Telegram

Financial Research

Macro

STRATEGY: If IWM closes below $222.59, today is a sequential '9' on DeMark = goodI am sending out an alert today, because the stock market has been ultra reactive to news and headlines lately.  And the underlying framework remains positive, despite the 'noisy tape'In fact, today, I am watching IWM, the Russell 2000 ETF, very closely.  Why? The daily DeMark count on IWM (using version V1b) is potentially a 'sequential 9' count today.- in DM analysis, a '9' can signal exhaustion of trend- hence, a '9' could be a place for buyers to step in (counter-trend system)- to be a '9' today, IWM needs to close below $222.59, which is the close 4 bars priorSTRATEGY: If this is indeed a true '9', IWM needs to trade higher within 4 further bars.  Meaning, by Wednesday next week, a rally needs to start, otherwise, this is a failed signal By the way, the 30 minute chart already has posted a 'sequential 9' as indicated below.  So the smaller fractal is showing buyers stepping in. - Now we are watching whether the bigger fractal, the daily, can confirm what we are seeing on the 30-minute chart ... If CPI is to be believed, why is the 10-year shrugging it off? Lastly, while investors have talked about inflation and inflationary fears, those 'fears' were confirmed by the big CPI number today. But here is my question:- If CPI print is real, why is the US 10-year barely moving?- Like the 10Y is sort of yawning Source:  LINE: We remain positive on equities, and see signs of capitulation.  Our top 3 sectors remain:- Energy, Materials and Financials --> $XLE $XLB $XLF- We are cautious on Technology and recommend using strength to reduce --> $XLK $QQQ 

If IWM closes BELOW $222.59, another affirmation that small-caps establishing tradeable low
  • 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

COVID-19 UPDATE: Yikes. US daily cases fall to 22,751 (29,780 7D ago) on Sunday. Last week's "breakout" a reminder US stocks have a capacity to positively surprise

