion, we see 2021 P/E rising to 19.7X from 18.3X, which would lead to S&P 500 3,800 (based on EPS of $193).  This, we are revising our YE target from 3,525 (which we raised on 8/13) and represents about 6.5% upside.- this is about the magnitude of a typical Santa Claus rally- so we are saying markets see their typical seasonal gains. Source: FundstratS&P 500 P/E of 19.7X is the same as High-yield implied P/E today... so it is not demandingFrom a valuation perspective, the target P/E of 19.7X is the same as the high-yield implied P/E (inverse of yield to worst) of 20.6X.   - in fact, it is a discount- if S&P 500 traded at 20.6X, the S&P 500 would be 3,976 Epicenter stocks rally still weaker than the post-Wave 1 rally... We have written multiple commentaries about the tailwinds for epicenter stocks, and in particular, how they are the most leveraged to both:- vaccine/therapeutics --> demand recovery- economic recovery --> operating leverage via cost cuttingThus, we see the best risk/reward in the epicenter.  And unlike earlier in 2020, there is much greater visibility and tangibility to a vaccine and cure for COVID-19.  Thus, the ability for markets to look beyond contemporaneous cases should be much higher.  As shown below, post-Wave 1, Epicenter stocks rallied 1,900bp relative to the S&P 500.  And the rally was weaker post-Wave 2.- So far, Epicenter has outperformed by 1,420bp.  - This is a fraction of the 7,000bp of YTD outperformance of Growth- Thus, we see substantial upside for epicenter stocks. Source: Fundstrat ADDENDUM: We are attaching the stock lists for our 3 portfolios:We get several requests to give the updated list for our stock portfolios.  We are including the links here: - Granny Shots  -->       core stocks, based on 6 thematic/tactical portfolios- Trifecta epicenter  --> based on the convergence of Quant (tireless Ken), Rauscher (Global strategy), Sluymer (Technicals)- Biden vs Trump  -->   based on correlation to either candidate odds Granny Shots:Full stock list here --> Click here Trifecta Epicenter:Full stock list here --> Click here Biden White House vs. Trump White House:Full stock list here --> Click here POINT 1: Daily cases 160,466, +19,492 vs 7D ago -- the lowest 7D delta in two weeksThe latest COVID-19 daily cases came in at 160,466, up +19,492 vs 7D ago. Wave 3 is still surging.- But oddly, are cases starting to decelerate on a rate of change basis?- maybe Source: COVID-19 Tracking Project  and Fundstrat7D delta at 19,492 is the lowest in nearly 3 weeks... 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,- It had been rising at >40,000 7D delta- But the pace slowed to <20,000 on Wednesday Source: COVID-19 Tracking and Fundstrat   Source: COVID-19 Tracking and Fundstrat   Source: COVID-19 Tracking and FundstratPOINT 2: If Wave 3 is peaking, early signs in WI, IL and TXYesterday, we wrote about how it looks like parts of Texas were seeing a peak in cases.  And below are the major states involved by their respective waves.  If wave 3 is peaking, we believe it is potentially starting in 3 states:- IL --> seems rolling over- TX --> we wrote yesterday about El Paso- WI --> squint... looks like it is rolling over Source: COVID-19 Tracking Project and FundstratThis is the chart showing daily cases per 1mm in the 6 largest counties in Texas.  And El Paso stands out because it looks like cases are finally rolling over. Source: Johns Hopkins and FundstratAgain, looking at Illinois, it does look like this surge associated with Wave 3 could be plateauing... that is a good sign. Source: Johns Hopkins and Fundstrat And again, I might say that Wisconsin also looks like daily cases are starting to roll over... Source: Johns Hopkins and Fundstrat  POINT 3: Age 60+ is now the largest share of new cases, a bad sign for future mortalityThe CDC provides data on demographic trends in COVID-19. The data is somewhat lagged, due to reported delays and the latest update is as of 11/3/2020, or about two weeks ago.  But the extracted data, particularly around the share of cases, is still relevant.  Below shows the share of cases  (trailing 30D) based on age groups.  This is important because we know of the sizable variances in mortality risk (case fatality rate) between age groups:- Wave 1, ~35% of cases were age 60+ which explains the extremely high mortality rates- Wave 2, the plurality of cases were age 20-29- Wave 3, so far, age 60+ is now the largest share of cases at ~21%This wave is underway, but this also suggests that death rates could exceed that of Wave 2, simply because of the higher share of older Americans. source:  chart below shows the case fatality rate by age, based on data from Our World in Data.  And as shown, there is a sharp rise in mortality based on age. the US specifically, Statista has this data, collected from the CDC and also shows considerably higher mortality for older Americans.- in round numbers, if wave 2 was primarily 20-29, the mortality rate (case fatality rate) was 0.1% but age 60+, this jumps to 2.7% or higher- thus, mortality risk remains high unless the standard of the case has improved /chart/21173/hospitalization-icu-admission-and-fatality-rates-for-reported-coronavirus-cases/RANDOM: Chart shows Wave 3 surge is similar to US corn production -- someone called it cornvirusI wanted to share this tweet from @EthicalSkeptic.  This account often comments on COVID-19 with sometimes interesting facets of the pandemic.  But this tweet below caught my eye.- @ethicalskeptic points out that corn production in the US looks similar to wave 3 of COVID-19- I especially found cornvirus to be funny Source: twitter. comThe two images below make it clearer.  I have no idea why these two charts look so similar.  If you have a view, please let me know Source: twitter. com

FOMC taking backseat as re-opening back in focus

Click HERE to access the FSInsight COVID-19 Daily Chartbook. We are shifting to a 4-day a week publication schedule: MondayTuesdayWednesdaySKIP THURSDAYFriday STRATEGY: FOMC taking backseat as re-opening back in focus  US daily COVID-19 cases are showing continual improvements.  This week, daily cases fell to 4,228 on Sunday and even Monday's cases were down from the prior week.  Given the typical daily fluctuations, we think daily cases will likely be sub-5,000 for most of the week.  Compared to where daily cases were in December (nearly 300,000 per day), 5,000 per day is tremendous progress. And this reduction in cases is setting the US to see a full re-opening by the end of this month.  Look at the latest TSA checkpoint figures, where daily travelers levels are quickly approaching pre-pandemic levels:- 1.91 million is latest data point (7D avg)- 2.61 million is pre-2020 level- these figures are all the more impressive considering business and international flights are limited Even cruises are again launching from US ports.  Royal Caribbean's Freedom of the Seas departed from PortMiami this past Sunday.  Recall, the CDC had taken the hardest line against cruise lines.  - the resumption of sailing is the latest sign of a return to normalcy- is it any wonder the FOMC eliminated pandemic tail risks from their thinking?- is it any wonder why dot plots might be advancing? If so, this is the right reason for the FOMC to become incrementally less dovish.  Even slightly so. Source: /news/articles/2021-06-20/first-u-s-cruise-in-15-months-set-to-sail-as-restrictions-easeMore importantly, this week, markets will focus on incoming hard and soft data.  As highlighted below, we will get multiple measures of the health of corporate and consumer spending.  And this should refocus markets on the health of the economic expansion.- and incoming data, while healthy, is not expected to be so strong to ignite fears of over-heating- if risks of overheating were elevated, the US 10-yr yields would be far higher than the 1.5% currently. STRATEGY: Millennials are more central to economic resilience than most appreciateStocks rallied sharply Monday.  Wow.  We thought markets would flail until midweek before rallying sharply.  But I guess a ton of position squaring took place Friday, during quad witching and along with 5 days of carnage, and brought markets into equilibrium faster than we expected. Equity markets have shown exceptional resilience in 2021 and we remain constructive.  As we have written multiple times, we see the S&P 500 reaching 4,400 by the end of June.  This seems a bit of a reach given that is only 10 days away.  But the chop from last week has pushed equity markets into a position where a sharp rally is possible:- S&P 500 touched the 50-day moving average- this usually marks the end of a pullback- S&P 500 30-minute RSI fell below 30- 4 of the last 5 times this happened, the S&P 500 staged a strong snapbackGiven the turmoil of last week, from both FOMC and quad witching, many stocks fell for non-fundamental reasons.  And with interest rates now lower, we see this as supportive of stocks. The 50-day moving average is a level where the S&P 500 has been touching and then rebounding smartly.  Take a look below.  And given the strong bounce Monday, this seems like another case of this. On a shorter time frame, we like to look at the 30 minute RSI (14 period) and below we can see the S&P 500 on this measure fell into levels that normally result in a sharp rally:- 4 of the last 5 times this happened, the S&P 500 rebounded sharply ADDENDUM: We are attaching the stock lists for our 3 portfolios:We get several requests to give the updated list for our stock portfolios.  We are including the links here: - Granny Shots  -->       core stocks, based on 6 thematic/tactical portfolios- Trifecta epicenter  --> based on the convergence of Quant (tireless Ken), Rauscher (Global strategy), Technicals- Violence in USA --> companies that are involved in some aspect of home or personal security. We are not recommending these stocks, but rather, bringing these stocks to your attention. Granny Shots:Full stock list here --> Click here Trifecta Epicenter (*):Full stock list here --> Click here Power Epicenter Trifecta 35 (*): Full stock list here --> Click here Violence in USA:Full stock list here --> Click here(*) Please note that the stocks rated OW on this list meet the requirements of our investment theme as of the publication date. We do not monitor this list day by day. A stock taken off this list means it no longer meets our investment criteria, but not necessarily that it is neutral rated or should be sold. Please consult your financial advisor to discuss your risk tolerance and other factors that characterize your unique investment profile. POINT 1: Daily COVID-19 cases 10,274, down -917 (ex-FL)  vs 7D ago... The speed of case decline has slowed down..._____________________________Current Trends -- COVID-19 cases: - Daily cases   10,274 vs 12,182 7D ago, down -1,908- Daily cases ex-FL   10,274 vs 11,191 7D ago, down -917- 7D positivity rate   1.8% vs 1.9% 7D ago- Hospitalized patients   13,996 down -6.9% vs 7D ago- Daily deaths    281,  down 15% vs 7D ago_____________________________- As we noted previously, Florida stopped publishing daily COVID stats update on 6/4 and we switched to use CDC surveillance data as the substitute. However, as CDC surveillance data is subject to a one to two-day lag, we added a US ex-FL in our daily cases and 7D delta sections in order to demonstrate a more comparable COVID development.- The latest COVID-19 daily cases came in at 10,274 new cases, down -917 (ex-FL)  vs 7D ago. If taking WA and WV into account (both stats were not available as of Monday 7PM ET), the 7D delta in daily cases is likely to reduce to -200 to -300. As the chart below shows, the absolute daily number of new cases has been down a lot compared to 4 weeks ago. But, the 7D delta in daily cases (the speed of decline) has indeed slowed down. Did the reopening cause the downward momentum in cases to pause? Or perhaps it was the Delta variant? Maybe it was an aberration and cases are about to accelerate back to the downside? We simply don't know the answer. But the good news is case trends remain on a downtrend and, as the future is uncertain and COVID remains exceedingly mysterious, the case data will be worth watching in the next few days. 7D delta in daily cases has been < -1,000 in last two days... The 7D delta has reduced to less than -1,000 over the past two days. The decline in daily cases indeed has slowed down as the chart below shows. The good news is that we have not seen a sudden surge in case figure, but the slow down in the case decline is still worrisome. Therefore, the case data in the next few days are worth watching as it will give us a more clear view on the case trend.    Current hospitalization, daily deaths and positivity rate are at all time low... Below we show the aggregate patients who are currently hospitalized due to COVID. After a mini-surge in March, the number of patients currently hospitalized rolls over again. Positivity rate is also following the similar pattern. Currently, all three metrics - current hospitalization, daily deaths and positivity rate - are at their all time lows since the start of the pandemic.     POINT 2: VACCINE: Several states reported unusual low number of doses administered possibly due to the Juneteenth..._____________________________Current Trends -- Vaccinations: - avg 1.1 million this past week vs 1.1 million last week- overall, 44.9% fully vaccinated, 53.0% 1-dose+ received_____________________________Vaccination frontier update --> all states now near or above 70% combined penetration (vaccines + infections)Below we sorted the states by the combined penetration (vaccinations + infections).  As we commented in the past, the key figure is the combined value >60%, which is presumably near herd immunity. We have overlaid our case progress with that of Israel several times to demonstrate what should happen to cases once immunity reaches a certain critical level in the population.  That is, the combined value of infections + vaccinations as % population > 60%. The persistent and rapid decline in cases suggest that the US is following a similar path to Israel (see our prior notes) while nations with less penetration continue to struggle more. - Currently, all states are near or above 70% combined penetration- RI, SD, MA, ND, CT, NJ, DE, NY, IL, UT, MN, NM, NE, AZ, PA are now above 90% combined penetration (vaccines + infections)- So gradually, the US is getting to that threshold of presumable herd immunity. So long as a vaccine resistant variant doesn’t spread widely, the continued retreat of cases should continue.  Below is a diffusion chart that shows the % of US states (based on state population) that have reached the combined penetration >60%/70%/80%/90%. As you can see, all states have reached 60% and 70% combined vaccination + infection. 89.4% of US states (based on state population) have seen combined infection & vaccination >80% and 60.2% of US states have seen combined infection & vaccination >90%.     There were a total of 603,333 doses administered on Monday. Over the past 7 days, on average 1,122,937 doses were administered per day, up 1.5% from 7D ago. As the chart below shows, the vaccination has slowed down over the past few days. But this is likely because several states reported unusual low number of doses administered (see below) possibly due to the new federal holiday, Juneteenth. Hence, we expect some true-up in the number of doses administered in the next few days. Compared to early June, the average number of daily vaccines administered is still about 20% higher. 13 states reported unusual low number of doses administered... Below we listed the 13 states that reported less than 1,000 doses administered on Monday. As you can see, the vaccination figures are much lower than its 7D average. Hence, we expect some true-up in number of doses administered in the next few days. Also, the daily number of vaccines administered seems to fluctuate a lot among states. Therefore, the 7D average daily number of vaccines administered might be a better gauge to measure the vaccination trend.   95.5% of the US has seen 1-dose penetration >40%... To better illustrate the actual footprint of the US vaccination effort, we have a time series showing the percent of the US with at least 35%/40%/45% of its residents fully vaccinated, displayed as the orange line on the chart. Currently, 89.9% of US states have seen 35% of their residents fully vaccinated.   However, when looking at the percentage of the US with at least 40% of its residents fully vaccinated, this figure is 66.8%. And only 48.1% of US (by state population) have seen 45% of its residents fully vaccinated.- While 95.5% of US states have seen vaccine penetration >40%, 78.7% of them have seen 1 dose penetration >45% and 59.4% of them have seen 1 dose penetration > 50%.- 89.9% of the US has at least 35% of its residents fully vaccinated, However, only 66.8% of US has fully vaccinated >40% and 48.1% of US has fully vaccinated >45%. This is the state by state data below, showing information for individuals with one dose and two doses. The ratio of vaccinations/ daily confirmed cases is generally trending higher (red line is 7D moving avg), but this is largely due to the decline in daily cases.- the 7D moving average is about ~100 for the past few days- this means 70 vaccines dosed for every 1 confirmed case In total, 317 million vaccine doses have been administered across the country. Specifically, 176 million Americans (53% of US population) have received at least 1 dose of the vaccine. And 149 million Americans (45% of US population) are fully vaccinated.   POINT 3: Tracking restrictions lifting and subsequent effects in individual statesPoint #3 focuses primarily on tracking the lifting of restrictions, as states have eased the majority of mandates.  Keep in mind, easing/lifting restrictions are contingent upon state of emergency ordinances being renewed. - States in groups 1 and 2 represent states that let their emergency ordinances expire, or that never had one in the first place- Note: IL and HI are not listed. This is because restrictions lifting is determined at the county / island level, and no statewide policy will be established to lift restrictions until a full reopeningSo there is a spectrum of approaches.  Our team is listing 3 tiers of states and these are shown below.  - states that eased all restrictions in 2020: AK, OK, MO, FL, TN- states that have eased all restrictions in 2021 to now: ND, SD, NE, ID, IA, MT, MS, AZ, SC, WY, TX, GA, AR, KS, WI, IN, AL, UT, NH- states that are still easing restrictions in 2021: OR, ME, WV, WA, MN, MA, NC, KY, LA, CA, DE, PA, NM, OH, CO, NJ, VT, MD, NV, NY, CT, VA, MI, RI, DC GROUP 1:  States that lifted restrictions in 2020... The daily case trends in these states are impressive and it is difficult to say that lifting restrictions has actually caused a new wave of cases because the case trends in these states look like other states.    GROUP 2: States that have lifted restrictions in 2021 to now... Similar to the list of states above, the daily case trends in these states are impressive and it seems that lifting restrictions hasn’t caused an increase in cases.   GROUP 3: States that are still easing restrictions in 2021... These states have begun to lift restrictions, but have yet to ease all restrictions.  The date of each state’s most recent restrictions lifting is indicated on each chart.  The case trends in these states have been mostly positive.- Easing restrictions appears to have contributed to an increase in cases in several of these states, most drastically in OR, ME, WA, and MN  

Lots of noise last week, but little signal. We continue to see US expansion as mostly early cycle.