Click Here to access the FSInsight COVID-19 Daily Chartbook. We are shifting to a 4-day a week publication schedule: MondayTuesdayWednesdaySKIP THURSDAYFriday STRATEGY: Last week's breakout a reminder US stocks still have capacity to a positively surpriseThe news continues to be very positive on US COVID-19 trends. The latest COVID-19 daily cases came in at 22,751, down -7,029 vs 7D ago and could be sub-20,000 before month end. - vaccine penetration growing = cumulative benefit- seasonally weather improving = helps The collapse in US COVID-19 cases is evident in the 7D delta chart below and you can see the sustained fall in US cases since early April. This is around the time US vaccine penetration hit 40%, which proved to be a key threshold in Israel. In Israel, that nation saw a leg down in cases following 40%. Vaccination efforts are stabilizing at 2 million per day, or 14 million Americans per week. - This is 4% incrementally per week- 34% of Americans have 2 doses, 45% 1 dose- By June, this should be 54% 2 doses and 65% 1 dose- The is about par with Israel, and Israel has like almost non-existent cases at this point. Broader issues --> Colonial Pipeline + Elon MuskThis is subjective, but the two notable events over the weekend, were: - the cyberattack on the Colonial Pipeline and- and secondarily Billionaire and businessman Elon Musk on SNL The cyberattack shutdown the largest US pipeline, with >5,500 miles and supplying nearly half of the fuel for the East Coast. So it is a sizable portion of infrastructure. There are mostly short term impacts, but we believe there is one longer term implication: - short term, gasoline/oil prices might spike/volatile, but this impact is transitory- could create short term distortions as gasoline surges would impact consumer wallets - longer term, this raises the question whether US policy of wanting to financially starve oil and energy infrastructure is misguided.- supply and stability of US oil supply is weakening given the White House anti-fossil stance and financial markets are hostile to Energy- last week, we highlighted the Rystad report that showed US production is set to fall >3mbpd in 2022 and beyond So this cyberattack could be a call to action to beef up US infrastructure.   Source: /2021/05/09/pipeline-hack-all-hands-on-deck-to-avert-disruptions-commerce-secretary-says. html Elon Musk's appearance is unique because he is one of only a handful of business owners who hosted -- Donald Trump, George Steinbrenner and Steve Forbes -- but Musk's appearance speak to the mainstream interest in many of things associated with Elon Musk: - stonks - Dogecoin + bitcoin - convergence of investment + entertainment In fact, I believe this is the first time ever that SNL actually broadcast this simultaneously on the internet for the global audience. ... India --> only 1 region of 10 largest, Tamil Nadu, is seeing cases rise India continues to face a healthcare and economic catastrophe due to the surge in COVID-19 cases. Based on the latest data, as pulled together by our data science team (led by tireless Ken), it looks like 9 of the 10 largest regions in India are seeing COVID-19 flat/rolling over: - 9 of 10 biggest regions seeing COVID-19 flat/rolling - only Tamil Nadu still rising, and driving higher overall cases - if most regions are seeing case levels plateau/fall, the tail risks to the healthcare and economy declining The impact and risk of India to US financial risk is probably also diminishing as well. While we do not want to minimize the healthcare tragedy, we think the US financial markets are less wary of those risks. In other words, this is one less major risk. And similar to the CDC call for 5th wave in May 2021 fear surge, India's downside risk to US markets is likely diminishing. Again, I want to reiterate that India remains a healthcare catastrophe and we hope the situation improves. As marked below by tireless Ken, there is now only 1 (of the 10 largest regions) with rising cases. - Karnataka was seeing surging cases last week, but now is flattening STRATEGY: Last week's breakout is a reminder that US stocks still have quite a capacity to a positively surpriseLast week, in my view, is a reminder how US equities still have the capacity to a positively surprise. Early last week, equities suffered a hammer blow and many viewed this as a sign of a top, but this was actually a pullback to touch support. I think the belief to return to normal is still not as widely held as it should be. So many people seem convinced that this economic recovery/equity gains will falter as: - we hit a wall due to inflation forcing Fed to panic - many pandemic-holdouts think world changed with COVID-19 and there is no normal And everyone was talking markets topping (until Friday surge). In fact, we did some zooms recently with technology investors and many were strongly of the view the stay at home trade would come roaring back. And many seemed sort of hopeful that new CDC forecast of a Summer surge would happen. It was a reminder to me that many of our clients are uncomfortably to long technology/hypergrowth/Growth stocks. Market leadership continues to be Epicenter and weakening in Growth, especially Technology... YTD, the outperformance of Epicenter (aka Cyclicals) vs Growth is stark and becoming even more bifurcated. Take a look below: - Epicenter stocks re-ignited this week, led by Energy - Energy is outperforming the S&P 500 already by 2,600bp - Our clients know we see far greater upside in Energy as well - Growth is weakening, Technology got hit hard last week - Technology is underperforming by 500bp YTD Our top 3 sectors for 2H2021 reflect first order Epicenter winners In case you missed our webinar last week, we made some Sector changes as highlighted below: - Top 3 now: Energy, Materials and Financials - Top 3 in Dec 2020 was: Industrials, Discretionary and Energy The change is to reflect our view that shortages are now appearing in first order companies: - move supply chains to America - commodities - all this requires capital = Financials We also downgraded Technology to Neutral, and FANG to Underweight. We think some of the growth money will rotate into Consumer Staples, hence, our upgrade from Underweight to Neutral. This is a summary of our webinar, so please tune into the replay for a more detailed rationale and explanation. Our 5 themes for 2021 are the same and described below. These are the basis for our thematic overlays (Granny Shots) and the general framework when we look at incoming economic data and financial market movements: - supply chain moving back to USA --> the semiconductor shortage is best example of this urgency - de-urbanization --> look at homebuilders... wow! - work from home --> this favors home furnishings, etc - buy USA --> small-caps, etc - violence in America --> anti-Asian crime surge is latest. Helps Bitcoin and defensive tools ... we see S&P 500 4,400 by mid-year and then a possible drawdown (~50% chance) In our webinar, we also believe the S&P 500 has a reasonable chance of revisiting the 200D moving average, or ~3,700. A rough roadmap is below, but this is only potential roadmap. We think the S&P 500 could avoid a 200D touch: - Drawdown would likely be Growth led as this is the crowded trade - Growth is 66% of market weight - But YTD, already 3 drawdowns - Reddit Massacre/GME drove record HF degrossing - Small-caps/Nasdaq crumbled on interest rate panic in Feb - Massive unwind by 6 prime brokers drove de-risking and VIX surge So in many ways, equities have already seen sizable shocks. So, I would give the risk of a move to the 200D in 2021 at ~50%. But we first see a move to 4,400. TECHNOLOGY: Supply-chain related Technology companies are outperforming While we are Neutral on Technology, parts of Technology are linked to two key themes: - global re-opening --> cyclical technology - supply chain moves to USA --> look at semicap equipment and EMS (contract manufacturing) As shown below, these groups have been outperforming Technology YTD and are above their 200D. But Technology itself is crowded and many parts of simply crowded trades (see the negative icons marked below). ENERGY: Oilfield Services is the most attractive, in our view So far this year, we have commented on Energy in 60 of our daily notes, or 40% of our comments (thanks tireless Ken), so this is the sector we see having the most urgent upside. For much of the year, institutions largely ignored the group, for several reasons: - sector too small at 3% --> more important to get AAPL right (bigger weight) - not ESG friendly --> but Energy cos are pivoting big time to ESG - nobody cares --> Energy was so bad for last 12 years, nobody cares But in the past week, we are seeing the first signs of institutional interest in these stocks. And this would be a very good sign, because inflows could be a sizable tailwind. And we have highlighted how Energy stocks have trailed the move in oil, so there is already sizable upside. Energy is broadly outperforming the S&P 500 YTD. And as shown on the leftmost chart, the outperformance is reaching a key level: - a few weeks ago, we commented that Energy/S&P 500 relative triggered a '13' combo buy signal on DeMark - now it looks like Energy is potentially completing a 'inverted head and shoulders' -- if so, we could see a further surge in $XLE - within Energy, the most attractive groups are: - E&Ps - Equipment & Services - Refiners --> the cyber attack might cause near-term volatility but not structural The best proxy for the most attractive groups it the Oilfield Services ETF, OIH (by VanEck). That chart is highlighted in the bottom right. 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 22,751, -29,780 vs 7D ago... 7D delta start to accelerate to the downside again... _____________________________ Current Trends -- COVID-19 cases:- Daily cases 22,751 vs 29,780 7D ago, down -7,029- 7D positivity rate 3.4% vs 3.9% 7D ago- Hospitalized patients 32,011 down -9.5% vs 7D ago- Daily deaths 650, down 3.6% vs 7D ago_____________________________ - The latest COVID-19 daily cases came in at 22,751, down -7,029 vs 7D ago. Based on current speed of case decline, we could see daily cases to fall below 20k next week. - The US continues to see a steady decline in daily cases. The 7D delta has been negative in the past 3 weeks. In the past few days, the 7D delta has been accelerating to the downside again. If this speed of decline persists, we could see the daily cases drop sub-20k by mid-May. - As we wrote before, at this stage of pandemic, as long as vaccinations work, eventually the rollout of the vaccines will lead to a decline in the pervasiveness of the COVID pandemic. And according to the recent data, this decline seems to finally arrive. 7D delta in daily cases has turned negative in the past 3 weeks... The US continues to see a steady decline in daily cases. The 7D delta has been negative in the past 3 weeks. In the past few days, the 7D delta has been accelerating to the downside again. If this speed of decline persists, we could see the daily cases drop sub-20k by mid-May. US hospitalization still rolling over ... and even US deaths seem to be rolling over... 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 starts to roll over again. Compared to the wave 3 peak, it has fallen significantly. POINT 2: VACCINE: all states reached ~60% infected + vaccinated... Over one-third of Americans have been fully vaccinated... _____________________________ Current Trends -- Vaccinations: Vaccinations ramping steadily - avg 2.0 million this past week vs 2.4 million last week - overall, 34.2% fully vaccinated, 45.5% 1-dose+ received _____________________________ Vaccination frontier update --> all states now near or above 60% 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. That is, the combined value of infections + vaccinations as % population > 60%. - Currently, all states are at this level - RI, SD, MA, ND, CT, NJ, DE, NY, IL and NM are now above 90% combined penetration (vaccines + infections) - So gradually, the US is getting to that threshold of presumable herd immunity All states have reached 60% combined vaccination + infection. Besides, 92.7% of US states (based on state population) have seen combined infection and vaccination >70% and 65.2% of US states have seen combined infection and vaccination >80%. As the chart below highlights, the US is seeing steady forward progress and this figure continues to rise steadily. There were a total of 2,352,831 doses administered on Sunday, up 12% from 7D ago. The 7D moving average has been trending downward since mid-April. It could be caused by the pause of JNJ vaccines or/and the vaccine hesitancy resulted from the JNJ vaccines. As both CDC and FDA lifted the recommended pause of JNJ vaccines, the vaccination pace could re-accelerate again in the near future. 96.0% of the US has seen 1-dose penetration >35%... 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 30%/35%/40% of its residents fully vaccinated, displayed as the orange line on the chart. Currently, 87.4% of US states have seen 30% of their residents fully vaccinated. However, when looking at the percentage of the US with at least 35% of its residents fully vaccinated, this figure is 39.6%. And only 7.8% of US (by state population) have seen 40% of its residents fully vaccinated. - While 96.0% of US states have seen vaccine penetration >35%, 73.4% of them have seen 1 dose penetration >40% and 48.6% of them have seen 1 dose penetration > 45%. - 87.4% of the US has at least 30% of its residents fully vaccinated, However, only 39.6% of US has fully vaccinated >35% and 7.8% of US has fully vaccinated >40%. - This is still a small figure but this figure is rising sharply now. This is the state by state data below, showing information for states with one dose and for those with two doses. The ratio of vaccinations/ daily confirmed cases is generally trending higher (red line is 7D moving avg) and this is the most encouraging statistic. - the 7D moving average is about ~50 for the past few days - this means 50 vaccines dosed for every 1 confirmed case This figure is rising nicely and likely surges in the coming weeks In total, about 151 million Americans have received at least 1 dose of a vaccine. This is a good pace and as we noted previously, implies 50% of the population by mid-May. POINT 3: Tracking un-restricted and restriction-lifted states We are changing Point #3 to focus primarily on tracking the lifting of restrictions, as states begin to ease various mandates. Keep in mind, easing/lifting restrictions can take multiple forms: - easing indoor capacity - opening theaters, gyms, salons, saloons - eliminating capacity restrictions - eliminating mask mandates So there is a spectrum of approaches. Our team is listing 3 tiers of states and these are shown below. - states that eased in 2020: AK, OK, MO, FL, TN - states that eased start 2021 to now: SD, ND, NB, ID, MT, IA, NC, MS, SC, AZ, TX, MD - states that announced future easing dates: GA, NY, WI, AR, CA, AL, CT GROUP 1: States that eased restrictions in 2020... The daily case trends in these states is impressive and it is difficult to say that lifting restrictions has actually caused a new wave of cases. Rather, the case trends in these states look like other states. GROUP 2: States that have eased all restrictions in 2021 to now... Similar to the list of states above, 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. - we have previously written about how ND and SD, in particular, have seen an utter obliteration of COVID-19 cases in those states - that seems to be a function of vaccine penetration + infection penetration, leading to something akin to herd immunity GROUP 3: States that are still easing restrictions in 2021... These states have upcoming dates to ease restrictions. The dates are indicated on each chart. The cases trends in these states have been mostly positive, with perhaps the exception of NY state: - NY state case levels seem awfully stubborn at these high levels - weather is improving in NY area, so if weather has any effect on virus transmission, it should slow cases

COVID-19 UPDATE: US COVID-19 cases fall below 30,000 Sunday -- YES!!!! US economic activity accelerate in May + COVID-19 retreats = Cyclical trade "resurge higher"?