Click HERE to access the FSInsight COVID-19 Daily Chartbook. We are shifting to a 4-day a week publication schedule: MondayTuesdayWednesdaySKIP THURSDAYFriday STRATEGY: Lots of noise last week, but little signalYesterday was Father's Day in the US (and some other places), and this is a holiday to celebrate our own father's and also to recognize those who are a father to someone -- either their own child or someone else in their life. I spent yesterday making some ribs (sorry, not smoked, since the cooking time is so short) and generally enjoying the wonderful weather. As for markets, to call last week choppy is somewhat of an understatement, but it was tumultuous given the combination of volatility inducing factors: - FOMC meeting, and one where Fed has recognized the reduction of pandemic tail risks- Quad witching (expiry of stock options, stock futures, index options, index futures) and the second largest in history Markets were therefore roiled both in the rates (fixed income) and equity world (quad witching) NOISE --> FOMC hawkish surprise, but interest rates fell --> Noise --> Was market was too hawkish? As many of our clients know, we recently have discussed how we see downside risk to interest rates, relative to consensus view. This is not because we are deflation-ists and not because we are negative on the global recovery. - rather, we believe that many contemporaneous hot inflation readings were making investors too hawkish- in fact, the FOMC meeting was more hawkish than expected Per JPMorgan US Fixed Income research team, led by Alex Roever, the Fed even began talking about Fed tapering. Tapering, or reducing either asset purchases and even moving towards raising rates, should cause interest rates to rise.   ... but instead a surge in rates, we saw 10-year yields fall sharplyBut despite this hawkish surprise, we saw interest rates decline. In fact, the 10-yr yield has been falling downwards within this channel. And this downward move in rates has puzzled us for some time. - the downtrend is evident- post-FOMC rates have continued to drift lower We do not think this is a sign that interest rates in the out years (2-3 years forward) are lower, but this downward move in rates could be due to several factors: - technical reaction as bond investors were too short- re-calibration, as the bond market has been too hawkish compared to Fed In our view, either explanation works. That is, Fed was incrementally hawkish, so rates should have risen. But instead, we got lower long-term rates and a flatter yield curve. STRATEGY: FOMC actions + lower yields = supportive of equitiesThe S&P 500 fell 2% last week, although the index decline masked a much more savage sector rotation. Growth stocks outperformed (still fell) and Epicenter got clobbered. - Healthcare was strongest last week --> flat- Financials and Basic Materials worst --> hoarding falling off + rates lower I know investors are tempted to declare the Epicenter trade over, because of the combination of bond market reversals plus the sector laggardship. However, we think this is largely noise. ... The US economy is still arguably early cycle in the expansionForemost, we think the US economy remains early cycle. This is obviously a very soft observation, given there is really no real way to stage the economic expansion real-time. We can only judge this in the rear view mirror. But there are two simple guideposts: So looking at the above, by many measures, the US expansion seems early cycle to us. That is, there is substantial pent-up demand and liquidity and the expected return of capital is high. - that latter point, expected return is key.- cycles generally end when the expected return on capital is zero or negative- think dot com bubble or housing market peak Thus, we continue to see the US expansion as early cycle and this is a time to be overweight Epicenter stocks. ... incoming economic data will tell us whether revenge capex and revenge spend remains strongThis coming week should appease those anxious about the business cycle. There is plenty of incoming data to give us a sense for the strength of the recovery. - Existing home sales- Markit PMIs (not ISMs)- Durable goods and capital goods orders --> revenge capex And let's not forget stock buybacks will be ramping up in 2021 as well. This is revenge spending, to an extent, as companies were constrained in 2020 from executing on stock buybacks.   BOTTOM LINE: Equity markets might suffer near-term from Quad witching impacts, but we see strong after mid-weekBottom line, we remain constructive. We think this period of chop, which we warned about last week, should end by mid-week. And in the meantime, after all the panic has abated, we see stocks drifting higher. Visibility on the recovery is strengthening. - and it seems early to worry about 2023 dot plots- the FOMC raising rates in 2023 is 18 months away- do we really need to be selling stocks today?   ADDENDUM: We are attaching the stock lists for our 3 portfolios:We get several requests to give the updated list for our stock portfolios.  We are including the links here: - Granny Shots  -->       core stocks, based on 6 thematic/tactical portfolios- Trifecta epicenter  --> based on the convergence of Quant (tireless Ken), Rauscher (Global strategy), Technicals- Violence in USA --> companies that are involved in some aspect of home or personal security. We are not recommending these stocks, but rather, bringing these stocks to your attention. Granny Shots:Full stock list here --> Click here Trifecta Epicenter (*):Full stock list here --> Click here Power Epicenter Trifecta 35 (*): Full stock list here --> Click here Violence in USA:Full stock list here --> Click here(*) Please note that the stocks rated OW on this list meet the requirements of our investment theme as of the publication date. We do not monitor this list day by day. A stock taken off this list means it no longer meets our investment criteria, but not necessarily that it is neutral rated or should be sold. Please consult your financial advisor to discuss your risk tolerance and other factors that characterize your unique investment profile.   POINT 1: Daily COVID-19 cases 4,197, down -618 (ex-FL) vs 7D ago... Daily cases could drop to sub-10,000 for most of the individual days this week..._____________________________ Current Trends -- COVID-19 cases:- Daily cases 4,197 vs 5,932 7D ago, down -1,735- Daily cases ex-FL 4,197 vs 4,815 7D ago, down -618- 7D positivity rate 1.8% vs 2.0% 7D ago- Hospitalized patients 14,118 down -8.2% vs 7D ago- Daily deaths 279, down 25% vs 7D ago_____________________________ - As we noted previously, Florida stopped publishing daily COVID stats update on 6/4 and we switched to use CDC surveillance data as the substitute. However, as CDC surveillance data is subject to a one to two-day lag, we added a US ex-FL in our daily cases and 7D delta sections in order to demonstrate a more comparable COVID development. - On Sunday, 22 states reported 4,197 new cases, down -618 (ex-FL) vs 7D ago. The 7D delta in daily cases has been stabilized between -1,000 to -2,000 and we have not seen any signs of the post-holiday surge. With continued efforts for higher penetration of vaccines, we believe the steady decline in daily cases is likely to persist, and we could see the daily cases could drop to sub-10,000 for most of the individual days this week.     7D delta in daily cases has been stabilized over the past 10 days ... The 7D delta in daily cases has been stabilized. The decline in daily cases seems to slow down but this is primarily due to the lower daily cases now vs. a few months ago. More importantly, the daily cases remain on a downtrend, and we haven't seen a post-holiday case surge yet. As the data suggests, we expect the daily cases to drop sub-10,000 for most of the individual days this week.     Current hospitalization, daily deaths and positivity rate are at all time low... Below we show the aggregate patients who are currently hospitalized due to COVID. After a mini-surge in March, the number of patients currently hospitalized rolls over again. Positivity rate is also following the similar pattern. Currently, all three metrics - current hospitalization, daily deaths and positivity rate - are at their all time lows since the start of the pandemic. POINT 2: VACCINE: Vaccination pace has sped up... 7D average daily vaccination rose to 1.2 million doses (vs. 1.1 million doses 7D ago)... _____________________________ Current Trends -- Vaccinations: - avg 1.2 million this past week vs 1.1 million last week - overall, 44.8% fully vaccinated, 52.9% 1-dose+ received _____________________________ Vaccination frontier update --> all states now near or above 70% combined penetration (vaccines + infections) Below we sorted the states by the combined penetration (vaccinations + infections). As we commented in the past, the key figure is the combined value >60%, which is presumably near herd immunity. We have overlaid our case progress with that of Israel several times to demonstrate what should happen to cases once immunity reaches a certain critical level in the population. That is, the combined value of infections + vaccinations as % population > 60%. The persistent and rapid decline in cases suggest that the US is following a similar path to Israel (see our prior notes) while nations with less penetration continue to struggle more. - Currently, all states are near or above 70% combined penetration - RI, SD, MA, ND, CT, NJ, DE, NY, IL, UT, MN, NM, NE, AZ, PA are now above 90% combined penetration (vaccines + infections) - So gradually, the US is getting to that threshold of presumable herd immunity. So long as a vaccine resistant variant doesn’t spread widely, the continued retreat of cases should continue. Below is a diffusion chart that shows the % of US states (based on state population) that have reached the combined penetration >60%/70%/80%/90%. As you can see, all states have reached 60% and 70% combined vaccination + infection. 89.4% of US states (based on state population) have seen combined infection & vaccination >80% and 56.3% of US states have seen combined infection & vaccination >90%.   There were a total of 842,200 doses administered on Sunday, down from 7D ago. Several states reported unusual low number of doses administered over the weekend possibly due to the new federal holiday, Juneteenth. Hence, we expect some true-up in the number of doses administered in the next few days. The overall trend of vaccination remains upward which is the good news. With continued efforts for higher penetration of vaccines, it could prevent the renewed outbreak and ensure the economy reopens safely.   95.5% of the US has seen 1-dose penetration >40%... To better illustrate the actual footprint of the US vaccination effort, we have a time series showing the percent of the US with at least 35%/40%/45% of its residents fully vaccinated, displayed as the orange line on the chart. Currently, 89.9% of US states have seen 35% of their residents fully vaccinated. However, when looking at the percentage of the US with at least 40% of its residents fully vaccinated, this figure is 66.8%. And only 48.1% of US (by state population) have seen 45% of its residents fully vaccinated. - While 95.5% of US states have seen vaccine penetration >40%, 78.7% of them have seen 1 dose penetration >45% and 59.4% of them have seen 1 dose penetration > 50%.- 89.9% of the US has at least 35% of its residents fully vaccinated, However, only 66.8% of US has fully vaccinated >40% and 48.1% of US has fully vaccinated >45%.   This is the state by state data below, showing information for individuals with one dose and two doses. The ratio of vaccinations/ daily confirmed cases is generally trending higher (red line is 7D moving avg), but this is largely due to the decline in daily cases. - the 7D moving average is about ~100 for the past few days - this means 70 vaccines dosed for every 1 confirmed case In total, 316 million vaccine doses have been administered across the country. Specifically, 176 million Americans (53% of US population) have received at least 1 dose of the vaccine. And 149 million Americans (45% of US population) are fully vaccinated. POINT 3: Tracking restrictions lifting and subsequent effects in individual states Point #3 focuses primarily on tracking the lifting of restrictions, as states have eased the majority of mandates. Keep in mind, easing/lifting restrictions are contingent upon state of emergency ordinances being renewed. - States in groups 1 and 2 represent states that let their emergency ordinances expire, or that never had one in the first place - Note: IL and HI are not listed. This is because restrictions lifting is determined at the county / island level, and no statewide policy will be established to lift restrictions until a full reopening So there is a spectrum of approaches. Our team is listing 3 tiers of states and these are shown below. - states that eased all restrictions in 2020: AK, OK, MO, FL, TN - states that have eased all restrictions in 2021 to now: ND, SD, NE, ID, IA, MT, MS, AZ, SC, WY, TX, GA, AR, KS, WI, IN, AL, UT, NH - states that are still easing restrictions in 2021: OR, ME, WV, WA, MN, MA, NC, KY, LA, CA, DE, PA, NM, OH, CO, NJ, VT, MD, NV, NY, CT, VA, MI, RI, DC GROUP 1: States that lifted restrictions in 2020... The daily case trends in these states are impressive and it is difficult to say that lifting restrictions has actually caused a new wave of cases because the case trends in these states look like other states. GROUP 2: States that have lifted restrictions in 2021 to now... Similar to the list of states above, the daily case trends in these states are impressive and it seems that lifting restrictions hasn’t caused an increase in cases. GROUP 3: States that are still easing restrictions in 2021... These states have begun to lift restrictions, but have yet to ease all restrictions. The date of each state’s most recent restrictions lifting is indicated on each chart. The case trends in these states have been mostly positive. - Easing restrictions appears to have contributed to an increase in cases in several of these states, most drastically in OR, ME, WA, and MN

Quad witching almost over. FOMC post-mortem, consensus probably right on "level of inflation" but not on "timing" --> Energy still our favorite sector