Click HERE to access the FSInsight COVID-19 Daily Chartbook. We are shifting to a 4-day a week publication schedule: MondayTuesdayWednesdaySKIP THURSDAYFriday STRATEGY: US economic activity accelerate in May + COVID-19 retreats = Cyclical trade resurge higher? US COVID-19 cases are indeed legging down in a big way now. If one had any doubts about the impact of vaccination efforts, consider that US daily cases are now below 30,000 (29,660). The progress in US cases is so substantial that Dr. Scott Gottlieb believes that we will see an acceleration in the decline in US cases in the coming weeks. This is consistent with the US following the template of Israel. - as we noted in the past few weeks, once vaccination penetration reached 40% in Israel, Israel cases took a leg down. Source: /2021/05/02/covid-gottlieb-says-cases-will-decline-vaccinations-monumental-achievement. html And if the US follows the timeline of Israel, US cases should now be legging down and collapse in the coming weeks. In fact, this suggests the US could see 6,000 cases daily by Summer 2021, which is a 98% decline from the ~300,000 cases per day in December 2020. That is an utter collapse. Among major nations, the US is among the highest in terms of vaccine penetration (now 44% including partial). And in fact, the UK is not that far behind. - In the UK, 22% are fully vaccinated and an additional 29% have partial vaccination., or 51% of the population- thus, the UK should also be seeing a sharp decline in cases   Source: /interactive/2021/health/global-covid-vaccinations/ Daily cases have fallen to about 1,671 per day in the UK. This is a tremendous decline from >45,000 in early January. In other words, about a 97% decline from the peak. Source: The UK is in fact moving in lockstep with the US. The UK Foreign Secretary Dominic Raab said that he expects the UK to ease most restrictions soon. Again, with cases down 97% from the peak, there is a strong case for the UK to ease.   Source: /news/articles/2021-05-02/u-k-very-close-to-turning-the-corner-on-covid-19-raab-says? sref=NVS0rEaE ... IHME model India's infections peaked on April 27th... India COVID-19 daily deaths per 1mm are 1/5 USA and 1/7 that of BrazilIndia continues to experience a surge in daily cases and over the weekend, daily cases surged to 400,000. Many of our clients have correctly pointed out that due to lags and inadequate testing, India's actual infections are far higher than the confirmed cases reported. And this has been the case in nearly every area of the world that saw a massive outbreak, including the US. Source: /world/asia-pacific/india-posts-record-daily-rise-covid-19-cases-401993-2021-05-01/ The IHME daily infections model forecast is below and as this model shows, suggests that COVID-19 infections peaked on April 27th. Daily cases and daily deaths will still rise. Cases will rise for some time as testing catches up and daily deaths, tragically, lag cases. Thus, we expect reported statistics of cases and deaths to be rising. - but markets should be responding and reflecting infection trends -- thus, the worst could be behind India Source: ... IHME forecasts India daily COVID-19 deaths to peak on May 23The IHME model forecasts India's daily deaths to rise for the next few weeks and peak around May 23rd. - daily deaths are ~5,000 per day now- by May 23, daily deaths could reach to 12,500 per day   Source: ... at 12,500 peak daily deaths in India, this works out to 9 per 1mm, below USA and Brazil peaksAt 12,500 deaths, this works out to ~9 deaths per million (1.4 billion residents in India). We have highlighted the comparative death statistics below for other nations. - India could peak at 9 deaths per 1mm residents- USA peaked at 10 deaths per 1mm in January 2021- Brazil reached 15 deaths per 1mm in April 2021 and is still ~12 Thus, Brazil's death toll is currently 6X that of India and that nation has been able to manage through the worst of the peak.   ... India's case fatality rate is 1.1% which is below USA's 1.9%The situation in India is indeed tragic. We are not trying to minimize the horrific death toll and healthcare nightmare India is facing. Rather, we are trying to frame this wave relative to other nations. And the case fatality rate, which is cumulative deaths/ cumulative confirmed cases is shown below: - India stands at 1.1%- USA is 1.9%, or ~2X India- Brazil is 2.7% or 2.5X India And if one argues cases are understated due to inadequate testing in India, the CFR would be below 1%. As for the economy, JPMorgan's economics team believes India will see 2Q GDP of -16% decline, or a depression-like decline. But the economics team believes the financial risks are modest given India's Central Bank liquidity.   Source: JPMorgan Economic Research STRATEGY: US economic activity accelerate in May + COVID-19 retreats = Cyclical trade resurge higher? The S&P 500 finished April, gaining ~6% and bringing total YTD gains to >11% -- already on track to be a >20% total return for US equities. As we look ahead into May 2021, we realize investors are already wary. And stocks in the second half of April, labored higher, with underlying weakness that was not fully reflected in the indices. So, April was actually disappointing when looking at strengthening market breadth. - In April, Epicenter stocks had mixed performance.- Financials were the second best performing sector (+5.8%).- But Technology and Healthcare, both Growth/Defensive, outperformed the broader market. And thus, April seemed like a month where markets turned defensive   ... markets enter May where clients are defensive and ready to sell in May and go awayAs we look into May, here is the set-up we see: - US Daily COVID-19 cases retreating at an accelerating pace- US easing restrictions and set to fully reopen within 6 weeks- India likely past worst in COVID-19 cases = positive surprise- Commodities continue to rally = reflation surprise- our clients remain cautious given labored equity gains- investors have substantially de-risked in the past two weeks evidenced by HFRX long/short beta to equities ... GS survey shows 60% expect activity to surpass pre-virus levels in 2021--hard to see how this is priced inSo the key question is whether the pickup in economic activity is enough to positively surprise the market, and thus, trigger additional gains in cyclical stocks. - in our view, the answer is yes. In fact, Goldman Sachs Economic Research team notes that their survey, GSAI (GS Analyst Index) posted an all-time high of 79.2 in April, a record reading. More importantly: - 60% of survey report they expect their industry to overshoot to pre-virus levels in 2021 by 0 to 10% Wow. Again, this is not priced in. If this was priced in, Cyclicals would be trading above 2019 highs and this is not the case. In fact, we continue to point to Energy stocks which are still 30% below 2019 levels. Source: Goldman Sachs Economics Research ... Consensus is cautiously positioned, Nomura data shows this, as everyone seems to think sell in May and go awayConsensus is cautious, evidenced in our conversations with clients over the past few weeks -- also see the notes below by Brian Rauscher for additional confirmation. But part of the reason for this is the seasonals: - May to October is the worst 6M period for stocks- thus, many expect stocks to underperform in May Source: twitter In fact, Brian Rauscher (our Head of Global Portfolio Strategy) recently noted the angst among clients about the poor performance of stocks in the second half of April. ...a minority of Strategists are calling for a Cyclical rallyJPMorgan's Head of Global Strategy, Marko Kolanovic, is one of the few on the Street calling for a cyclical rally. In fact, he is very bullish - he sees interest rates moving up- this should re-ignite the Cyclical trade with a move that will be bigger than we saw earlier this year This is consistent with our view that the capacity to positively surprise is in the Epicenter trade. And we thus think as US cases recede + India apexes + economic momentum strengthens = Epicenter comes on strong