Click HERE to access the FSInsight COVID-19 Daily Chartbook. We are shifting to a 4-day a week publication schedule: MondayTuesdayWednesdaySKIP THURSDAYFriday STRATEGY: Quad witching almost over. FOMC post-mortem, consensus probably right on level of inflation but not on timing --> Energy still our favorite sectorWhile USA cases continue to recede, UK cases and hospitalizations are rising...I am not trying to sound any alarm bells, but the case trends in the UK are not plateauing. Since the daily cases ticked up a month ago, the daily cases are still surging in the UK: - daily cases are now 8,000 per day- was 2,000 per day in late May- hospitalizations are starting to rise - this is due to the Delta variant As we wrote about, the UK has a different composition of vaccines, and this might explain the surge. But we need to keep an eye on that. By contrast, USA cases continue to collapse and are on the track to fall sub-10,000 and maybe sub-5,000 next week. In the meantime, US vaccination trends seem to be curling upwards. In fact, there were a total of 2,035,923 doses administered newly reported by CDC on Thursday. Although this large increase is partially due to the under-reporting on Wednesday (see the table of daily vaccination by state below), the overall trend of vaccination evidenced by the 7D average (blue dash line) is indeed creeping up. This is a good thing. Take a look below. The number of vaccinations daily is slightly higher than it was a week ago. This is good news. STRATEGY: Please ignore the markets this week, but the interest rates are undershooting the consensusThis week is a bit of a throwaway week given the combination of the FOMC post-mortem and the quad witching this Friday (6/18/2021). And while the market movements have been extreme, in our view, there has been no change to the positive economic and market fundamentals supporting stocks. In other words, we are treating this entire week as noise. The Fed is acknowledging reflationary conditions, but the Fed's central view of transitory inflation seems to be more convincing to markets. Here is a rundown of our current stance on fundamentals and markets: - US economy reaching escape velocity as the US economy essentially now fully re-open- Substantial pent-up consumer demand will lead to a surge in spending, some of which is revenge spend- US corporates likely to see capital spending ramp up given strong recovery in earnings- Stocks poised to surge to new highs in the coming weeks - reflationary pressures exist- but transitory factors like supply chain disruptions, hoarding, shortages of semis (etc.) and extended unemployment benefits give a distorted view of inflation This is why we are positive on stocks and see upside in the coming weeks. As for sector positioning, we want to be: - Overweight Epicenter stocks- but we see downside to interest rates, and hence, we have a Neutral rating on Financials.- FAANG is the beneficiary of a downside risk to interest rates, hence, our upgrade last week to Overweight More importantly, it is a good sign that Technology is strengthening. Technology and Communications Services is nearly 40% of the S&P 500, so their strengthening bodes well for equities to surge to new highs. ... inflation is arguably destiny, but I think consensus has timing wrongI agree 100%, even 1,000X, with the central view that reflationary conditions are in place. And thus, inflation is set to rise over the next 5 years. In fact, I think it is almost destiny driven by the surge in Millennials and their associated consumption and wealth effects. Take a look at this population series starting in 1935: - the growth rate of adults age 30-48 has cycles, associated with variations associated with generations- Millennials are causing the number of adults age 30-48 to surge in the next 10 years (see below)- this mirrors the demographic Boomer surge of 1969-1985- Core CPI seems to follow this demographic surge Thus, our takeaway is that inflationary conditions are set to rise in the next 5-10 years. BUT. Big BUT. This does not have to happen in 2021. That is where our view differs from consensus. - Recall, one can either forecast level or time- the market is trying to call inflation risk both on level AND time- thus, we are counter-trading the market's forecast on time ... the 30-year bond yields fall sharply this week, further evidence that consensus view on inflation timing is offWhile many might view us as naive, take a look at the 30-year bond yields. - whoa- they utterly crashed- if inflationary pressures were secular we would expect 30-yr yields to rise- instead, they are falling So, this is a further argument in favor of our timing view -- inflation is set to rise, but why now? We think the Fed's view that inflationary evidence now is transitory --> hoarding, bottlenecks, participation rates low due unemployment benefits --> these are arguably transitory. - Fed 1, market 0 ... Thus, Violent rotation into FAANG out of Financials makes more senseThis week saw a violent rotation out of Financials into FAANG as shown below: - FAANG has outperformed Financials by 640bp in just the past 6 trading days- whoa, that is nearly a 2-std deviation move in 6 days This is violent. And the Quad witching plus FOMC over-reaction are contributing to this. ... But 640bp is a mere fraction of the 4,000bp of outperformance of Financials in the last 6 monthsBut as we highlighted multiple times, Financials outperformed FAANG by 4,000bp in the past 6 months, the largest degree of outperformance in a decade. And the last time we saw this magnitude of outperformance, this trade reverted: - the key question is whether this is another turning point- I am still favorable to Epicenter stocks, but we see risk in Financials- for next 6 months, we see FAANG outperforming Financials- thus, our double-upgrade of FAANG last week STRATEGY: Bull market getting stronger --> DO NOT GET BEARISH!!!!I need to reiterate: - This week is noise- Again, to repeat, this week is noise Quad witching means sloppy markets. FOMC means sloppy markets. I would not take any cues from this week. ... Foundation for bull market getting strongerBut we think the foundation for this bull market is strengthening. Strengthening to an extent that makes us even more constructive on the outlook for stocks into the end of June: - inflationary risks are decreasing = good- FAANG/Technology is strengthening = good, given 40% of market weight- interest rates are easing = higher P/E = good- 2H2021 capex likely to surge = good So, you can see, the foundations for equities remain very strong. My personal conviction about higher markets increased this week. Granted, the market was choppy, but this is expected. It is a quad witching week and we warned everyone about this. We did this in March. And again in June. And like clockwork, it has been sloppy. ... revenge Capex of corporates drives Capex upside in 2H2021There has been a huge wealth effect in the US owing to the recovery of financial markets. - the revenge spend of households --> household wealth effects- corporate revenge capex coming --> corporate wealth effect Look at some of the charts from Thomas Callum of TopDown Charts. Below shows S&P 500 profit growth and the lead time to capex growth: - EPS growth leads Capex by 12 months- profit explosion of 2020/2021 = capex surge 2H2021 Source: /is-sp-500-corporate-capex-ready-to-surge/ Similarly, look at bank lending easing (inverted and advanced 1.5 years): - bank lending easing leads capex by 1.5 years - bank lending eased bigtime - capex surge in 2H2021 So, capex set to surge in 2H2021 and beyond. Source: ENERGY: The sell-off this week is a gift... Energy remains our favorite sector by a country mileGiven the upside to economic resilience, stemming from the revenge spend of both households and corporates, we find this supportive of the upside for Energy stocks. And while Energy suffered from profit taking this week, I would hardly view any sector moves as a signal this week. David Tepper, founder of Appaloosa, and one of the most respected macro investors is also bullish on Energy. He made his comments at Robin Hood Investors Conference, the charitable event that took place this week. But his comments are particularly striking: - per Tepper, oil stocks are the cheapest by every measure- wow- people hate them And I concur. These are hardly crowded trades. Technology is a crowded trade. Financials are a crowded trade. Discretionary is a crowded trade. - Energy is a loathed sector that also happens to be the best performing sector YTD- nothing has changed, particularly by FOMC, that has changed the tightening supply/demand dynamics of that sector So, we would be buying $XLE and $OIH aggressively here. Those are the proxy ETFs for the Energy sector. Source: /news/articles/2021-06-16/david-tepper-says-he-s-bullish-much-loathed-oil-stocks ADDENDUM: We are attaching the stock lists for our 3 portfolios:We get several requests to give the updated list for our stock portfolios.  We are including the links here: - Granny Shots  -->       core stocks, based on 6 thematic/tactical portfolios- Trifecta epicenter  --> based on the convergence of Quant (tireless Ken), Rauscher (Global strategy), Technicals- Violence in USA --> companies that are involved in some aspect of home or personal security. We are not recommending these stocks, but rather, bringing these stocks to your attention. Granny Shots:Full stock list here --> Click here Trifecta Epicenter (*):Full stock list here --> Click here Power Epicenter Trifecta 35 (*): Full stock list here --> Click here Violence in USA:Full stock list here --> Click here(*) Please note that the stocks rated OW on this list meet the requirements of our investment theme as of the publication date. We do not monitor this list day by day. A stock taken off this list means it no longer meets our investment criteria, but not necessarily that it is neutral rated or should be sold. Please consult your financial advisor to discuss your risk tolerance and other factors that characterize your unique investment profile. POINT 1: Daily COVID-19 cases 9,800, -3,005 (ex-FL) vs 7D ago...7D delta accelerating to the downside..._____________________________ Current Trends -- COVID-19 cases:- Daily cases 9,800 vs 15,042 7D ago, down -5,242- Daily cases ex-FL 9,800 vs 12,805 7D ago, down -3,005- 7D positivity rate 1.8% vs 2.1% 7D ago- Hospitalized patients 14,610 down -12% vs 7D ago- Daily deaths 283, down 23% vs 7D ago_____________________________ - As we noted previously, Florida stopped publishing daily COVID stats update on 6/4 and we switched to use CDC surveillance data as the substitute. However, as CDC surveillance data is subject to a one to two-day lag, we added a US ex-FL in our daily cases and 7D delta sections in order to demonstrate a more comparable COVID development. - The latest COVID-19 daily cases came in at 9,800, down -3,005 (ex-FL) vs 7D ago. The 7D delta in daily cases has been accelerating to the downside over the past 3 days. This is good news. The persistent decline in daily cases and no post-holiday surge proved the importance of vaccine penetration. With continued efforts for higher penetration of vaccines, we believe the steady decline in daily cases is likely to persist, and daily cases could drop sub-10,000 for most of the individual days in the next week. 7D delta in daily cases has remained negative since the spike due to data distortion... As you can see from the chart below, the 7D delta in daily cases has been accelerating to the downside over the past 3days. The decline in daily cases seems to slow down but this is primarily due to the lower daily cases now vs. a few months ago. More importantly, the daily cases remain on a downtrend, and we haven not seen a post-holiday case surge yet. As the data suggests, we expect the daily cases to drop sub-10,000 for most of the individual days in the next week. Current hospitalization, daily deaths and positivity rate are at all time low... Below we show the aggregate patients who are currently hospitalized due to COVID. After a mini-surge in March, the number of patients currently hospitalized rolls over again. Positivity rate is also following the similar pattern. Currently, all three metrics - current hospitalization, daily deaths and positivity rate - are at their all time lows since the start of the pandemic. POINT 2: VACCINE: Vaccination pace has sped up... Average daily vaccination rose to 1.3 million doses (vs. 1.1 million doses 7D ago)... _____________________________ Current Trends -- Vaccinations: - avg 1.3 million this past week vs 1.0 million last week - overall, 43.6% fully vaccinated, 52.2% 1-dose+ received _____________________________ Vaccination frontier update --> all states now near or above 70% combined penetration (vaccines + infections) Below we sorted the states by the combined penetration (vaccinations + infections). As we commented in the past, the key figure is the combined value >60%, which is presumably near herd immunity. We have overlaid our case progress with that of Israel several times to demonstrate what should happen to cases once immunity reaches a certain critical level in the population. That is, the combined value of infections + vaccinations as % population > 60%. The persistent and rapid decline in cases suggest that the US is following a similar path to Israel (see our prior notes) while nations with less penetration continue to struggle more. - Currently, all states are near or above 70% combined penetration - RI, SD, MA, ND, CT, NJ, DE, NY, IL, UT, MN, NM, NE, AZ, PA are now above 90% combined penetration (vaccines + infections) - So gradually, the US is getting to that threshold of presumable herd immunity. So long as a vaccine resistant variant doesn’t spread widely, the continued retreat of cases should continue. Below is a diffusion chart that shows the % of US states (based on state population) that have reached the combined penetration >60%/70%/80%/90%. As you can see, all states have reached 60% and 70% combined vaccination + infection. 80.5% of US states (based on state population) have seen combined infection & vaccination >80% and 55.1% of US states have seen combined infection & vaccination >90%. There were a total of 2,035,923 doses administered on Thursday, up significantly from 7D ago. The huge increase in the number of doses administered was partially due to the under-reporting on Wednesday. As you can see in the table below, many states reported an unusual low number of doses administered on Wednesday: - Florida: 207,386 (Thu) vs. 743 (Wed)- Georgia: 158,050 (Thu) vs. 172 (Wed), 370 (Tue)- Illinois: 124,926 (Thu) vs. 90 (Wed)- Pennsylvania: 112,902 (Thu) vs. 956 (Wed)...... That said, the overall trend of vaccination evidenced by the 7D average (blue dash line) is indeed creeping up. The 7D average daily number of doses administered has been up 16.5% from 1.13 million to 1.32 million per day. This increase in vaccination speed coincides with the recent efforts by the Biden administration to get more people vaccinated by the fourth of July. With continued efforts for higher penetration of vaccines, it could prevent the renewed outbreak and ensure the economy reopens safely. 95.5% of the US has seen 1-dose penetration >40%... To better illustrate the actual footprint of the US vaccination effort, we have a time series showing the percent of the US with at least 35%/40%/45% of its residents fully vaccinated, displayed as the orange line on the chart. Currently, 89.3% of US states have seen 35% of their residents fully vaccinated. However, when looking at the percentage of the US with at least 40% of its residents fully vaccinated, this figure is 65.9%. And only 47.5% of US (by state population) have seen 45% of its residents fully vaccinated. - While 95.5% of US states have seen vaccine penetration >40%, 78.7% of them have seen 1 dose penetration >45% and 58.8% of them have seen 1 dose penetration > 50%.- 89.3% of the US has at least 35% of its residents fully vaccinated, However, only 65.9% of US has fully vaccinated >40% and 47.5% of US has fully vaccinated >45%. This is the state by state data below, showing information for individuals with one dose and two doses. The ratio of vaccinations/ daily confirmed cases is generally trending higher (red line is 7D moving avg), but this is largely due to the decline in daily cases. - the 7D moving average is about ~100 for the past few days - this means 70 vaccines dosed for every 1 confirmed case In total, over 300 million vaccine doses have been administered across the country. Specifically, 174 million Americans (53% of US population) have received at least 1 dose of the vaccine. And 147 million Americans (44% of US population) are fully vaccinated. POINT 3: Tracking restrictions lifting and subsequent effects in individual states Point #3 focuses primarily on tracking the lifting of restrictions, as states have eased the majority of mandates. Keep in mind, easing/lifting restrictions are contingent upon state of emergency ordinances being renewed. - States in groups 1 and 2 represent states that let their emergency ordinances expire, or that never had one in the first place - Note: IL and HI are not listed. This is because restrictions lifting is determined at the county / island level, and no statewide policy will be established to lift restrictions until a full reopening So there is a spectrum of approaches. Our team is listing 3 tiers of states and these are shown below. - states that eased all restrictions in 2020: AK, OK, MO, FL, TN - states that have eased all restrictions in 2021 to now: ND, SD, NE, ID, IA, MT, MS, AZ, SC, WY, TX, GA, AR, KS, WI, IN, AL, UT, NH - states that are still easing restrictions in 2021: OR, ME, WV, WA, MN, MA, NC, KY, LA, CA, DE, PA, NM, OH, CO, NJ, VT, MD, NV, NY, CT, VA, MI, RI, DC GROUP 1: States that lifted restrictions in 2020... The daily case trends in these states are impressive and it is difficult to say that lifting restrictions has actually caused a new wave of cases because the case trends in these states look like other states. GROUP 2: States that have lifted restrictions in 2021 to now... Similar to the list of states above, the daily case trends in these states are impressive and it seems that lifting restrictions hasn’t caused an increase in cases. GROUP 3: States that are still easing restrictions in 2021... These states have begun to lift restrictions, but have yet to ease all restrictions. The date of each state’s most recent restrictions lifting is indicated on each chart. The case trends in these states have been mostly positive. - Easing restrictions appears to have contributed to an increase in cases in several of these states, most drastically in OR, ME, WA, and MN

...60% of Americans age 18-64 are vaccinated... it is age <18 hurting the statistics. Waiting out "quad witching" --> Choppy week continues