in May Source: Bloomberg ... Nomura notes there is a crazy bid for Put protection = crash up for CyclicalsAnother minority voice is Nomura's Charlie McElligott, who notes that there is a massive bid for put protection in the highest decile observed. - This is a cautionary view expressed by investors- he predicts a crash up in Cyclical value shares Source: Bloomberg Bottom line: Stick with Epicenter and Energy shares are the most undervalued, in our viewSo for the month of May, we think the most non-consensus trade, hence, least crowded, is to be long Epicenter - Energy is the most undervalued- If interest rates do rise, this strengthens the case- Recall, DeMark in the webinar last week, expects all indices to make new highs- Energy recorded what looks like a major bottom 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 Tickers: GOOG, AMZN, EBAY, GRMN, TSLA, BF/B, MNST, MO, PG, PM, PSX, AXP, BIIB, GILD, REGN, AAPL, CSCO, MSFT, MU, MXIM, NVDA, PYPL, QCOM, QRVO, SWKS, XLNX, D, EIX Trifecta Epicenter (*):Full stock list here --> Click hereTickers: AAP, AN, AZO, F, GM, HOG, BBY, GRMN, GPC, LEG, TPX, PHM, NWL, MAT, PII, RL, MGM, HLT, MAR, NCLH, RCL, WH, TNL, SIX, FL, GPS, KSS, LB, VFC, WTFC, ASB, FNB, PB, TFC, WBS, PACW, NYCB, MTG, EVR, IBKR, VIRT, BK, STT, BHF, AGCO, OC, ACM, WAB, GNRC, CSL, GE, GGG, IEX, PNR, CFX, DOV, MIDD, SNA, XYL, FLS, EAF, ITT, ALK, DAL, JBLU, LUV, MIC, KEX, JBHT, R, UBER, UHAL, MAN, XOM, HP, BKR, HAL, NOV, SLB, COP, EOG, FANG, HES, MRO, MUR, PXD, XEC, HFC, MPC, PSX, EXP, CF, NEU, NUE, RS, SON, IP, ARE, BXP, HIW, JBGS, ESS, UDR, KIM, NNN, O, WRI, PSA 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 29,660, -2,783 vs 7D ago... Daily cases first time sub-30k since last September _____________________________ Current Trends -- COVID-19 cases:- Daily cases 29,660 vs 32,443 7D ago, down -2,783- 7D positivity rate 3.9% vs 4.3% 7D ago- Hospitalized patients 35,438 down -6.6% vs 7D ago- Daily deaths 674, down -2.1% vs 7D ago_____________________________ - The latest COVID-19 daily cases came in at 29,660, down -2,783 vs 7D ago. Several states are not reporting case stats over the weekend which causes the number of new cases over the weekends to tend to be lower than that during weekdays. That said, Sunday's 29,660 new cases are the first time since last September that daily cases fall below 30k. - The 7D delta has been negative in the past 19 days. In the past few days, the decline has been stable. If this decline persists, we could see the daily cases drop sub-20k by mid-May. - As we wrote before, at this stage of pandemic, as long as vaccinations work, eventually the rollout of the vaccines will lead to a decline in the pervasiveness of the COVID pandemic. And according to the recent data, this decline seems to finally arrive. 7D delta in daily cases has turned negative in the past 19 days... The 7D delta has been negative in the past 19 days. In the past few days, the decline has been stable. If this decline persists, we could see the daily cases drop sub-20k by mid-May. US hospitalization still rolling over ... and even US deaths seem to be rolling over... 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 starts to roll over again. Compared to the wave 3 peak, it has fallen significantly. POINT 2: VACCINE: all states reached ~60% infected + vaccinated... Over 30% of Americans have been fully vaccinated... _____________________________ Current Trends -- Vaccinations: Vaccinations ramping steadily - avg 2.4 million this past week vs 2.7 million last week - overall, 31.4% fully vaccinated, 44.0% 1-dose+ received _____________________________ Vaccination frontier update --> all states now near or above 60% 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. That is, the combined value of infections + vaccinations as % population > 60%. - Currently, all states are at this level - RI, SD, MA, ND, CT, NJ, DE and NY are now above 90% combined penetration (vaccines + infections) - So gradually, the US is getting to that threshold of presumable herd immunity All states have reached 60% combined vaccination + infection. Besides, 92.7% of US states (based on state population) have seen combined infection and vaccination >70% and 58.7% of US states have seen combined infection and vaccination >80%. As the chart below highlights, the US is seeing steady forward progress and this figure continues to rise steadily. There were a total of 2,109,811 doses administered on Sunday, down 30% from 7D ago. The 7D moving average has been trending downward in the past 3 weeks. It could be caused by the pause of JNJ vaccines or/and the vaccine hesitancy resulted from the JNJ vaccines. As both CDC and FDA lifted the recommended pause of JNJ vaccines, the vaccination pace could re-accelerate again in the near future. 93.4% of the US has seen 1-dose penetration >35%... 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 25%/30%/35% of its residents fully vaccinated, displayed as the orange line on the chart. Currently, 96.6% of US states have seen 25% of their residents fully vaccinated. However, when looking at the percentage of the US with at least 30% of its residents fully vaccinated, this figure is 63.2%. And only 18.6% of US (by state population) have seen 35% of its residents fully vaccinated. - While 93.4% of US states have seen vaccine penetration >35%, 68.1% of them have seen 1 dose penetration >40% and 47.4% of them have seen 1 dose penetration > 45%. - 96.6% of the US has at least 25% of its residents fully vaccinated, However, only 63.2% of US has fully vaccinated >30% and 18.6% of US has fully vaccinated >35%. - This is still a small figure but this figure is rising sharply now. This is the state by state data below, showing information for states with one dose and for those with two doses. The ratio of vaccinations/ daily confirmed cases is generally trending higher (red line is 7D moving avg) and this is the most encouraging statistic. - the 7D moving average is about ~50 for the past few days - this means 50 vaccines dosed for every 1 confirmed case This figure is rising nicely and likely surges in the coming weeks In total, about 146 million Americans have received at least 1 dose of a vaccine. This is a good pace and as we noted previously, implies 50% of the population by mid-May. POINT 3: Tracking un-restricted and restriction-lifted states We are changing Point #3 to focus primarily on tracking the lifting of restrictions, as states begin to ease various mandates. Keep in mind, easing/lifting restrictions can take multiple forms: - easing indoor capacity - opening theaters, gyms, salons, saloons - eliminating capacity restrictions - eliminating mask mandates So there is a spectrum of approaches. Our team is listing 3 tiers of states and these are shown below. - states that eased in 2020: AK, OK, MO, FL, TN - states that eased start 2021 to now: SD, ND, NB, ID, MT, IA, NC, MS, SC, AZ, TX, MD - states that announced future easing dates: GA, NY, WI, AR, CA, AL, CT GROUP 1: States that eased restrictions in 2020... The daily case trends in these states is impressive and it is difficult to say that lifting restrictions has actually caused a new wave of cases. Rather, the case trends in these states look like other states. GROUP 2: States that have eased all restrictions in 2021 to now... Similar to the list of states above, 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. - we have previously written about how ND and SD, in particular, have seen an utter obliteration of COVID-19 cases in those states - that seems to be a function of vaccine penetration + infection penetration, leading to something akin to herd immunity GROUP 3: States that are still easing restrictions in 2021... These states have upcoming dates to ease restrictions. The dates are indicated on each chart. The cases trends in these states have been mostly positive, with perhaps the exception of NY state: - NY state case levels seem awfully stubborn at these high levels - weather is improving in NY area, so if weather has any effect on virus transmission, it should slow cases