Click HERE to access the FSInsight COVID-19 Daily Chartbook. We are shifting to a 4-day a week publication schedule: MondayTuesdayWednesdaySKIP THURSDAYFriday STRATEGY: Waiting out quad witching --> Choppy week continues...60% of Americans age 18-64 are vaccinated... it is age <18 hurting the statisticsTireless Ken, our head of data science, pulled some interesting statistics about US vaccinations.  He gathered the information from the CDC, cross-referenced with information from the US Census Bureau.  In essence, he broke down the composition of vaccinated and unvaccinated Americans.  And the insights were interesting:- Only 53% of Americans have received at least 1-dose- But this data is misleading- 60% of Americans age 18-64 have received at least 1-dose (36%/61% of USA)- Americans age <18 have limited eligibility- 43% of the unvaccinated is actually just Americans age <18In other words, the US vaccination program is further along than one may think, as those who really need vaccinations, age >20, are at a higher level of penetration. This is a half-full observation.  But this might also partially explain the rapid decline in US cases.  Those who are working and interacting with the economy and arguably most impacted, that is age 18-64, have high levels of vaccinations. US Daily cases fall to sub-10,000 consistentlyTake a look at US daily cases below and you can see for 3 of the last 4 days, daily cases were below 10,000.  This is a pretty big milestone. We are not seeing fluky statistical aberrations driving sub-10,000 cases.  It is becoming pretty consistent.- COVID-19 is receding in the US, and at a minimum, well controlled- US is on pace to full re-open.  In fact, it is largely fully open- US cases could be sub-5,000 next weekWhoa.  I think this is a positive trend development, because the US is seeing a decisive downward move in cases. Even the other key COVID-19 metrics are showing sustained improvements, without any signs of slowing down.  - US hospitalized patients is -88%- US daily deaths is -90%And neither looks to be flattening, trends look like further improvements ahead.  - Question --> how long until US daily deaths are less than 50 per day?- Horrific figure, but a vast improvement from 5,000 per day at the peak STRATEGY: quad witching week certainly is living up to its choppy reputationWe are two days into quad witching week and the fluctuation in markets is certainly living up to its reputation.  Recall, quad witching is:- single stock option expiration- single stock futures expirations- index option expiration- index futures expirationThis happens four times per year.  And as shown below, 5 of last 5 quad witchings saw market turmoil.  We don't have a lot of market commentary Tuesday because we see Tuesday's price movements as largely noise.  And our preference is to buy/ add exposure towards the end of the week.  - Moreover, we have the FOMC briefing Wednesday, and this will carry a lot of weight. ... FOMC meeting likely to be a positive catalyst, actuallyThe data that came in this week has been heavy.  And as we know, the incoming data investors are keying off of is inflationary signs.  - Retail sales (ex-autos) came in somewhat soft at -0.7% vs +0.4% Street- Empire manufacturing missed +17.4 vs 22.7 Street- NAHB Housing Index missed 81 vs 83 Street- Above was Producer Price Index ex-food ex-Energy at +0.7% vs 0.5%But the data points this week hardly seem to support strengthening inflationary conditions.  In fact, look at many of the commodities below:- Lumber rolling over- Copper might be rolling over- Corn rolling overSo, from the market's perspective, the FOMC is not on its heels if it continues to suggest transitory inflation.  In any case, I don't have a strong view on market direction this week:- the future is uncertain, always- quad witching makes it especially uncertain But we continue to have high conviction on Energy and oil, generally.  We like individual names like $XOM, best performing mega-cap, but also ETFs $XLE and $OIH as proxies for sector exposure. Beware of quad witching!!!!! ADDENDUM: We are attaching the stock lists for our 3 portfolios:We get several requests to give the updated list for our stock portfolios.  We are including the links here: - Granny Shots  -->       core stocks, based on 6 thematic/tactical portfolios- Trifecta epicenter  --> based on the convergence of Quant (tireless Ken), Rauscher (Global strategy), Technicals- Violence in USA --> companies that are involved in some aspect of home or personal security. We are not recommending these stocks, but rather, bringing these stocks to your attention. Granny Shots:Full stock list here --> Click here Trifecta Epicenter (*):Full stock list here --> Click here Power Epicenter Trifecta 35 (*): Full stock list here --> Click here Violence in USA:Full stock list here --> Click here(*) Please note that the stocks rated OW on this list meet the requirements of our investment theme as of the publication date. We do not monitor this list day by day. A stock taken off this list means it no longer meets our investment criteria, but not necessarily that it is neutral rated or should be sold. Please consult your financial advisor to discuss your risk tolerance and other factors that characterize your unique investment profile. POINT 1: Daily COVID-19 cases 9,794, -1,633 (ex-FL) vs 7D ago... Daily cases likely to fall below 10,000 for most of the individual days next week..._____________________________Current Trends -- COVID-19 cases: - Daily cases   9,794 vs 13,017 7D ago, down -3,223- Daily cases ex-FL   9,794 vs 11,427 7D ago, down -1,633- 7D positivity rate   1.9% vs 2.2% 7D ago- Hospitalized patients   15,201 down -12% vs 7D ago- Daily deaths    321,  down 19% vs 7D ago_____________________________- As we noted previously, Florida stopped publishing daily COVID stats update on 6/4 and we switched to use CDC surveillance data as the substitute. However, as CDC surveillance data is subject to a one to two-day lag, we added a US ex-FL in our daily cases and 7D delta sections in order to demonstrate a more comparable COVID development.- The latest COVID-19 daily cases came in at 9,794, down -1,633 (ex-FL) vs 7D ago. The 7D delta in daily cases has been stabilized since last Monday's spike. The persistent decline in daily cases and no post-holiday surge proved the importance of vaccine penetration. With continued efforts for higher penetration of vaccines, we believe the steady decline in daily cases is likely to persist, and daily cases could drop sub-10,000 for most of the individual days in the next week. 7D delta in daily cases has remained negative since the spike due to data distortion... As suggested by the chart below, the 7D delta in daily cases has been stabilized over the past 7 days. The decline in daily cases seems to slow down partially due to the lower daily cases now vs. a few months ago. But more importantly, the daily cases remain on a downtrend and we haven't seen a post-holiday case figure yet. As the data suggests, we expect the steady decline in daily cases to persist.    Current hospitalization, daily deaths and positivity rate are at all time low... Below we show the aggregate patients who are currently hospitalized due to COVID. After a mini-surge in March, the number of patients currently hospitalized rolls over again. Positivity rate is also following the similar pattern. Currently, all three metrics - current hospitalization, daily deaths and positivity rate - are at their all time lows since the start of the pandemic.     POINT 2: VACCINE: Vaccination pace has sped up... Daily vaccination about 1.1 million doses (~35 million per month)..._____________________________Current Trends -- Vaccinations: - avg 1.1 million this past week vs 1.0 million last week- overall, 43.6% fully vaccinated, 52.2% 1-dose+ received_____________________________Vaccination frontier update --> all states now near or above 70% combined penetration (vaccines + infections)Below we sorted the states by the combined penetration (vaccinations + infections).  As we commented in the past, the key figure is the combined value >60%, which is presumably near herd immunity. We have overlaid our case progress with that of Israel several times to demonstrate what should happen to cases once immunity reaches a certain critical level in the population.  That is, the combined value of infections + vaccinations as % population > 60%. The persistent and rapid decline in cases suggest that the US is following a similar path to Israel (see our prior notes) while nations with less penetration continue to struggle more. - Currently, all states are near or above 70% combined penetration- RI, SD, MA, ND, CT, NJ, DE, NY, IL, UT, MN, NM, NE, AZ, PA are now above 90% combined penetration (vaccines + infections)- So gradually, the US is getting to that threshold of presumable herd immunity. So long as a vaccine resistant variant doesn’t spread widely, the continued retreat of cases should continue.  Below is a diffusion chart that shows the % of US states (based on state population) that have reached the combined penetration >60%/70%/80%/90%. As you can see, all states have reached 60% and 70% combined vaccination + infection. 80.5% of US states (based on state population) have seen combined infection & vaccination >80% and 55.1% of US states have seen combined infection & vaccination >90%.    There were a total of 1,222,472 doses administered on Tuesday, up 15% from 7D ago. After the daily number of doses administered fell below 1 million, the vaccination trend (dashed line: 7D average) has sped up. This increase in vaccination speed coincides with the recent efforts by the Biden administration to get more people vaccinated by the fourth of July. With continued efforts for higher penetration of vaccines, it could prevent the renewed outbreak and ensure the economy reopens safely.  95.5% of the US has seen 1-dose penetration >40%... To better illustrate the actual footprint of the US vaccination effort, we have a time series showing the percent of the US with at least 35%/40%/45% of its residents fully vaccinated, displayed as the orange line on the chart. Currently, 89.3% of US states have seen 35% of their residents fully vaccinated.   However, when looking at the percentage of the US with at least 40% of its residents fully vaccinated, this figure is 65.9%. And only 44.5% of US (by state population) have seen 45% of its residents fully vaccinated.- While 95.5% of US states have seen vaccine penetration >40%, 78.7% of them have seen 1 dose penetration >45% and 58.8% of them have seen 1 dose penetration > 50%.- 89.3% of the US has at least 35% of its residents fully vaccinated, However, only 65.9% of US has fully vaccinated >40% and 44.5% of US has fully vaccinated >45%. This is the state by state data below, showing information for individuals with one dose and two doses.  The ratio of vaccinations/ daily confirmed cases is generally trending higher (red line is 7D moving avg), but this is largely due to the decline in daily cases.- the 7D moving average is about ~80 for the past few days- this means 70 vaccines dosed for every 1 confirmed case In total, over 300 million vaccine doses have been administered across the country. Specifically, 173 million Americans (52% of US population) have received at least 1 dose of the vaccine. And 145 million Americans (44% of US population) are fully vaccinated.   POINT 3: Tracking restrictions lifting and subsequent effects in individual statesPoint #3 focuses primarily on tracking the lifting of restrictions, as states have eased the majority of mandates.  Keep in mind, easing/lifting restrictions are contingent upon state of emergency ordinances being renewed. - States in groups 1 and 2 represent states that let their emergency ordinances expire, or that never had one in the first place- Note: IL and HI are not listed. This is because restrictions lifting is determined at the county / island level, and no statewide policy will be established to lift restrictions until a full reopeningSo there is a spectrum of approaches.  Our team is listing 3 tiers of states and these are shown below.  - states that eased all restrictions in 2020: AK, OK, MO, FL, TN- states that have eased all restrictions in 2021 to now: ND, SD, NE, ID, IA, MT, MS, AZ, SC, WY, TX, GA, AR, KS, WI, IN, AL, UT, NH- states that are still easing restrictions in 2021: OR, ME, WV, WA, MN, MA, NC, KY, LA, CA, DE, PA, NM, OH, CO, NJ, VT, MD, NV, NY, CT, VA, MI, RI, DC GROUP 1:  States that lifted restrictions in 2020... The daily case trends in these states are impressive and it is difficult to say that lifting restrictions has actually caused a new wave of cases because the case trends in these states look like other states.    GROUP 2: States that have lifted restrictions in 2021 to now... Similar to the list of states above, the daily case trends in these states are impressive and it seems that lifting restrictions hasn’t caused an increase in cases.   GROUP 3: States that are still easing restrictions in 2021... These states have begun to lift restrictions, but have yet to ease all restrictions.  The date of each state’s most recent restrictions lifting is indicated on each chart.  The case trends in these states have been mostly positive.- Easing restrictions appears to have contributed to an increase in cases in several of these states, most drastically in OR, ME, WA, and MN  

Why we see downside risk to rates --> Analysis shows "rate of change" GDP and inflation breakevens drive rates, less CPI

Click HERE to access the FSInsight COVID-19 Daily Chartbook. We are shifting to a 4-day a week publication schedule: MondayTuesdayWednesdaySKIP THURSDAYFriday STRATEGY: Why we see downside risk to rates --> Interest rates track rate of change of GDP and Fed inflation breakevens, less so CPILast Friday, we made a course correction by upgrading FAANG to OW (from UW) and downgrading Financials to N from OW. There were several reasons, but the two primary drivers were: - Financials outperformed FAANG at a pace not seen for nearly a decade- Unless, structural factors are at play, mean reversion argues to buy FAANG - Interest rates, in our view, have downside risk- Financials are the prime beneficiaries of higher rates, while FAANG suffered worst headwind Perhaps not surprisingly, we faced quite a lot of backlash over this sector course correction. Many of our clients simply do not agree that there is a fundamental reason to downgrade Financials. Moreover, many of our clients believe because inflationary pressures are building, interest rates need to rise. ... Mean reversion time? Or is this time different? Financials have outperformed FAANG by 4,000bp in the past 6 months and this is nearly a historic degree of outperformance. The last time this was seen was 2012 and at that time, NYFANG+ staged a massive rebound. - so the question is whether structural factors argue for Financials to keep trouncing FAANG- if not, time for a rotation Economic escape velocity? YESreflation? YESHigher rates? NOT CLEARRelative to consensus views, we think interest rates will undershoot. Fundstrat does not have a target for interest rates, so I am not able to give you a range of where the 10-year is by year end 2021. If anything, our Global Portfolio Strategist, Brian Rauscher has a better insight and even Brian does not think this is really that forecastable. - thus, the key question, in my view, is whether US rates are above or below consensus- we think rates will undershoot Why?- CPI does not influence rates, despite this being the central factor for consensus seeing higher rates- Rate of change matters more (aka ROC)- ROC of GDP growth and ROC of inflation breakevens- If ROC is flattening, rates have downside risk, not upside ... CPI YoY, even ROC of CPI does not really impact rates as much as you thinkMany clients have told us that interest rates are set to rise because inflation is rising. Intuitively, this makes perfect sense. In fact, if you asked me what drives rates, it is two components: - real cost of rate (Fed, deficits)- inflation But the inflation in the above equation is actually the forecasted inflation, matching the duration of the interest rate. So arguably, CPI doesn't matter, unless that is the level of future inflation rates. In other words, current/contemporaneous CPI should not drive interest rates. And the below chart shows this to be indeed true. CPI, or rather ROC of CPI has little impact on interest rates. - so unless one believes current CPI YoY inflation is sustained for the next 10-years- CPI YoY has little impact on interest rates ...5-year inflation breakevens have a stronger influence on interest ratesIn our view, future inflation expectations should impact rates more than current CPI. And analysis below seems to bear this out. The 6M change in 5-year inflation breakevens seems to have a greater impact on the 6M change in interest rates. - this makes sense to me- the key is the rate of change, ROC, of inflation breakevens- if inflation breakevens are 2.4% now, and 2.4% in December, that is ZERO ROC- that would imply interest rates stabilize, not rise ... ROC of GDP forecasts also seem to influence 10-yr ratesSimilarly, the change in GDP forecasts seems to influence interest rates as shown below. This makes sense. Over the cycle, the level of real interest rates should track real GDP. And thus, higher growth = higher rates: - the key is the rate of change, ROC, of GDP forecasts- if GDP forecasts are 6% SAAR now, and 6% in December, that is ZERO ROC- that would imply interest rates stabilize, not rise ... GDP growth needs to further accelerate, or inflation rate needs to accelerate to drive higher ratesIn other words, if the rate of change is constant over the next 6 months, ROC = zero. And therefore interest rates have less pressure to rise. We illustrate this point below: - if GDP growth is 6% now and 6% in December, ROC = 0- if inflation breakevens are 2.4% now and 2.4% in Dec, ROC = 0 Thus, our analysis suggests that pressure for higher rates, versus Consensus, needs to come from growth accelerating further or inflation accelerating further. But consider that ROC might be slowing: - While GDP growth forecasted to be strong, ROC may not accelerate further- Commodities like lumber are down 40% from their peak, suggesting some inflationary pressures waning- Supply chain bottlenecks likely ease, leading to decreased inflationary pressures later   STRATEGY: If interest rates have downside bias versus Consensus, Technology/FAANG outperforms FinancialsIn short, if ROC is slowing, this is the downside to interest rates relative to consensus. And central to our take is that current CPI matters less for rates than future inflation. In turn, history strongly argues that a slowing of interest rates is a headwind for Financials vs Technology. - if US 10-yr is 1.5% today and 1.5% in December, ROC = 0- Technology should outperform Financials - if US 10-yr is 1.8% by December, 6M ROC falls from 1.3% to 0.3%- Technology should outperform Financials - if US 10-yr is 2.8% by December, 6M ROC flat at 1.3%- Financials should outperform Technology I don't think Consensus sees 10-yr at 2.8%. So you can see, interest rates need to rise above Consensus for Financials to outperform FAANG before year-end. Hence, we are favoring FAANG over Financials. Energy remains our favorite SectorBut our top sector remains Energy. The oil market has favorable supply/demand dynamics and demand should see upside surprise in coming months as travel further resumes - international travel- business travel Both would push global oil consumption back towards 100 mbpd. In fact, Standard Charter's Paul Horsnell believes much of this surge in demand will take place in the next few months: - demand surprise coming in oil- Energy stocks benefit from positive oil demand surprise Hence, we continue to see strong upside in Energy stocks. Good proxies are the ETFs $XLE and $OIH   Source: Bloomberg and @BurggrabenHAnd lastly, stick with the Epicenter trade broadly. FYI, a Neutral rating for Financials just means it tracks the S&P 500. Thus, we do not see Financials subtracting from index or a portfolio manager performance. - Energy is our favorite Sector- FAANG (NYFANG+) should also lead S&P 500 next 6 months ADDENDUM: We are attaching the stock lists for our 3 portfolios:We get several requests to give the updated list for our stock portfolios.  We are including the links here: - Granny Shots  -->       core stocks, based on 6 thematic/tactical portfolios- Trifecta epicenter  --> based on the convergence of Quant (tireless Ken), Rauscher (Global strategy), Technicals- Violence in USA --> companies that are involved in some aspect of home or personal security. We are not recommending these stocks, but rather, bringing these stocks to your attention. Granny Shots:Full stock list here --> Click here Trifecta Epicenter (*):Full stock list here --> Click here Power Epicenter Trifecta 35 (*): Full stock list here --> Click here Violence in USA:Full stock list here --> Click here(*) Please note that the stocks rated OW on this list meet the requirements of our investment theme as of the publication date. We do not monitor this list day by day. A stock taken off this list means it no longer meets our investment criteria, but not necessarily that it is neutral rated or should be sold. Please consult your financial advisor to discuss your risk tolerance and other factors that characterize your unique investment profile. POINT 1: Daily COVID-19 cases 10,830, -2,249 (ex-FL) vs 7D ago... Steady decline in daily cases persists..._____________________________ Current Trends -- COVID-19 cases:- Daily cases 10,830 vs 14,263 7D ago, down -3,433- Daily cases ex-FL 10,830 vs 13,079 7D ago, down -2,249- 7D positivity rate 1.9% vs 2.1% 7D ago- Hospitalized patients 15,128 down -12% vs 7D ago- Daily deaths 312, down 21% vs 7D ago_____________________________ - As we noted previously, Florida stopped publishing daily COVID stats updates on 6/4 and we switched to use CDC surveillance data as the substitute. However, as CDC surveillance data is subject to a one to two-day lag, we added a US ex-FL in our daily cases and 7D delta sections in order to demonstrate a more comparable COVID development. - The latest COVID-19 daily cases came in at 10,830, down -2,249 (ex-FL) vs 7D ago. Given the relatively lower daily case figure compared to a few months ago, the slow down of the decline in daily cases (measured by 7D delta in daily cases) is understandable. Besides, the more important news is that we have not seen the cases surge following the Memorial Day holiday. We believe this is the result of the high penetration of vaccines. And with continued efforts for higher penetration of vaccines, the steady decline in daily cases is likely to persist, similar to the COVID path in Israel.   7D delta in daily cases has remained negative since the spike due to Memorial Day data distortion... The 7D delta in daily cases has turned negative following last Monday's spike. Although the decline in daily cases seems to slow down, the daily cases remain on a downtrend and we haven't seen the case figure surge yet (even following the Memorial Day holiday). As the data suggests, we expect the steady decline in daily cases to persist. Current hospitalization, daily deaths and positivity rate are at all time low... Below we show the aggregate patients who are currently hospitalized due to COVID. After a mini-surge in March, the number of patients currently hospitalized rolls over again. Positivity rate is also following the similar pattern. Currently, all three metrics - current hospitalization, daily deaths and positivity rate - are at their all time lows since the start of the pandemic. POINT 2: VACCINE: Vaccination pace seems to have speed up again... Daily vaccination about 1.1 million doses (~35 million per month)..._____________________________ Current Trends -- Vaccinations:- avg 1.1 million this past week vs 0.9 million last week- overall, 43.4% fully vaccinated, 52.1% 1-dose+ received_____________________________ Vaccination frontier update --> all states now near or above 70% combined penetration (vaccines + infections)Below we sorted the states by the combined penetration (vaccinations + infections). As we commented in the past, the key figure is the combined value >60%, which is presumably near herd immunity. We have overlaid our case progress with that of Israel several times to demonstrate what should happen to cases once immunity reaches a certain critical level in the population. That is, the combined value of infections + vaccinations as % population > 60%. The persistent and rapid decline in cases suggest that the US is following a similar path to Israel (see our prior notes) while nations with less penetration continue to struggle more. - Currently, all states are near or above 70% combined penetration- RI, SD, MA, ND, CT, NJ, DE, NY, IL, UT, MN, NM, NE, AZ, PA are now above 90% combined penetration (vaccines + infections)- So gradually, the US is getting to that threshold of presumable herd immunity. So long as a vaccine resistant variant doesn’t spread widely, the continued retreat of cases should continue.   Below is a diffusion chart that shows the % of US states (based on state population) that have reached the combined penetration >60%/70%/80%/90%. As you can see, all states have reached 60% and 70% combined vaccination + infection. 80.5% of US states (based on state population) have seen combined infection & vaccination >80% and 54.1% of US states have seen combined infection & vaccination >90%.   There were a total of 1,311,703 doses administered on Monday, down 11% from 7D ago. After the daily number of doses administered fell below 1 million, the vaccination trend (dashed line: 7D average) seems to be reversing higher. This increase in vaccination speed coincides with the recent efforts by the Biden administration to get more people vaccinated by the fourth of July. With continued efforts for higher penetration of vaccines, it could prevent the renewed outbreak and ensure the economy safely reopen. 95.5% of the US has seen 1-dose penetration >40%... To better illustrate the actual footprint of the US vaccination effort, we have a time series showing the percent of the US with at least 35%/40%/45% of its residents fully vaccinated, displayed as the orange line on the chart. Currently, 88.3% of US states have seen 35% of their residents fully vaccinated. However, when looking at the percentage of the US with at least 40% of its residents fully vaccinated, this figure is 65.0%. And only 44.5% of US (by state population) have seen 45% of its residents fully vaccinated. - While 95.5% of US states have seen vaccine penetration >40%, 78.7% of them have seen 1 dose penetration >45% and 58.8% of them have seen 1 dose penetration > 50%.- 88.3% of the US has at least 35% of its residents fully vaccinated, However, only 65.0% of US has fully vaccinated >40% and 44.5% of US has fully vaccinated >45%.   This is the state by state data below, showing information for individuals with one dose and two doses. The ratio of vaccinations/ daily confirmed cases is generally trending higher (red line is 7D moving avg), but this is largely due to the decline in daily cases. - the 7D moving average is about ~80 for the past few days - this means 70 vaccines dosed for every 1 confirmed case In total, over 300 million vaccine doses have been administered across the country. Specifically, 173 million Americans (52% of US population) have received at least 1 dose of the vaccine. And 144 million Americans (43% of US population) are fully vaccinated. POINT 3: Tracking restrictions lifting and subsequent effects in individual states Point #3 focuses primarily on tracking the lifting of restrictions, as states have eased the majority of mandates. Keep in mind, easing/lifting restrictions are contingent upon state of emergency ordinances being renewed. - States in groups 1 and 2 represent states that let their emergency ordinances expire, or that never had one in the first place - Note: IL and HI are not listed. This is because restrictions lifting is determined at the county / island level, and no statewide policy will be established to lift restrictions until a full reopening So there is a spectrum of approaches. Our team is listing 3 tiers of states and these are shown below. - states that eased all restrictions in 2020: AK, OK, MO, FL, TN - states that have eased all restrictions in 2021 to now: ND, SD, NE, ID, IA, MT, MS, AZ, SC, WY, TX, GA, AR, KS, WI, IN, AL, UT, NH - states that are still easing restrictions in 2021: OR, ME, WV, WA, MN, MA, NC, KY, LA, CA, DE, PA, NM, OH, CO, NJ, VT, MD, NV, NY, CT, VA, MI, RI, DC GROUP 1: States that lifted restrictions in 2020... The daily case trends in these states are impressive and it is difficult to say that lifting restrictions has actually caused a new wave of cases because the case trends in these states look like other states. GROUP 2: States that have lifted restrictions in 2021 to now... Similar to the list of states above, the daily case trends in these states are impressive and it seems that lifting restrictions hasn’t caused an increase in cases. GROUP 3: States that are still easing restrictions in 2021... These states have begun to lift restrictions, but have yet to ease all restrictions. The date of each state’s most recent restrictions lifting is indicated on each chart. The case trends in these states have been mostly positive. - Easing restrictions appears to have contributed to an increase in cases in several of these states, most drastically in OR, ME, WA, and MN

UK cases rising, but USA no post-Memorial Day surge. TACTICAL: 'quad witching' 6/18, 5 of 5 recent, equities "chop" and we terminate IWM Tactical call.

Click HERE to access the FSInsight COVID-19 Daily Chartbook. We are shifting to a 4-day a week publication schedule: MondayTuesdayWednesdaySKIP THURSDAYFriday ... UK cases still ramping higher... hmmm.... By contrast, cases in the UK continue to ramp up and now higher than they were last week, when we first flagged this. The surge is being attributed to the spread of the Delta variant (Indian) and this is entirely possible. - cases are now 3.5X higher than they were in May 2021- that is a big surge UK has larger share of vaccines not used in the USA The UK is using 4 approved vaccines, Pfizer, AstraZeneca, Modern and J&J and the share of those is not entirely clear, from what I can gather. But this chart below shows that the UK has a high share of the Oxford vaccine. This is not as effective as the mRNA vaccines in preventing COVID-19. - so it's too early for us to say vaccines are not working - and that USA should follow the UK No sign of a post-Memorial Day surge... expecting sub-10,000 for the entire week There are zero signs that US COVID-19 cases are ticking up. Daily cases are 4,733 on Sunday, but Sunday's are a bit thrown off as fewer states report weekend cases (Monday sees a jump). But we expect daily cases to fall below 10,000 for most of the individual days this week. And that is a good thing.   ... US vaccinations are stabilizing at 1.2 million per day, or ~8.5 million per weekOn Sunday, there were a total of 1,200,849 doses administered, up 9.3% from 7D ago. This is a pretty solid pace and should lead to about 35 million Americans monthly getting vaccinated, or 11% per month.   - that is a good pace Breakthrough cases still happen... RoyalCaribbeancruise as an example that COVID-19 still lurks out there Being fully vaccinated is still not going to prevent breakthrough cases (vaccinated people catching COVID-19) but vaccines do reduce the severity of the infection. The latest example is the Royal Caribbean Celebrity Millennium where two fully vaccinated passengers tested positive for COVID-19. The full facts are not clear: - were vaccination authentic or honor system? - what vaccines use? J&J, AstraZeneca, Sino and Sputnik all have lower effectiveness So, there are some unknowns and a reminder that COVID-19 exists. Even at 10,000 US cases per day, that is a pace of 3.65 million Americans catching it annually. A really high pace. /story/two-vaccinated-royal-caribbean-cruise-passengers-test-positive-for-covid-19-11623442162 And another example is the 22 cases linked to the India Delta variant in a Calgary hospital. There were 10 cases at that were from residents who were fully vaccinated. The article is somewhat confusing, but it seems like the Calgary outbreak's origin itself is within the hospital. So this variant is not causing an explosion throughout Calgary. Source: /canada/alberta/article-covid-19-outbreak-at-calgary-hospital-linked-to-delta-variant-grows-to/ STRATEGY: June 18th is 'quad witching' and 5 of the precedent quad witchings saw equity markets chop, sometimes big This coming Friday June 18th is 'quad witching' and in the past is viewed as creating short-term market turmoil. It has certainly been true recently: - quad witching is the expiry of 4 types of contracts - single stock options, single stock futures, index options, index futures - and 5 of the last 5 'quad witchings' saw significant chop in equities (see below) The reason for this chop is several, but it has to do with dealer and investor positioning. Take a look at the March 'quad witching' which was March 19th, 2021. This is a recent event, and you can see the gyrations for equity markets around that event. And it was a brief rise and then sell-off for that event. - The selling started 4 days before the 'quad witching' expiry - Monday/Tuesday, this week, is the analogous June 18th expiry Thus, we believe equity markets could see some chop this week. The vast majority of investors should not be taking any action. But this could impact the timing of purchases and sales. - given 'quad witching' we would prefer to be trimming positions early in the week - and do our equity buying towards the middle of next week In other words, we are expecting chop. However, the future is uncertain. We could be totally wrong. However, recall, we wrote a similar analysis of quad witching ahead of the March expiry. And indeed, the March 19th 'quad witching' created some chop. ... impact of 'quad witching' growing because options activity nearly doubled since start of 2020, vs +22% for equity volumesOne reason options expiries create greater impact, is options activity is soaring relative to cash volumes. Take a look at the simple volume of call purchases versus S&P 500 index volumes: - call volumes steadily rising and exploded in past 18 months, +92% - S&P 500 index volumes are LOWER today than they were in 2002 Yup, stock volumes have declined, but are up 22% in past 18 months. Multiple reasons might explain this. Options have seen growing popularity from both institutional and retail investors. Wall Street also likes options and futures, as these tend to be far more profitable for investment banks and dealers, compared to cash equities. Even if options are cash settled, there is impact on the underlying instruments (single stocks or indices), because of the related hedging/positioning involved in the original position. In other words, if options volumes soar, these will have an impact on stocks/indices. And to the extent options volumes surge, the expiry would have a greater proportionate impact. And meme investing is further adding to its popularity. Dan Nathan, of Risk Reversal, sent me this WSJ article below on the surge in options volumes (thanks Dan). Among the highlights: - AMC call volumes exceeded the call volumes of SPY, TSLA and QQQ combined- wow   Source: /articles/amc-other-meme-stocks-turn-options-market-upside-down-11623144602? st=3sj55shqkaysn4p&reflink=article_email_share ... next week is a big economic data week, so this further adds to potential chopWe believe the US economic recovery is gaining strength, so our central case remains the incoming data will surprise to the upside. But as you know, markets can overreact to economic surprise, both positive and negative. Thus, big data weeks = potential chop Among some of the key data points: - retail sales 6/15 - capacity utilization 6/15 (key for creating reflationary conditions and thus, economic cycle) - housing starts 6/16 key given the surge in home prices, etc - FOMC 6/16 Wow. Ok. So, there is clearly some important incoming data this week. Source: Bloomberg STRATEGY: Ending IWM Tactical Buy... but see Small-caps ready to breakoutGiven the upcoming 'quad witching' we are closing our IWM tactical buy call: - we initiated IWM 'tactical' buy on 5/12 at $213.20- we close IWM 'tactical' buy on 6/13 at $231.70 We are not changing our positive view on Epicenter, nor small-caps, but the tactical call is ending, particularly due to the upcoming 'quad witching.' Small-caps, in our view, are a good proxy for Epicenter stocks, because the Russell 2000 has much greater exposure to Cyclicals vs S&P 500. Zooming out, one can see that IWM is at the upper end of a range. And we see a bullish resolution coming: - IWM has range traded since March 2021 - DeMark count for IWM remains positive (combo v1b) - IWM is in a confirmed uptrend ADDENDUM: We are attaching the stock lists for our 3 portfolios:We get several requests to give the updated list for our stock portfolios.  We are including the links here: - Granny Shots  -->       core stocks, based on 6 thematic/tactical portfolios- Trifecta epicenter  --> based on the convergence of Quant (tireless Ken), Rauscher (Global strategy), Technicals- Violence in USA --> companies that are involved in some aspect of home or personal security. We are not recommending these stocks, but rather, bringing these stocks to your attention. Granny Shots:Full stock list here --> Click here Trifecta Epicenter (*):Full stock list here --> Click here Power Epicenter Trifecta 35 (*): Full stock list here --> Click here Violence in USA:Full stock list here --> Click here(*) Please note that the stocks rated OW on this list meet the requirements of our investment theme as of the publication date. We do not monitor this list day by day. A stock taken off this list means it no longer meets our investment criteria, but not necessarily that it is neutral rated or should be sold. Please consult your financial advisor to discuss your risk tolerance and other factors that characterize your unique investment profile. POINT 1: Daily COVID-19 cases 4,733, -1,516 (ex-FL) vs 7D ago... 7D delta has remained negative since last Monday's spike..._____________________________ Current Trends -- COVID-19 cases:- Daily cases 4,733 vs 8,822 7D ago, down -4,089- Daily cases ex-FL 4,733 vs 6,249 7D ago, down -1,516- 7D positivity rate 1.9% vs 2.0% 7D ago- Hospitalized patients 15,507 down -12.6% vs 7D ago - Daily deaths 360, up 5.0% vs 7D ago_____________________________ - As we noted previously, Florida stopped publishing daily COVID stats updates on 6/4 and we switched to use CDC surveillance data as the substitute. However, as CDC surveillance data is subject to a one to two-day lag, we added a US ex-FL in our daily cases and 7D delta sections in order to demonstrate a more comparable COVID development.- The latest COVID-19 daily cases came in at 4,733, down -1,516 (ex-FL) vs 7D ago. The decline in daily cases (measured by 7D delta in daily cases) has been slowed over the past few days, but the good news is that we have not seen the cases surge following the Memorial Day holiday. We believe this is the result of high penetration of vaccines. And with continued efforts for a higher penetration of vaccines, the steady decline in daily cases is likely to persist, similar to the COVID path in Israel.   7D delta in daily cases has remained negative since the spike due to Memorial Day data distortion... The 7D delta in daily cases has turned negative following last Monday's spike. Although the decline in daily cases seems to slow down, the daily cases remain on a downtrend and we haven't seen the case figure surge yet (even following the Memorial Day holiday). As the data suggests, we expect the steady decline in daily cases to persist. Current hospitalization, daily deaths and positivity rate are at all time low... Below we show the aggregate patients who are currently hospitalized due to COVID. After a mini-surge in March, the number of patients currently hospitalized rolls over again. Positivity rate is also following the similar pattern. Currently, all three metrics - current hospitalization, daily deaths and positivity rate - are at their all time lows since the start of the pandemic. POINT 2: VACCINE: Vaccination pace seems to speed up again... Daily # of doses administered up 24% vs. last week _____________________________ Current Trends -- Vaccinations: - avg 1.1 million this past week vs 0.9 million last week - overall, 43.1% fully vaccinated, 52.0% 1-dose+ received _____________________________ Vaccination frontier update --> all states now near or above 70% combined penetration (vaccines + infections) Below we sorted the states by the combined penetration (vaccinations + infections). As we commented in the past, the key figure is the combined value >60%, which is presumably near herd immunity. We have overlaid our case progress with that of Israel several times to demonstrate what should happen to cases once immunity reaches a certain critical level in the population. That is, the combined value of infections + vaccinations as % population > 60%. The persistent and rapid decline in cases suggest that the US is following a similar path to Israel (see our prior notes) while nations with less penetration continue to struggle more. - Currently, all states are near or above 70% combined penetration - RI, SD, MA, ND, CT, NJ, DE, NY, IL, UT, MN, NM, NE, AZ, PA are now above 90% combined penetration (vaccines + infections) - So gradually, the US is getting to that threshold of presumable herd immunity. So long as a vaccine resistant variant doesn’t spread widely, the continued retreat of cases should continue. Below is a diffusion chart that shows the % of US states (based on state population) that have reached the combined penetration >60%/70%/80%/90%. As you can see, all states have reached 60% and 70% combined vaccination + infection. 80.5% of US states (based on state population) have seen combined infection & vaccination >80% and 52.3% of US states have seen combined infection & vaccination >90%.   The vaccination pace seems to have speed up again. On Sunday, there were a total of 1,200,849 doses administered, up 9.3% from 7D ago. After the daily number of doses administered fell below 1 million, the vaccination trend (dashed line: 7D average) seems to be reversing higher. This increase in vaccination speed coincides with the recent efforts by the Biden administration to get more people vaccinated by the fourth of July. With continued efforts for a higher penetration of vaccines, it could prevent the renewed outbreak and ensure the economy to safely reopen. 95.5% of the US has seen 1-dose penetration >40%... To better illustrate the actual footprint of the US vaccination effort, we have a time series showing the percent of the US with at least 35%/40%/45% of its residents fully vaccinated, displayed as the orange line on the chart. Currently, 87.2% of US states have seen 35% of their residents fully vaccinated. However, when looking at the percentage of the US with at least 40% of its residents fully vaccinated, this figure is 65.0%. And only 44.5% of US (by state population) have seen 45% of its residents fully vaccinated. - While 95.5% of US states have seen vaccine penetration >40%, 78.7% of them have seen 1 dose penetration >45% and 58.8% of them have seen 1 dose penetration > 50%.- 87.2% of the US has at least 35% of its residents fully vaccinated, However, only 65.0% of US has fully vaccinated >40% and 44.5% of US has fully vaccinated >45%. This is the state by state data below, showing information for individuals with one dose and two doses. The ratio of vaccinations/ daily confirmed cases is generally trending higher (red line is 7D moving avg), but this is largely due to the decline in daily cases. - the 7D moving average is about ~80 for the past few days - this means 70 vaccines dosed for every 1 confirmed case In total, over 300 million vaccine doses have been administered across the country. Specifically, 172 million Americans (52% of US population) have received at least 1 dose of the vaccine. And 143 million Americans (43% of US population) are fully vaccinated. POINT 3: Tracking restrictions lifting and subsequent effects in individual states Point #3 focuses primarily on tracking the lifting of restrictions, as states have eased the majority of mandates. Keep in mind, easing/lifting restrictions are contingent upon state of emergency ordinances being renewed. - States in groups 1 and 2 represent states that let their emergency ordinances expire, or that never had one in the first place - Note: IL and HI are not listed. This is because restrictions lifting is determined at the county / island level, and no statewide policy will be established to lift restrictions until a full reopening So there is a spectrum of approaches. Our team is listing 3 tiers of states and these are shown below. - states that eased all restrictions in 2020: AK, OK, MO, FL, TN - states that have eased all restrictions in 2021 to now: ND, SD, NE, ID, IA, MT, MS, AZ, SC, WY, TX, GA, AR, KS, WI, IN, AL, UT, NH - states that are still easing restrictions in 2021: OR, ME, WV, WA, MN, MA, NC, KY, LA, CA, DE, PA, NM, OH, CO, NJ, VT, MD, NV, NY, CT, VA, MI, RI, DC GROUP 1: States that lifted restrictions in 2020... The daily case trends in these states are impressive and it is difficult to say that lifting restrictions has actually caused a new wave of cases because the case trends in these states look like other states. GROUP 2: States that have lifted restrictions in 2021 to now... Similar to the list of states above, the daily case trends in these states are impressive and it seems that lifting restrictions hasn’t caused an increase in cases. GROUP 3: States that are still easing restrictions in 2021... These states have begun to lift restrictions, but have yet to ease all restrictions. The date of each state’s most recent restrictions lifting is indicated on each chart. The case trends in these states have been mostly positive. - Easing restrictions appears to have contributed to an increase in cases in several of these states, most drastically in OR, ME, WA, and MN