IHME models show India "infections" likely plateau in past week = worst could be behind India

STRATEGY: IHME model shows India infections peaked on 4/26/2021I just want to give everyone a heads up.  We are fans of the IHME model (founded by the Gates Foundation) as their model is used by global policymakers. Their infection model for India shows infections in the country likely peaked on 4/26/2021, or 4 days ago.- if correct, India is past the worst point of this wave- if correct, economic risks have plateaued and will diminish- confirmed cases will still rise because testing is severely lagging, but that means cases are a lagging indicatorSTRATEGY: If correct, the cyclical trade is going to get a new catalyst in the coming weeks! The key is that we might soon see evidence that India's COVID-19 situation is improving.  Likely Mumbai / Delhi show improvements first.  And then a gradual realization that the crisis is past the worst point.  And from there, investors will see diminished economic risk.- this should result in a new leg up for the Epicenter trade- still with Energy, Industrials, Financials, Small-caps- $XLE, $OIH, $XLI, $XLF and $IWM Have a great weekend.

Takeaways from Wed. DeMark webinar --> S&P 500 4,400-ish possible near-term. Energy '13' bottom. Bitcoin likely bottomed. VIX going to 13

I am sending along my takeaways from our Wednesday webinar with Tom DeMark, the founder of DeMark analytics. Tom DeMark is a widely market systemic timer and is considered one of the pioneers of technical analysis. There is no replay, at the request of DeMark. So our summary below is the only way to get the abstracts. Here is our list of takeaways: 1. A possible '13' top formed in equity markets in early April, but the 3 major indices fell out of 'alignment' so that bearish view is negated 2. S&P 500 is in an 'uptrend' and possible target of 4,400 near-term. Nasdaq has upside but less so. 3. VIX is heading to 13-ish 4. Market breadth, measured as % stocks above 50D, set to surge = broader participation, not mega-cap led 5. Energy looks like it has bottomed = upside to Energy stocks (sweet!!!) 6. WTI should be expected to exceed its prior high, or $76.90 from October 5, 2018 7. XLE and OIH should trade to levels on October 5, 2018, which is $78.36/ $526.51, respectively, or +56% and +178% upside. 8. Bitcoin sold off at a '13' but found support at an anticipated key level of $47,000-ish = new uptrend likely underway BOTTOM LINE: To me, the biggest takeaway, is the move in WTI to $76.90 and the associated ballistic rise in Energy stocks. If oil does rise to $76.90, which is consistent with Goldman Sachs' $80 projection by Summer, and Energy equities rally to 2018 levels, we expect institutional investors to massively Overweight Energy stocks before year-end. This would be a formula for a melt-up.     ...S&P 500 sold off to key level 4,137-ish and upside now 4,350-4,400DeMark cited a trifecta of factors that pointed to a pullback to 4,137 in S&P 500 in April. As these charts show, that is where the S&P 500 retraced and now the upside in play is 4,350-4,400 and a possible upside to 4,600 - a few weeks ago, there was a '13' spotted on equities, but this was negated- the alignment was not seen in Dow, Nasdaq and S&P 500- now they are 'aligned' to the upside Hence, stocks are still in an uptrend This is consistent with our view that we will see S&P 500 4,400 before mid-year, maybe in the next month or so ... VIX still heading lower towards 13.48 or lowerHe also pointed out the VIX downside target is 13.48. - the VIX could breakdown further below that level- but 13.48 is the key level to watch- VIX is 17.6 now ... Market breadth should rise = small-caps > mega-caps DeMark also sees the % stocks >50D surging. This is a breadth indicator. - if # stocks >50D goes up = small-caps Our takeaway: Megacaps likely underperform (FANG/Growth) and Small-caps likely resume leadership ... Energy (XLE) likely bottomed vs broader market DeMark also noted that Energy (vs S&P 500) seems to track DeMark signals closely, as both the combo and sequential counts work at the tops and bottoms. - XLE/SPX posted a '13' bottom and is now in an uptrend - this means Energy stocks should outperform S&P 500 ... Crude oil expected to surpass 2018 highs of $76.90, implying +56% upside for XLE and +178% upside for OIH Tom DeMark also noted that he expected Crude, when looking at the weekly chart, that it would be typical for crude to exceed the prior highs at the next '13' -- in this case, the 2018 highs of WTI of $76.90. See below. - if WTI exceeds its October 5, 2018 highs, XLE and OIH should at least re-attain its October 5, 2018 levels - XLE was $78.36 on October 5, 2018 vs $50.11 today, or +56% upside - OIH was $526.51 on October 5, 2018 vs $189.04 today, or +178% upside Takeaway: The confirms our view that Energy stocks are due to a huge catch-up to oil. The upside in XLE and OIH is way higher than many appreciate, if correct, with >100% upside for OIH and >50% for XLE. So we think Energy remains very attractive, even as we realize this group feels leaning against the wind ... Bitcoin saw a textbook 20% selloff after a '13' but now found support at ~$47,000 Bitcoin saw a textbook sell-off of >20% after a '13' qualified combo count. - downside target was $47,000 on two different models --> TDST shown below - if this holds, and is likely, given this was a level prior to the last 'sell countdown' (green 1), Bitcoin going to rally Takeaway: Not crystal clear what to expect here... Key level is $62,000 and $47,000. The daily DeMark count shows an uptrend, so that is what should be watched and a move above $62,000 affirms selloff over

COVID-19 UPDATE: US COVID-19 daily cases now ~32,000 (yup). India case figures not high enough to warrant "shut down" and need to reach >1.0 million per day to match USA in Jan

Click HERE to access the FSInsight COVID-19 Daily Chartbook. We are shifting to a 4-day a week publication schedule: MondayTuesdayWednesdaySKIP THURSDAYFriday _________________________ My experience with shot #2 of Moderna, which I received on Thursday April 22For those wondering about my experience with shot #2 of Moderna, I received that shot on Thursday am. Soon after that shot, I felt slightly drunk the entire day Thursday. On Friday, I woke up as if slightly hungover with wincy pain sensitivity but mostly tired. Saturday, I woke up slightly drunk again but no pain or energy effect. By Sunday, I am completely back to 100%._________________________ STRATEGY: While India bad, USA far worse in Jan and did not shut downThere were multiple positive developments on COVID-19 over the weekend. Most notably, case trends do seem to be legging down and is evident looking at the 7D delta in US daily COVID-19 cases. The 7D delta is breaking to the downside. And the 7D average is -10,336 which is the highest pace since early in 2021. - COVID-19 appears to be in full retreat in the US, due apparently to vaccine penetration rising- the US is on track to fully re-open by mid-June 2021 ... USA tracking Israel case trends = USA daily cases of 6,000 or less by Summer 2021 US vaccine penetration reached that 40% penetration level that triggered a leg down in Israel. And it looks like the US is following the path of Israel, with US daily cases now trending down sharply. - if the US continues to track Israel, US cases could fall to 6,000 cases per day by the Summer. ... Dr. Gottlieb advocates ending outdoor mask mandate, suggests CDC moving too slow Another positive development is Dr. Scott Gottlieb is advocating the ending of the outdoor mask mandate. In his WSJ Op-Ed, Dr. Gottlieb, suggest the CDC is moving too slowly and not changing his views to properly reflect updated scientific knowledge. Among his points, he also cites a study in China which found only 1 of 318 outbreaks were due to outdoor activity. Source: /articles/time-to-end-outdoor-mask-edicts-11619383852 And the EU is likely to implement a policy allowing Americans fully vaccinated to be allowed to enter the EU (thanks AJS for the heads up). The NY Post article cites Ursula von der Leyen, president of the EU Commission. Shutdown risk for India overstated as daily cases per 1mm is still lower than Europe and Brazil...75% below USA at its worst Over the past few weeks, many of our clients have cited the surge in cases in India as the tail risk for the global re-opening trade. In fact, many commodity strategists even say India shutting down is the downside risk for oil prices. - but too many are looking at the absolute case figures of India, which sort of distorts the perspective If we look at daily cases per 1mm residents, India's case figures are 225 per 1 million. - this figure is below Europe's 249 - USA's peak was 763 in Jan, USA never shut down - Brazil's peak was 363 in March and Brazil never shut down In other words, India's cases, while large on an absolute basis, are actually lower proportionately. Recall, India has 1.3 billion citizens, or 4X that of the USA. ... India's cases per day need to reach 1.0 million to match USA at its January wave 3 peak India's daily cases need to rise significantly to match the peak seen in other regions. To match: - to match USA --> 1.0 million daily cases daily in India - to match Brazil --> 500,000 cases daily in India - to match Europe --> 487,000 cases daily in India In other words, as scary as the surge in cases in India, the figures are still far below other regions. STRATEGY: If USA daily cases are rolling over, Epicenter trade should be back on in full force The strategy implications of the above discussion are straight forward. Let me summarize some rationale: - USA daily cases legging down big = re-opening coming on strong - Dr. Gottlieb advocates ending mask mandate now = re-opening coming on strong - India cases not a level to warrant even considering shutdown = re-opening coming on strong - US dollar is also weakening So you can see, the implications of the above are a strengthening of the case for a US re-opening and global reflation. So what strategies should benefit: - Small-caps and Epicenter stocks --> chart shows small-caps inverse to USA case trends - Energy and commodities --> India risk overstated - Stocks sensitive to weaker USD --> cyclicals broadly Another thing to keep in mind is the USD has been making a stealth decline. As you can see below, USD is well off its late March highs of 93.437 and is down pretty materially in the past 3 weeks: - weaker USD = tailwind for Cyclicals - tailwind for Cyclicals = Epicenter trade back on Thus, we see the rejuvenation of the Epicenter trade strongly, led by: - small-caps $IWM - Energy $XLE and $OIH - Epicenter $SPHB $XLI $XLF $XLY The future is uncertain. But to me, the most non-consensus view is to expect a continued surge in US equities. 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 Tickers: GOOG, AMZN, EBAY, GRMN, TSLA, BF/B, MNST, MO, PG, PM, PSX, AXP, BIIB, GILD, REGN, AAPL, CSCO, MSFT, MU, MXIM, NVDA, PYPL, QCOM, QRVO, SWKS, XLNX, D, EIX Trifecta Epicenter (*):Full stock list here --> Click hereTickers: AAP, AN, AZO, F, GM, HOG, BBY, GRMN, GPC, LEG, TPX, PHM, NWL, MAT, PII, RL, MGM, HLT, MAR, NCLH, RCL, WH, TNL, SIX, FL, GPS, KSS, LB, VFC, WTFC, ASB, FNB, PB, TFC, WBS, PACW, NYCB, MTG, EVR, IBKR, VIRT, BK, STT, BHF, AGCO, OC, ACM, WAB, GNRC, CSL, GE, GGG, IEX, PNR, CFX, DOV, MIDD, SNA, XYL, FLS, EAF, ITT, ALK, DAL, JBLU, LUV, MIC, KEX, JBHT, R, UBER, UHAL, MAN, XOM, HP, BKR, HAL, NOV, SLB, COP, EOG, FANG, HES, MRO, MUR, PXD, XEC, HFC, MPC, PSX, EXP, CF, NEU, NUE, RS, SON, IP, ARE, BXP, HIW, JBGS, ESS, UDR, KIM, NNN, O, WRI, PSA 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 32,261, -9,837 vs 7D ago... 7D delta has been negative in the past 12 days and accelerated to the downside... _____________________________ Current Trends -- COVID-19 cases:- Daily cases 32,261 vs 42,098 7D ago, down -9,837- 7D positivity rate 4.3% vs 5.3% 7D ago- Hospitalized patients 37,985 down -6.3% vs 7D ago- Daily deaths 688, down -2.7% vs 7D ago_____________________________ - The latest COVID-19 daily cases came in at 32,261, down -9,837 vs 7D ago. - The 7D delta has been negative in the past 12 days and accelerated to the downside (7D avg shown as blue dash line). On average, the 7D delta in daily cases was over negative 10,000 in the past 7 days. If this decline persists, we could see the daily cases drop below 20k in the early May. - As we wrote before, at this stage of pandemic, as long as vaccinations work, eventually the rollout of the vaccines will lead to a decline in the pervasiveness of the COVID pandemic. And according to the recent data, this decline seems to finally arrive. 7D delta in daily cases has turned negative in the past 12 days... The 7D delta has been negative in the past 12 days and accelerated to the downside (7D avg shown as blue dash line). On average, the 7D delta in daily cases was over negative 10,000 in the past 7 days. If this decline persists, we could see the daily cases drop below 20k in the early May. As we wrote before, at this stage of pandemic, as long as vaccinations work, eventually the rollout of the vaccines will lead to a decline in the pervasiveness of the COVID pandemic. And according to the recent data, this decline seems to finally arrive. US hospitalization still rolling over ... and even US deaths seem to be rolling over... Below we show the aggregate patients who are currently hospitalized due to COVID. It has fallen significantly from the wave 3 peak. POINT 2: VACCINE: 49 states near ~60% infected + vaccinated... 1 in 4 Americans have been fully vaccinated... _____________________________ Current Trends -- Vaccinations: Vaccinations ramping steadily - avg 2.7 million this past week vs 3.2 million last week - overall, 28.4% fully vaccinated, 41.9% 1-dose+ received _____________________________ Vaccination frontier update --> almost all states now near or above 60% 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. That is, the combined value of infections + vaccinations as % population > 60%. - Currently, all states except OR and HI (see below) are basically all at this level - SD, ND and RI are now above 90% combined penetration (vaccines + infections) - So slowly, the US is getting to that threshold of presumable herd immunity Collectively, these 49 states represent about 99.0% of the US population. In fact, 79.1% of US states (based on state population) have seen combined infection and vaccination >70% and 54.1% of US states have seen combined infection and vaccination >80%. As the chart below highlights, the US is seeing steady forward progress and this figure continues to rise steadily. There were a total of 3,001,345 doses administered on Sunday, down 15% from 7D ago. The 7D moving average has been trending downward recently. It could be caused by the pause of JNJ vaccines or/and the vaccine hesitancy because of the JNJ vaccines. As both CDC and FDA lifted the recommended pause of JNJ vaccines last week, the vaccination pace could re-accelerate again in the near future. ~87.3% of the US has seen 1-dose penetration >35%... 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 25%/30%/35% of its residents fully vaccinated, displayed as the orange line on the chart. Currently, 89.5% of US states have seen 25% of their residents fully vaccinated. However, when looking at the percentage of the US with at least 30% of its residents fully vaccinated, this figure is 30.7%. And only 2.1% of US (by state population) have seen 35% of its residents fully vaccinated. - While 87.3% of US states have seen vaccine penetration >35%, 61.1% of them have seen 1 dose penetration >40% and 36.5% of them have seen 1 dose penetration > 45%. - 89.5% of the US has at least 25% of its residents fully vaccinated, However, only 30.7% of US has fully vaccinated >30% and 2.1% of US has fully vaccinated >35%. - This is still a small figure but this figure is rising sharply now. This is the state by state data below, showing information for states with one dose and for those with two doses. The ratio of vaccinations/ daily confirmed cases is generally trending higher (red line is 7D moving avg) and this is the most encouraging statistic. - the 7D moving average is about ~45 for the past few days - this means 45 vaccines dosed for every 1 confirmed case This figure is rising nicely and likely surges in the coming weeks In total, about 139 million Americans have received at least 1 dose of a vaccine. This is a good pace and as we noted previously, implies 50% of the population by May. POINT 3:Tracking un-restricted and restriction-lifted states We are changing Point #3 to focus primarily on tracking the lifting of restrictions, as states begin to ease various mandates. Keep in mind, easing/lifting restrictions can take multiple forms: - easing indoor capacity - opening theaters, gyms, salons, saloons - eliminating capacity restrictions - eliminating mask mandates So there is a spectrum of approaches. Our team is listing 3 tiers of states and these are shown below. - states that eased in 2020: AK, OK, MO, FL, TN - states that eased start 2021 to now: SD, ND, NB, ID, MT, IA, NC, MS, SC, AZ, TX, MD - states that announced future easing dates: GA, NY, WI, AR, CA, AL, CT GROUP 1: States that eased restrictions in 2020... The daily case trends in these states is impressive and it is difficult to say that lifting restrictions has actually caused a new wave of cases. Rather, the case trends in these states look like other states. GROUP 2: States that eased restrictions in 2021 to now... Similar to the list of states above, 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. - we have previously written about how ND and SD, in particular, have seen an utter obliteration of COVID-19 cases in those states - that seems to be a function of vaccine penetration + infection penetration, leading to something akin to herd immunity GROUP 3: States that announced plans ease restrictions in 2021... These states have upcoming dates to ease restrictions. The dates are indicated on each chart. The cases trends in these states have been mostly positive, with perhaps the exception of NY state: - NY state case levels seem awfully stubborn at these high levels - weather is improving in NY area, so if weather has any effect on virus transmission, it should slow cases