Course correcting Epicenter --> downgrade Financials to N from OW, upgrade FANG from UW to OW

Click HERE to access the FSInsight COVID-19 Daily Chartbook. We are shifting to a 4-day a week publication schedule: MondayTuesdayWednesdaySKIP THURSDAYFriday STRATEGY: Course correcting Epicenter --> downgrade Financials to N from OW, upgrade FANG from UW to OW​... UK cases bear some watching The news on COVID-19 remains mostly positive and in part, due to the effectiveness of vaccines.  And so far, even the more transmissible variants can be stopped/slowed by vaccines.  And thus, watching case trends in developed nations, which have far higher vaccine penetration, is a place to watch for trouble:- UK case trends might be curling up- the India variant is dominant in UK, and could explain this- it's not necessarily a cause for alarm, for us, for two reasons- UK did recently lift restrictions, so some rise is expected- Israel has seen cases dwindle to nearly zero, so this gives us comfortWe know many pundits will say US is only a few weeks behind UK, so we should panic.  But this is what many experts said earlier this year, and the UK/Europe had a surge, but no such surge appeared in the US.  So we are not yet alarmed.  But we are watching. Source:  S&P 500 achieves new all-time high both for intraday and closing = big deal = S&P 500 4,400 by mid-2021 intactThe S&P 500 managed to breakout to a new all-time high (ATH) Thursday, both intraday (4,249,74) and closing (4,239.18).  This is indeed a key day.  The core CPI came in strong at 0.7%, way above consensus of 0.5%, and instead of seeing risk assets fall, we saw a strong equity market rally.  As you know, we prefer to see what the market tells us, and it is conveying a positive signal:- the US 10-yr fell 6bp and now 1.432% --> opposite given CPI- Nasdaq 100 led gains Thursday +1.0% --> opposite given CPIBy the way, this breakout to new highs was presaged by the upside breakout in the advance/decline line last week (see our prior notes).  The strong rise in the adv/dec line, in our view, is a sign of the equity market getting stronger, and in turn, presaged this upside breakout.  So our base case of a surge in S&P 500 to 4,400 before mid-year 2021 remains intact. ... We believe the leadership to S&P 500 4,400 is now coming from Epicenter + FANGPost-close, the Senate announce bipartisan infrastructure package with NO tax increases, corporate or personal.  While the future is uncertain, this certainly seems to be an equity market friendly outcome:- infrastructure spend- no corporate or income tax increases --> benefits Technology/FANG mostThis has yet to be approved and our Tom Block, policy strategist, is really going to have a much more informed view.  But to me, I will be watching the bond market reaction to this.  If the 10-yr rates don't rise (given no tax increase) and USD does not weaken, this tells me financial markets already priced in an infrastructure package with no tax increases. And as an aside, given many households had large unrealized capital gains Technology/FANG/hypergrowth, the no action on taxes is positive for Technology on the margin, in my opinion. Source: /2021/06/10/biden-infrastructure-plan-bipartisan-senate-group-nears-deal. htmlSTRATEGY: Downgrading Financials to Neutral from Overweight and upgrading FANG from Underweight to OverweightWe are rethinking which sectors will lead the S&P 500 to 4,400 by mid-year 2021 (really next 4 weeks).  The primary reason for this shift in view is that interest rates are declining, and to a secondary extent, reflects the fact markets already panicked about inflation. Because of this, we are taking the following Sector changes:- downgrade Financials from Overweight to Neutral- upgrade FANG from Underweight to OverweightThis is a somewhat abrupt change in our view on FANG, since we downgraded FANG in early May.  However, we don't want to be stubborn.  Nor is the future certain. But we see higher probabilities that more of the 200 points for S&P 500 rally to 4,400 are likely to come from Technology/FANG than Financials.  And as such, we think this shift is warranted.... Financials is the sector that most benefits from rising rates, FANG is arguably the most hurtTo understand our rationale for this sector swap, take a look at the matrix below.  We highlight the key macro drivers of 2021:- Post-war fiscal spend (infrastructure) --> benefits Epicenter- Household pent-up demand --> benefits Epicenter- reflationary pressures --> higher rates --> most boost Financials and hurts Tech/FANG (see below)Thus, if the outlook for interest rates has shifted, and rates are flat/down for the remainder of 2021, then this is a direct headwind for Financials. - but this takes away a headwind for FANG/Technology- FANG/Technology are still overcrowded, but technicals now WAY BETTER Interest rates, in my view, are seemingly in a downtrend.  Even with Thursday’s super red hot CPI print, yields fell.   ... Technology outperforms Financials when interest rates start to rolloverAnd if interest rates are rolling over, this is generally a tactical signal to sell Financials vs Technology/FANG.  Take a look at the chart below:- whenever 6M change in interest rates is going down, Technology beats Financials- whenever 6M change in rates is higher, Financials beat Technology --> case for past 6 monthsThus, the rollover in interest rates is emerging as a case for FANG to lead. ... Only half of Financial industry groups look healthy... And within the GICS 4 of Financials, only 4 of the 9 groups look healthy.  The healthy groups:- Investment banks- Insurance- Consumer FinanceSo banks look questionable.  Asset managers look weak.  And thus, the group seems to be seeing narrowing strength. ... Financials DeMark outlook has decisively worsened, after seeing a 'perfect 13' sell signal in MayThe technical picture for Financials is also worsening.  We like to use DeMark system to provide a technical context.  And the key is watching how a sector/group reacts to a '13' combo signal.- Financials (XLF ETF) had a perfected '13' sell signal in late May- Financials previously had two prior '13' sell signals but financials rose, meaning failed signals- Since May, Financials have weakened and now seem in a confirmed downturnThis corresponds with the more decisive downtrend in interest rates.  Thus, the technical picture seems to confirm that the trend in interest rates is flat/lower. ... FANG technical picture is strengthening and suggest reversal of downtrend is confirmedConversely, look at the Demark combo count for FANG (NYFANG Index) and we can see that FANG is showing strength:- a '9' sell signal was generated late May- but instead of weakening, FANG has powered higher- this is similar to the failed buy '9' in Feb, and its failure led to further selling- this time, failed 'sell signal' points to strength aheadThis seems to me that much of the bad news for FANG has been baked in.  Whether tax hits, or regulation, or inflation wallops, etc.  These are not causing FANG to fall.  And thus, we see leadership emerging. BOTTOM LINE: Course correction --> FANG will be key to S&P 500 4,400, moreso than FinancialsBottom line, we remain positive on equities. We are course correcting to recognize FANG is likely more important than Financials.  But we are more constructive on Energy versus FANG.  Thus, we favor Energy as top sector idea. TACTICAL:- IWM set for a tactical 10 day rally, back to $235-$240 possibly- IWM needs a few more days, like 5-10 days ADDENDUM: We are attaching the stock lists for our 3 portfolios:We get several requests to give the updated list for our stock portfolios.  We are including the links here: - Granny Shots  -->       core stocks, based on 6 thematic/tactical portfolios- Trifecta epicenter  --> based on the convergence of Quant (tireless Ken), Rauscher (Global strategy), Technicals- Violence in USA --> companies that are involved in some aspect of home or personal security. We are not recommending these stocks, but rather, bringing these stocks to your attention. Granny Shots:Full stock list here --> Click here Trifecta Epicenter (*):Full stock list here --> Click here Power Epicenter Trifecta 35 (*): Full stock list here --> Click here Violence in USA:Full stock list here --> Click here(*) Please note that the stocks rated OW on this list meet the requirements of our investment theme as of the publication date. We do not monitor this list day by day. A stock taken off this list means it no longer meets our investment criteria, but not necessarily that it is neutral rated or should be sold. Please consult your financial advisor to discuss your risk tolerance and other factors that characterize your unique investment profile. POINT 1: Daily COVID-19 cases 12,387, -3,934 vs 7D ago... Could have a clear view on case trend next week._____________________________Current Trends -- COVID-19 cases: - Daily cases   12,387 vs 16,321 7D ago, down -3,934- 7D positivity rate   2.0% vs 2.0% 7D ago- Hospitalized patients   16,595 down -13.3% vs 7D ago- Daily deaths    360,  down 10.2% vs 7D ago_____________________________- The latest COVID-19 daily cases came in at 12,387, down -3,934 vs 7D ago. Considering the additional 1,500 cases that FL is likely to report (we switched to use CDC cases for FL which is subject to one to two-day lag), the 7D delta in daily cases could reduce to approximately -2,500. The decline in daily cases has been slowed over the past few days, but we have not seen the case to surge following the Memorial Day holiday. The data distortion resulted from the holiday will still last a few more days and we could have a clear view on the case trend next week. 7D delta in daily cases has turned negative after the spike on Monday.... The 7D delta in daily cases has turned negative again following Monday's spike. Although the decline in daily cases seems to slow down, the daily cases remain on a downtrend and we haven't seen the case figure to surge yet. As we noted previously, the data distortion could cause the 7D delta to fluctuate in the next few days, but we still expect the steady decline in daily cases to persist after the data distortion fades out.    Current hospitalization, daily deaths and positivity rate are at all time low... Below we show the aggregate patients who are currently hospitalized due to COVID. After a mini-surge in March, the number of patients currently hospitalized rolls over again. Positivity rate is also following the similar pattern. Currently, all three metrics - current hospitalization, daily deaths and positivity rate - are at their all time lows since the start of the pandemic.     POINT 2: VACCINE: Vaccination progress has stalled - the average daily number of dose administered fell to 1.1 million..._____________________________Current Trends -- Vaccinations: - avg 1.1 million this past week vs 1.0 million last week- overall, 42.4% fully vaccinated, 51.5% 1-dose+ received_____________________________Vaccination frontier update --> all states now near or above 70% combined penetration (vaccines + infections)Below we sorted the states by the combined penetration (vaccinations + infections).  As we commented in the past, the key figure is the combined value >60%, which is presumably near herd immunity. We have overlaid our case progress with that of Israel several times to demonstrate what should happen to cases once immunity reaches a certain critical level in the population.  That is, the combined value of infections + vaccinations as % population > 60%. The persistent and rapid decline in cases suggest that the US is following a similar path to Israel (see our prior notes) while nations with less penetration continue to struggle more. - Currently, all states are near or above 70% combined penetration- RI, SD, MA, ND, CT, NJ, DE, NY, IL, UT, MN, NM, NE, AZ, PA are now above 90% combined penetration (vaccines + infections)- So gradually, the US is getting to that threshold of presumable herd immunity. So long as a vaccine resistant variant doesn’t spread widely, the continued retreat of cases should continue.  Below is a diffusion chart that shows the % of US states (based on state population) that have reached the combined penetration >60%/70%/80%/90%. As you can see, all states have reached 60% and 70% combined vaccination + infection. 78.0% of US states (based on state population) have seen combined infection & vaccination >80% and 52.3% of US states have seen combined infection & vaccination >90%.     There were a total of 927,357 doses administered on Thursday, up 16% from 7D ago. The increase in doses administered could be the result of under-reporting in the Memorial Day week. But, if you look at the chart below closely, the vaccination trend (dashed line: 7D average) seems to be reversing higher. This is good news - with continued efforts for a higher penetration of vaccines, it could prevent the renewed outbreak and ensure the economy to safely reopen.  93.4% of the US has seen 1-dose penetration >40%... To better illustrate the actual footprint of the US vaccination effort, we have a time series showing the percent of the US with at least 35%/40%/45% of its residents fully vaccinated, displayed as the orange line on the chart. Currently, 87.2% of US states have seen 35% of their residents fully vaccinated.   However, when looking at the percentage of the US with at least 40% of its residents fully vaccinated, this figure is 62.7%. And only 44.5% of US (by state population) have seen 45% of its residents fully vaccinated.- While 93.4% of US states have seen vaccine penetration >40%, 78.7% of them have seen 1 dose penetration >45% and 55.7% of them have seen 1 dose penetration > 50%.- 87.2% of the US has at least 35% of its residents fully vaccinated, However, only 62.7% of US has fully vaccinated >40% and 44.5% of US has fully vaccinated >45%. This is the state by state data below, showing information for individuals with one dose and two doses. The ratio of vaccinations/ daily confirmed cases is generally trending higher (red line is 7D moving avg), but this is largely due to the decline in daily cases.- the 7D moving average is about ~70 for the past few days- this means 70 vaccines dosed for every 1 confirmed case In total, over 300 million vaccine doses have been administered across the country. Specifically, 171 million Americans (52% of US population) have received at least 1 dose of the vaccine. And 141 million Americans (42% of US population) are fully vaccinated.   POINT 3: Tracking restrictions lifting and subsequent effects in individual statesPoint #3 focuses primarily on tracking the lifting of restrictions, as states have eased the majority of mandates.  Keep in mind, easing/lifting restrictions are contingent upon state of emergency ordinances being renewed. - States in groups 1 and 2 represent states that let their emergency ordinances expire, or that never had one in the first place- Note: IL and HI are not listed. This is because restrictions lifting is determined at the county / island level, and no statewide policy will be established to lift restrictions until a full reopeningSo there is a spectrum of approaches.  Our team is listing 3 tiers of states and these are shown below.  - states that eased all restrictions in 2020: AK, OK, MO, FL, TN- states that have eased all restrictions in 2021 to now: ND, SD, NE, ID, IA, MT, MS, AZ, SC, WY, TX, GA, AR, KS, WI, IN, AL, UT, NH- states that are still easing restrictions in 2021: OR, ME, WV, WA, MN, MA, NC, KY, LA, CA, DE, PA, NM, OH, CO, NJ, VT, MD, NV, NY, CT, VA, MI, RI, DC GROUP 1:  States that lifted restrictions in 2020... The daily case trends in these states are impressive and it is difficult to say that lifting restrictions has actually caused a new wave of cases because the case trends in these states look like other states.    GROUP 2: States that have lifted restrictions in 2021 to now... Similar to the list of states above, the daily case trends in these states are impressive and it seems that lifting restrictions hasn’t caused an increase in cases.   GROUP 3: States that are still easing restrictions in 2021... These states have begun to lift restrictions, but have yet to ease all restrictions.  The date of each state’s most recent restrictions lifting is indicated on each chart.  The case trends in these states have been mostly positive.- Easing restrictions appears to have contributed to an increase in cases in several of these states, most drastically in OR, ME, WA, and MN  