Small-caps breakout underway and Oil is +1% above 2019 levels, but XLE/OIH is -21%/ -33% lower...hmmm

STRATEGY: Food for thought on small-caps and EnergyWe have been expecting that small-caps and Epicenter stocks would get rejuvenated once US COVID-19 cases started to roll over.  And this week, we believe we got the leg down in USA COVID-19 cases.  And as the chart below shows, if cases are rolling over, then the epicenter trade is back. STRATEGY: Buy small-caps (proxy is IWM), Epicenter (SPHB, etc) and EnergyAnd to reiterate, we believe the Epicenter trade is coming back on strong. The trade consolidated for the past few weeks and it was a rocky period. But today, it looks like the Russell 2000 is on its way to breaking out.- the key level on IWM is $226.69 (the most recent high), but once that is cleared, we think IWM can make all-time highs- Small-cap index Russell 2000 is a good epicenter proxy because it is chocked full of cyclicals. The other sector that we think will soon be a major beneficiary, if US COVID-19 cases are legging down, is Energy.  Energy is arguably the most sensitive to an economic re-opening because the movement of goods involves consuming some form of Energy.- Oil is now +1% compared to where it was on 12/31/2019- Energy sector (XLE) is still -21% lower and Oilfield Services (OIH) is -33% lowerHow can the Energy equities retracement be lower than the commodity price?  This makes little sense to me.  This is why we see a big catch-up trade in XLE and OIH coming.  One where XLE could rise >45% or more and OIH >100% The future is uncertain.  This is food for thought.

FLASH INTRADAY: Watch XLE (Energy proxy) over the next day or two. '13' buy countdown triggered on daily DeMark combo v1 (relative to S&P 500)

STRATEGY: XLE '13' buy countdown triggered today... 2 prior instances in 2020Energy stocks have struggled since mid-March and month to date are down ~4% vs a 4% gain in the S&P 500.  So the relative performance has been devastating, considering we are only mid-month. But the speed and persistence of the Energy underperformance have created a potentially attractive buy set-up based on the DeMark Analytics system.  Recall, DeMark is a counter-trading system, so if investors get too negative on a stock, this triggers a buy countdown which in a DeMark system, means imminent reversal.- XLE Daily DeMark (relative to S&P 500) count is now a '13' as highlighted below- based on daily, combo v1b.- This '13' was also seen July 9, 2020, and Sept 28, 2020In both precedent instances, XLE made a bottom almost immediately and subsequently rallied, in phases. This is also true of OIH, but we analyze XLE here Below is the actual price chart of XLE and I marked in 'purple' those two prior instances.- July 9, 2020, XLE started an immediate rally from $34 to $40, or >10% rally- Sept 28, 2020, XLE had an immediate rally, which failed and made an undercut low to $27 from $29- But then embarked on a rally to $56, or 100% gainSo, this is a DeMark development to keep an eye on.- XLE should reverse within 4 trading days or needs to respond by Monday next week- If not, this is a 'recycled' or broken '13'Given the divergence with Oil (oil is up) and given XLE is oversold and given the economic data is strengthening, this is likely a valid signal. What could go wrong? The tape is very weak... The only issue is the tape is very heavy and weak.  We are seeing stocks sell-off today and there is not necessarily a strong reason for the weakness.  Perhaps it is the scourge of COVID-19 in India and Brazil. FYI, OIH is seeing the same '13'

COVID-19 UPDATE: USA on cusp of "40%" level that presaged 53% plunge in Israel cases... Updating Granny Shots, +9, -13, net -4 stocks = 28 grREVISED Granny Shot ideas