Still legs to Energy FOMO --> Oil >$70 + XOM best performing Mega-cap YTD

Click HERE to access the FSInsight COVID-19 Daily Chartbook. We are shifting to a 4-day a week publication schedule: MondayTuesdayWednesdaySKIP THURSDAYFriday STRATEGY: Still legs to Energy FOMO --> Oil >$70 + XOM could break to upsideCOVID-19 trends in the US continue to improve.  Daily cases have fallen so much, the US is likely on track to see sub-10,000 cases by next week.  Prior to vaccinations, we would normally brace for a surge in cases post holiday, but this is not the case for this past Memorial Day.  Daily cases have been falling steadily (there is some distortion due to reporting lags a week ago).- Only 1 state reported >1,000 cases Tuesday, Texas- Many more states also see higher daily cases vs 7D ago, but this is primarily due to the under-reporting following the Memorial Day holiday- In fact, 18 states (WV, OK, MD, IA, WY, ME, CT, NM, MS, ND, NE, HI, RI, SD, DC, DE, VT and NH) reported less than 100 new cases Tuesday And while US vaccinations rates have slowed, to an extent, the US is still administering 1.1 million doses daily, or a pace of 35 million Americans per month. So, penetration is gradually increasing in the US.  And higher penetration confers greater community benefits (akin to herd immunity).- 35 million per month is 11% increase in penetration monthly- 51% of Americans have received at least 1 dose- 42% have received both/full dosesSo the US is still increasing the penetration of vaccinations. STRATEGY: Energy outperformance still has legsThe Energy sector remains our favorite sector, and we believe Energy stocks trade at an unjustified discount to oil, both spot and futures.  And oil fundamentals are unusually favorable Tuesday, given the tightening of supply and demand dynamics (we discussed multiple times over past 6 months).  One of our clients, ES in SF, also flagged that Exxon ($XOM) looked ready for an upside breakout.  Indeed, ES is correct (thanks Eric) and $XOM does look ready for an upside breakout.  But the significance of this is important to the overall favorable stance on Energy stocks.  So I wanted to spend Tuesday talking about this.- WTI Oil has cleared the $67.98 resistance decisively and now above $70, with $80 now feasible- Since YE2019, WTI is +9% while Energy stocks $XLE, $OIH are down -7% and -10%, respectively- $XOM is the largest Energy stock, 25% of sector market cap, thus it is key- $XOM is the best performing large-cap stock (among top 30 stocks) in S&P 500 YTD, +50%So you see the FOMO?  Investors cannot ignore $XOM any longer. ... WTI breaking to the upsideThe breakout in crude WTI is evident looking below and we see $80 as feasible ...$XLE and $OIH still need to rise +20% just to catch up to crudeThe performance gap between WTI and $XLE and $OIH is closing, but still substantial.  Given WTI levels, $XLE and $OIH have >20% upside still. And as you are aware, we see even greater upside for $OIH than +20%, maybe +100%. ...$XOM is the key stock, thanks ES of SFAnd Exxon is the key stock.  It is 25% of the weight in the S&P 500 Energy sector.  And at $264 billion, is not a small stock.   ...$XOM is a top 30 stock in the S&P 500, and the best performing mega-cap stock YTD. $XOM is not a puny market cap.  At $264 billion, $XOM is larger than many popular stocks:- $XOM market cap greater than Comcast, Oracle, Adobe, Verizon, Coca-Cola- $XOM is the best performing Mega-cap with +51% gains YTDSo large cap managers are increasingly facing FOMO (fear of missing out) if they don't overweight Energy.  I have not heard a single fund manager tell me they are interested in buying $XOM.  Yet, as shown below, $XOM is a monster YTD. ...$XOM looks like little resistance until $80We see $XOM shares as having little resistance until $80, versus $56 currently.  So $XOM has plenty of upside.  In fact, given the symmetry below, we think the 2018 highs of $80 are achievable.  This would be consistent with $80 WTI oil.- so $80 WTI = $80 XOM Looking at the last 40 years, $XOM might even reach $100.  The chart below is monthly and you can see that in 2020, $XOM became the most oversold (monthly RSI) in the 40-years shown.  - if that is not a sign of capitulation, I don't know another one- with WTI now nearing 2018 levels, $XOM could exceed its $80 2018 highs- capex discipline and shareholder return metrics were far stronger TuesdayThus, $XOM has substantial upside from here. BOTTOM LINE: Investors need to HODL Energy as FOMO set to kick inBottom line, we urge investors to HODL Energy stocks.  We see FOMO also kicking in given the stupendous gains of $XOM YTD.  And $XOM looks to be able to surge further to $80, maybe $100 per share. TACTICAL:- IWM set for a tactical 10 day rally, back to $235-$240 possibly- IWM needs a few more days, like 5-10 daysOVERWEIGHT Positive Surprise- Top 3 sectors still Energy, Materials and Financials --> $XLE $XLB $XLFUNDERWEIGHT Falling on a Slope of Hope- Cautious on Technology and recommend using strength to reduce --> $XLK $QQQ  ADDENDUM: We are attaching the stock lists for our 3 portfolios:We get several requests to give the updated list for our stock portfolios.  We are including the links here: - Granny Shots  -->       core stocks, based on 6 thematic/tactical portfolios- Trifecta epicenter  --> based on the convergence of Quant (tireless Ken), Rauscher (Global strategy), Technicals- Violence in USA --> companies that are involved in some aspect of home or personal security. We are not recommending these stocks, but rather, bringing these stocks to your attention. Granny Shots:Full stock list here --> Click here Trifecta Epicenter (*):Full stock list here --> Click here Power Epicenter Trifecta 35 (*): Full stock list here --> Click here Violence in USA:Full stock list here --> Click here(*) Please note that the stocks rated OW on this list meet the requirements of our investment theme as of the publication date. We do not monitor this list day by day. A stock taken off this list means it no longer meets our investment criteria, but not necessarily that it is neutral rated or should be sold. Please consult your financial advisor to discuss your risk tolerance and other factors that characterize your unique investment profile. POINT 1: Daily COVID-19 cases 11,245, -4,974 vs 7D ago...7D delta turned negative following Monday's spike..._____________________________Current Trends -- COVID-19 cases: - Daily cases   11,245 vs 16,219 7D ago, down 4,974- 7D positivity rate   1.9% vs 2.0% 7D ago- Hospitalized patients   17,431 down -11.3% vs 7D ago- Daily deaths    427,  up 3.2% vs 7D ago_____________________________- The latest COVID-19 daily cases came in at 11,245, down 4,974 vs 7D ago. As we expected, the 7D delta in daily cases has turned negative following Monday's spike. It will take a few more days to clear out the data distortion, but we don't believe the downtrend in daily cases will be reversed. In fact, as you can see from the chart below, the daily cases have been steadily falling over the past 4 weeks. And with the continued efforts for a higher penetration of vaccines, the steady decline in daily cases is likely to persist. 7D delta in daily cases turned negative after Monday's spike.... The 7D delta in daily cases has turned negative again following Monday's spike. As we noted Monday, the sudden jump Monday did not really warn of a trend reversal in daily cases, but purely was a result of the under-reporting 7 days ago on Memorial Day. In the coming days, the 7D delta could fluctuate slightly, but we still expect the steady decline in daily cases to persist.    Current hospitalization, daily deaths and positivity rate are at all time low... Below we show the aggregate patients who are currently hospitalized due to COVID. After a mini-surge in March, the number of patients currently hospitalized rolls over again. Positivity rate is also following the similar pattern. Currently, all three metrics - current hospitalization, daily deaths and positivity rate - are at their all time lows since the start of the pandemic.     POINT 2: VACCINE: Vaccination progress has stalled - the average daily number of dose administered fell to 1.1 million..._____________________________Current Trends -- Vaccinations: - avg 1.1 million this past week vs 1.2 million last week- overall, 42.0% fully vaccinated, 51.3% 1-dose+ received_____________________________Vaccination frontier update --> all states now near or above 70% combined penetration (vaccines + infections)Below we sorted the states by the combined penetration (vaccinations + infections).  As we commented in the past, the key figure is the combined value >60%, which is presumably near herd immunity. We have overlaid our case progress with that of Israel several times to demonstrate what should happen to cases once immunity reaches a certain critical level in the population.  That is, the combined value of infections + vaccinations as % population > 60%. The persistent and rapid decline in cases suggest that the US is following a similar path to Israel (see our prior notes) while nations with less penetration continue to struggle more. - Currently, all states are near or above 70% combined penetration- RI, SD, MA, ND, CT, NJ, DE, NY, IL, UT, MN, NM, NE, AZ, PA are now above 90% combined penetration (vaccines + infections)- So gradually, the US is getting to that threshold of presumable herd immunity. So long as a vaccine resistant variant doesn’t spread widely, the continued retreat of cases should continue.  Below is a diffusion chart that shows the % of US states (based on state population) that have reached the combined penetration >60%/70%/80%/90%. As you can see, all states have reached 60% and 70% combined vaccination + infection. 78.0% of US states (based on state population) have seen combined infection & vaccination >80% and 51.9% of US states have seen combined infection & vaccination >90%.     There were a total of 1,064,085 doses administered on Tuesday. As we noted last week, the vaccination progress has stalled - the average daily number of doses administered fell to approximately 1.1 million dose. And the vaccination hesitancy following the pause of JNJ vaccine could be one of the biggest factors. Also, according to the data from Kaiser Family Foundation (KFF), Hispanic and Black communities have relatively lower rates of vaccination. Therefore, if the US wants to boost vaccine penetration further, Hispanic and Black communities should be the focus.  93.4% of the US has seen 1-dose penetration >40%... To better illustrate the actual footprint of the US vaccination effort, we have a time series showing the percent of the US with at least 35%/40%/45% of its residents fully vaccinated, displayed as the orange line on the chart. Currently, 86.6% of US states have seen 35% of their residents fully vaccinated.   However, when looking at the percentage of the US with at least 40% of its residents fully vaccinated, this figure is 62.4%. And only 43.3% of US (by state population) have seen 45% of its residents fully vaccinated.- While 93.4% of US states have seen vaccine penetration >40%, 78.7% of them have seen 1 dose penetration >45% and 54.8% of them have seen 1 dose penetration > 50%.- 86.6% of the US has at least 35% of its residents fully vaccinated, However, only 62.4% of US has fully vaccinated >40% and 43.3% of US has fully vaccinated >45%. This is the state by state data below, showing information for individuals with one dose and two doses. The ratio of vaccinations/ daily confirmed cases is generally trending higher (red line is 7D moving avg), but this is largely due to the decline in daily cases.- the 7D moving average is about ~70 for the past few days- this means 70 vaccines dosed for every 1 confirmed case In total, over 300 million vaccine doses have been administered across the country. Specifically, 170 million Americans (51% of US population) have received at least 1 dose of the vaccine. And 139 million Americans (42% of US population) are fully vaccinated.   POINT 3: Tracking restrictions lifting and subsequent effects in individual statesPoint #3 focuses primarily on tracking the lifting of restrictions, as states have eased the majority of mandates.  Keep in mind, easing/lifting restrictions are contingent upon state of emergency ordinances being renewed. - States in groups 1 and 2 represent states that let their emergency ordinances expire, or that never had one in the first place- Note: IL and HI are not listed. This is because restrictions lifting is determined at the county / island level, and no statewide policy will be established to lift restrictions until a full reopeningSo there is a spectrum of approaches.  Our team is listing 3 tiers of states and these are shown below.  - states that eased all restrictions in 2020: AK, OK, MO, FL, TN- states that have eased all restrictions in 2021 to now: ND, SD, NE, ID, IA, MT, MS, AZ, SC, WY, TX, GA, AR, KS, WI, IN, AL, UT, NH- states that are still easing restrictions in 2021: OR, ME, WV, WA, MN, MA, NC, KY, LA, CA, DE, PA, NM, OH, CO, NJ, VT, MD, NV, NY, CT, VA, MI, RI, DC GROUP 1:  States that lifted restrictions in 2020... The daily case trends in these states are impressive and it is difficult to say that lifting restrictions has actually caused a new wave of cases because the case trends in these states look like other states.    GROUP 2: States that have lifted restrictions in 2021 to now... Similar to the list of states above, the daily case trends in these states are impressive and it seems that lifting restrictions hasn’t caused an increase in cases.   GROUP 3: States that are still easing restrictions in 2021... These states have begun to lift restrictions, but have yet to ease all restrictions.  The date of each state’s most recent restrictions lifting is indicated on each chart.  The case trends in these states have been mostly positive.- Easing restrictions appears to have contributed to an increase in cases in several of these states, most drastically in OR, ME, WA, and MN  

Equity markets "de-equitize" faster in 2021 = upside + $3.2T dry powder

Click HERE to access the FSInsight COVID-19 Daily Chartbook. We are shifting to a 4-day a week publication schedule: MondayTuesdayWednesdaySKIP THURSDAYFriday STRATEGY: Equity markets de-equitize faster in 2021 = upside + $3.2T dry powderThere are central views about markets and among the most accepted of these is that underlying inflationary conditions are going to surprise markets and the Fed is already behind the ball.  I don't personally have a view on this but at the extremes, inflation is indeed a headwind for markets.  That is, too much inflation is bad for equities just as much as too little inflation is bad for stocks. But the best contemporaneous gauge is looking at the absolute level of the US 10-yr.  Sure, other measures are useful such as inflation breakevens, etc., but the US 10-yr is going to reflect the market's fears about inflation.  Think about it:or- if deflation was a risk, rates would be plunging- if inflation was a risk, rates would be risingLooking at the recent trend in rates, it seems like interest rates are actually trending lower.  Take a look below.  - the 10-yr was nearly 1.8% in early March- it has made lower highs since- it is currently 1.5687%There are many ways to interpret this, but to me, one takeaway is the bond market is saying that inflationary conditions are less now than they were in March.  I don't think reported CPI is lower, but instead, this suggests to me bond markets are seeing reduced inflationary risks -- in other words, the bond market panicked about inflation in March and now the level of panic is subsiding. To me, this is positive for equities.  After all, if interest rates are stabilizing, this reduces the tail risk for equity markets.  It was in March when many pundits were talking about 10-yr soaring to 4%-plus within 12 months and how this would crush equity P/E.  But now, the 10-yr has seen rates drift lower, and this is positive, from my vantage point.  In short, we still think equities are about to break to the upside and we see S&P 500 reaching 4,400 by mid-year.  ... Russell 2000 breaks to the upside Monday -- tactical call still intactIt was also encouraging to see small-caps break to the upside Monday.  The surge in the Russell 2000 (IWM ETF) might be due to some technical factors:- upcoming re-balance/constituent additions caused some stocks to surge- GME and AMC, two reddit stocks and heavily shorted, surged MondayBut as shown below, this has strengthened the price chart for IWM.  And we see IWM making its way above the March highs of $235.- hence, our tactical call for an IWM rally to $235-$240 is intact.- we had extended this view 5-10 days from our earlier call- we see this reaching $235-$240 by June 14th or 15th (mirroring XLE move)- The upcoming June options expiration on June 18th is a triple witching.  Stocks tend to be weak into that period so we don't see IWM rising into June 18.  The future is uncertain, but we would not expect IWM to be strong on 6/18. Equity markets are de-equitizing at a faster pace in 2021, including a nearly 3X in stock buybacksJPMorgan’s Niko Panigirtzoglou's latest “Flows and Liquidity” has some good insights on equity net issuance by corporates — that is, the net increase in equity float as a result of corporate activity.  A summary chart is below:- Net issuance in 2021 forecast to be $350 billion - Net issuance in 2020 was $750 billion (approx.)- Net issuance this year is down 55% versus a year agoIn other words, the supply of equities, as determined by issuers, is actually dropping sharply in 2021.  This is somewhat surprising given one would have expected bigger issuance in 2021 (vs 2020) given the strong equity markets and the potential financing needs of companies. This is not the case, and because the net issuance is lower, means there is an improvement in supply & demand alignment. The ramp up in equity buybacks is significant and is shown below. - 2021 global buybacks announced tracking to $1.2 trillion- 2020 global buybacks $400 billion- 2021 pace is 3X what it was in 2020... wow! Recall that many pundits last year claimed stocks would fare poorly in 2020 due to the falloff in buybacks.  The drop in buybacks did not hurt stocks in 2020.  And this massive ramp in 2021, in our view, provides an underlying bid for stocks in 2021. And another source of “de-equitization” is the acceleration of M&A and LBOs in 2021.  M&A doesn’t necessarily reduce float, as it is dependent on the composition of financing paid for the target.  But LBOs are de-equitizing.- 2021 M&A announced volumes are $6T- 2020 announced M&A was $4T- 2021 is 50% ahead of 2020... big increase- 2021 LBO activity is also 33% above 2020 to $400 billion or soCorporate confidence is the primary driver of M&A and to an extent LBOs, so this substantial ramp is also a sign of the improving business conditions and visibility for 2021.  And especially compared to 2020. ... despite “confidence” by corporates, institutional investors continue to raise cash on sidelines to $3.2TThe confidence by corporates is contrasted with the seeming rising caution by institutional investors.  The latest institutional money market cash balances shows institutional investors continue to raise dry powder:- last week, another $8 billion added to sidelines- currently stands at $3.176T and nearing the $3.221T seen May 2020- massive dry powder- of the ~25 weeks so far in 2021, institutions decreased cash balances in 5 of those weeks- last time “cash balances declined” was mid-April  There may be other reasons to explain this rise in cash — i.e., corporate LBOs return cash to shareholders, which is cash paid to institutional investors.  Or, institutional investors are selling bonds. But in this environment where corporates are reducing equity issuance, accelerating M&A and LBOs, we see this rising “dry powder” as constructive.  This money eventually gets invested. Moreover, as we wrote Monday, the fact that equity breadth is increasing, evidenced by the upside breakout in cumulative advance/decline lines, means we see stocks being accumulated.- and this means equity indices have upside risks.- thus raises the further potential for positive surprise- in other words, this is a signal to keep buying the dip BOTTOM LINE: We remain positive on equities, and see signs of capitulation.  Our top 3 sectors remain:TACTICAL:- IWM set for a tactical 10 day rally, back to $235-$240 possibly- IWM needs a few more days, like 5-10 daysOVERWEIGHT Positive Surprise- Top 3 sectors still Energy, Materials and Financials --> $XLE $XLB $XLFUNDERWEIGHT Falling on a Slope of Hope- Cautious on Technology and recommend using strength to reduce --> $XLK $QQQ  ADDENDUM: We are attaching the stock lists for our 3 portfolios:We get several requests to give the updated list for our stock portfolios.  We are including the links here: - Granny Shots  -->       core stocks, based on 6 thematic/tactical portfolios- Trifecta epicenter  --> based on the convergence of Quant (tireless Ken), Rauscher (Global strategy), Technicals- Violence in USA --> companies that are involved in some aspect of home or personal security. We are not recommending these stocks, but rather, bringing these stocks to your attention. Granny Shots:Full stock list here --> Click here Trifecta Epicenter (*):Full stock list here --> Click here Power Epicenter Trifecta 35 (*): Full stock list here --> Click here Violence in USA:Full stock list here --> Click here(*) Please note that the stocks rated OW on this list meet the requirements of our investment theme as of the publication date. We do not monitor this list day by day. A stock taken off this list means it no longer meets our investment criteria, but not necessarily that it is neutral rated or should be sold. Please consult your financial advisor to discuss your risk tolerance and other factors that characterize your unique investment profile. POINT 1: Daily COVID-19 cases 13,079, +6,884 vs 7D ago... Data distortion caused the spike in 7D delta... steady case decline likely to persist..._____________________________Current Trends -- COVID-19 cases: - Daily cases   13,079 vs 6,195 7D ago, up 6,884- 7D positivity rate   1.9% vs 2.1% 7D ago- Hospitalized patients   17,514 down -14.4% vs 7D ago- Daily deaths    416,  down 9.1% vs 7D ago_____________________________- The latest COVID-19 daily cases came in at 13,079, up 6,884 vs 7D ago. The 7D delta in daily cases has turned positive after being negative for nearly 8 weeks. However, as we noted Monday, the jump in 7D delta is expected and just a result of the under-reporting 7 days ago on Memorial Day. Although it will take a few more days to clear out the data distortion, we don't believe the downtrend in daily cases will be reversed. With the continued efforts for a higher penetration of vaccines, the steady decline in daily cases is likely to persist. 7D delta in daily cases turned positive due to the data distortion.... After being negative for nearly 2 months, the 7D delta in daily cases turned positive on Monday. This sudden jump does not really warn of a trend reversal in daily cases, but purely is a result of the under-reporting 7 days ago on Memorial Day. In the coming days, the 7D delta is likely to fall again and we expect the steady decline in daily cases to persist.    Current hospitalization, daily deaths and positivity rate are at all time low... Below we show the aggregate patients who are currently hospitalized due to COVID. After a mini-surge in March, the number of patients currently hospitalized rolls over again. Positivity rate is also following the similar pattern. Currently, all three metrics - current hospitalization, daily deaths and positivity rate - are at their all time lows since the start of the pandemic.     POINT 2: VACCINE: Vaccination progress has stalled - the average daily number of dose administered fell to 1.1 million..._____________________________Current Trends -- Vaccinations: - avg 1.1 million this past week vs 1.1 million last week- overall, 41.8% fully vaccinated, 51.2% 1-dose+ received_____________________________Vaccination frontier update --> all states now near or above 70% combined penetration (vaccines + infections)Below we sorted the states by the combined penetration (vaccinations + infections).  As we commented in the past, the key figure is the combined value >60%, which is presumably near herd immunity. We have overlaid our case progress with that of Israel several times to demonstrate what should happen to cases once immunity reaches a certain critical level in the population.  That is, the combined value of infections + vaccinations as % population > 60%. The persistent and rapid decline in cases suggest that the US is following a similar path to Israel (see our prior notes) while nations with less penetration continue to struggle more. - Currently, all states are near or above 70% combined penetration- RI, SD, MA, ND, CT, NJ, DE, NY, IL, UT, MN, NM, NE, AZ, PA are now above 90% combined penetration (vaccines + infections)- So gradually, the US is getting to that threshold of presumable herd immunity. So long as a vaccine resistant variant doesn’t spread widely, the continued retreat of cases should continue.  Below is a diffusion chart that shows the % of US states (based on state population) that have reached the combined penetration >60%/70%/80%/90%. As you can see, all states have reached 60% and 70% combined vaccination + infection. 78.0% of US states (based on state population) have seen combined infection & vaccination >80% and 51.9% of US states have seen combined infection & vaccination >90%.     There were a total of 1,470,968 doses administered on Monday. As we noted last week, the vaccination progress has stalled - the average daily number of doses administered fell to approximately 1.1 million dose. And the vaccination hesitancy following the pause of JNJ vaccine could be one of the biggest factors. Also, according to the data from Kaiser Family Foundation (KFF), Hispanic and Black communities have relatively lower rates of vaccination. Therefore, if the US wants to boost vaccine penetration further, Hispanic and Black communities should be the focus.  93.4% of the US has seen 1-dose penetration >40%... To better illustrate the actual footprint of the US vaccination effort, we have a time series showing the percent of the US with at least 35%/40%/45% of its residents fully vaccinated, displayed as the orange line on the chart. Currently, 85.1% of US states have seen 35% of their residents fully vaccinated.   However, when looking at the percentage of the US with at least 40% of its residents fully vaccinated, this figure is 62.4%. And only 31.3% of US (by state population) have seen 45% of its residents fully vaccinated.- While 93.4% of US states have seen vaccine penetration >40%, 78.7% of them have seen 1 dose penetration >45% and 54.8% of them have seen 1 dose penetration > 50%.- 85.1% of the US has at least 35% of its residents fully vaccinated, However, only 62.4% of US has fully vaccinated >40% and 31.3% of US has fully vaccinated >45%. This is the state by state data below, showing information for individuals with one dose and two doses. The ratio of vaccinations/ daily confirmed cases is generally trending higher (red line is 7D moving avg), but this is largely due to the decline in daily cases.- the 7D moving average is about ~70 for the past few days- this means 70 vaccines dosed for every 1 confirmed case In total, over 300 million vaccine doses have been administered across the country. Specifically, 170 million Americans (51% of US population) have received at least 1 dose of the vaccine. And 139 million Americans (42% of US population) are fully vaccinated.   POINT 3: Tracking restrictions lifting and subsequent effects in individual statesPoint #3 focuses primarily on tracking the lifting of restrictions, as states have eased the majority of mandates.  Keep in mind, easing/lifting restrictions are contingent upon state of emergency ordinances being renewed. - States in groups 1 and 2 represent states that let their emergency ordinances expire, or that never had one in the first place- Note: IL and HI are not listed. This is because restrictions lifting is determined at the county / island level, and no statewide policy will be established to lift restrictions until a full reopeningSo there is a spectrum of approaches.  Our team is listing 3 tiers of states and these are shown below.  - states that eased all restrictions in 2020: AK, OK, MO, FL, TN- states that have eased all restrictions in 2021 to now: ND, SD, NE, ID, IA, MT, MS, AZ, SC, WY, TX, GA, AR, KS, WI, IN, AL, UT, NH- states that are still easing restrictions in 2021: OR, ME, WV, WA, MN, MA, NC, KY, LA, CA, DE, PA, NM, OH, CO, NJ, VT, MD, NV, NY, CT, VA, MI, RI, DC GROUP 1:  States that lifted restrictions in 2020... The daily case trends in these states are impressive and it is difficult to say that lifting restrictions has actually caused a new wave of cases because the case trends in these states look like other states.    GROUP 2: States that have lifted restrictions in 2021 to now... Similar to the list of states above, the daily case trends in these states are impressive and it seems that lifting restrictions hasn’t caused an increase in cases.   GROUP 3: States that are still easing restrictions in 2021... These states have begun to lift restrictions, but have yet to ease all restrictions.  The date of each state’s most recent restrictions lifting is indicated on each chart.  The case trends in these states have been mostly positive.- Easing restrictions appears to have contributed to an increase in cases in several of these states, most drastically in OR, ME, WA, and MN  

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