Click HERE to access the FSInsight COVID-19 Daily Chartbook. We are shifting to a 4-day a week publication schedule: MondayTuesdayWednesdaySKIP THURSDAYFriday STRATEGY: Week 2 of 1Q2021 earnings + better COVID-19 progress + cash coming off sidelines... Updating Granny Shots... Over the weekend (and Friday), there were several notable COVID-19 developments, all entirely positive - Israel lifting outdoor mask mandates as cases have plunged to near obliteration (thanks ES for heads up)- Dr. Fauci in a CNN interview expects the J&J vaccines to resume by Friday, with labeling- CDC reported breakthroughs (vaccinated but get COVID-19) a mere 5,814 cases of 75 million vaccinated, or 0.0078% of vaccinated. So 3 of the major items over the weekend were all positive and support the US moving towards a full re-opening by mid-June. Of these developments, to me, Israel's announcement is the most important. Source: /israel-news/as-outdoor-mask-mandate-ends-jubilant-israelis-adjust-to-new-set-of-covid-rules-1.9723288 We have tracked Israel's case progress closely, as our clients know, but the rapid progress is worth reviewing: - In 3 months, Israel's vaccine penetration rose 26% to 62% - In 3 months, Israel's cases (per 1mm) fell 97% from 952 to 26 - 26 cases per 1mm is USA equivalent of 8,500 cases per day (vs ~65,000 now) The chart below show three key milestones that are associated with case plunges - 26% penetration, daily cases peaked - 40% penetration, massive leg down in cases, -53% - 58% penetration, massive leg down in cases, -93% Interestingly, while vaccinations rose steadily, daily cases went through plunges and plateaus. While I don't know the exact reason for this, it likely reflects the combination of: delays in efficacy, offset further by citizen mobility/dropping guard. - nevertheless, Israel's cases have plunged to near obliteration USA on cusp of 40% level that presaged 53% plunge in Israel cases... Our data science team, led by tireless Ken, overlaid Israel and USA vaccine penetration and COVID-19 cases (per 1mm). And as you can see, the US is on the cusp of that 40% level: - USA vaccine penetration is set to reach 40% within a week - Israel saw daily cases take a second leg down after reaching 40% So naturally, we are watching if this analog plays out in the USA. But 40% could be an important level to watch. And if so, USA cases could dip meaningfully once that 40% level is crossed. In simplistic terms, we think the 7D delta in daily cases might soon make a drastic plunge as indicated below. Daily cases have been flatlining recently. Some of this is the surge seen in the Midwest (MI, MN, etc) but also the Northeast (NY, CT, etc). And while variants + Spring Break could explain this, the pattern in Israel suggests that increasing vaccine penetration leads to a new threshold that leads to a plunge. Daily cases are starting to rollover again, as you can see below on the chart below, which is only for the past 6 weeks. As you can see, of the last 5 days, each of those saw 5 consecutive declines. And daily cases on Sunday came in at 41,917, which is down from 47,042 last Sunday. A client of ours in Boston (thanks MF) queried us about breakthrough infections which is defined as COVID-19 infections from those fully vaccinated. The CDC released a report late last week on this topic: - of the 75 million fully vaccinated Americans (4/13) - 5,814 breakthroughs have been reported - this is 0.0078%, or 78 infections per 1 million fully vaccinated That is an astonishingly low rate. And while it is only a snapshot, it does suggest that the 90% effectiveness of the vaccines of Moderna and Pfizer might be accurate. Source: /vaccines/covid-19/health-departments/breakthrough-cases. html And it is encouraging to see J&J vaccine come back online. As you know, financial markets pulled a fire ready aim a few weeks ago, stemming from this vaccine pause. Source: /2021/04/18/politics/fauci-jj-vaccine-friday/index. html STRATEGY: Market color --> week 2 of 1Q2021 earnings + better COVID-19 progress + cash coming off sidelinesEquities have continued post steady gains, and the S&P 500 is up ~6% month to date, bringing its total gain to ~12% this year. And there are still two weeks left of the month. But a few things have surprised us this month: - In the past two weeks, leadership has come from large caps and defensive/ growth - Part of this is explained by the MI and Midwest COVID surge - Part of this is the J&J vaccine pause But we think the movement of cash off the sidelines explains this. - In past two weeks, $45 billion of cash has come off sidelines - Institutional investors, mostly HF, $30 billion in last two weeks, the largest since Dec - HF tend to favor large caps and FANG - Hence, outperformance of FANG/Growth STRATEGY: Updating Granny Shots --> +9 additions, -13 deletions, -4 net = 28 REVISED Granny Shots (*)We updated our Granny shots list on April 9th. We rebalance Granny Shots every three months, and this is the first rebalance of 2021. Granny Shots has continued to lead to relative stability and steady market outperformance: - 2021 YTD outperformance +547bp- 2020 outperformance +3,015bp- 2019 outperformance +879bp   9 Additions:Health Care: $BIIB, $GILD, $REGNConsumer Staples: $MOUtilities: $EIX, $DTechnology: $QRVO, $SWKSEnergy: $PSX 13 Deletions:Technology: $INTC, $KLAC, $AMAT, $LRCX, $HPQConsumer Discretionary: $TGT, $BBYComm. Services: $ATVIEnergy: $XOM, $VLOFinancials: $GL, $RFIndustrials: $GE The revised list of Granny Shots is below. And we marked the additions and deletions, so you can see the changes to the list, both before and after. (*) Please note that the stocks 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. 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 hereTickers: AAPL, CSCO, INTC, MXIM, NVDA, EBAY, KLAC, GRMN, GOOG, MNST, MSFT, AMZN, QCOM, TSLA, PYPL, AXP, BF/B, PM, XLNX, TGT, PG, XOM, VLO, GL, RF, ATVI, BBY, GE, AMAT, LRCX, MU, HPQ Trifecta Epicenter (*):Full stock list here --> Click hereTickers: AAP, AN, AZO, F, GM, HOG, BBY, GRMN, GPC, LEG, TPX, PHM, NWL, MAT, PII, RL, MGM, HLT, MAR, NCLH, RCL, WH, TNL, SIX, FL, GPS, KSS, LB, VFC, WTFC, ASB, FNB, PB, TFC, WBS, PACW, NYCB, MTG, EVR, IBKR, VIRT, BK, STT, BHF, AGCO, OC, ACM, WAB, GNRC, CSL, GE, GGG, IEX, PNR, CFX, DOV, MIDD, SNA, XYL, FLS, EAF, ITT, ALK, DAL, JBLU, LUV, MIC, KEX, JBHT, R, UBER, UHAL, MAN, XOM, HP, BKR, HAL, NOV, SLB, COP, EOG, FANG, HES, MRO, MUR, PXD, XEC, HFC, MPC, PSX, EXP, CF, NEU, NUE, RS, SON, IP, ARE, BXP, HIW, JBGS, ESS, UDR, KIM, NNN, O, WRI, PSA 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 41,917, -5,125vs 7D ago... 7D delta has been negative in the past five days... _____________________________ Current Trends -- COVID-19 cases:- Daily cases 41,917 vs 47,042 7D ago, down -5,125- 7D positivity rate 5.3% vs 5.1% 7D ago- Hospitalized patients 40,728 up +4.0% vs 7D ago- Daily deaths 708, down -1.1% vs 7D ago_____________________________ - The latest COVID-19 daily cases came in at 41,917, down -5,125 vs 7D ago. - After surging to ~16k on last Tuesday, 7D delta in daily cases has turned negative in the past five days. Especially in the past three days, the 7D delta has accelerated to the downside. This is a good sign and 7D delta in daily cases might soon make an even more drastic plunge. - As we wrote before, at this stage of pandemic, as long as vaccinations work, eventually the rollout of the vaccines will lead to a decline in the pervasiveness of the COVID pandemic. Source: Fundstrat and state health departments 7D delta in daily cases has turned negative in the past five days... After surging to ~16k on last Tuesday, 7D delta in daily cases has turned negative in the past five days. Especially in the past three days, the 7D delta has accelerated to the downside. This is a good sign and 7D delta in daily cases might soon make an even more drastic plunge. Source: Fundstrat and state health departments US hospitalization still rolling over ... and even US deaths seem to be rolling over... Below we show the aggregate patients who are currently hospitalized due to COVID. It has fallen significantly from the wave 3 peak. Source: Fundstrat and state health departments Source: Fundstrat and state health departments Source: Fundstrat and state health departments Source: Fundstrat and state health departments POINT 2: VACCINE: 49 states near ~60% infected + vaccinated... 1 in 4 Americans have been fully vaccinated... _____________________________ Current Trends -- Vaccinations: Vaccinations ramping steadily - avg 3.2 million this past week vs 3.1 million last week - overall, 25.2% fully vaccinated, 39.3% 1-dose+ received _____________________________ Vaccination frontier update --> almost all states now near or above 60% 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. That is, the combined value of infections + vaccinations as % population > 60%. - Currently, all states except OR and HI (see below) are basically all at this level - SD, ND and RI are now above 90% combined penetration (vaccines + infections) - So slowly, the US is getting to that threshold of presumable herd immunity Collectively, these 49 states represent about 97.3% of the US population. In fact, 77.5% of US states (based on state population) have seen combined infection and vaccination >70% and 29.0% of US states have seen combined infection and vaccination >80%. As the chart below highlights, the US is seeing steady forward progress and this figure continues to rise steadily. There were a total of 3,521,144 doses administered on Sunday, slightly down from 7D ago. Overall, the pace is steadily rising, as evidenced by the 7D moving average (see blue line). ~73.6% of the US has seen 1-dose penetration >35%... 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 20%/25%/30% of its residents fully vaccinated, displayed as the orange line on the chart. Currently, 93.4% of US states have seen 20% of their residents fully vaccinated. However, when looking at the percentage of the US with at least 25% of its residents fully vaccinated, this figure is 59.0%. And only 3.1% of US (by state population) have seen 30% of its residents fully vaccinated. - While 96.6% of US states have seen vaccine penetration >30%, 73.6% of them have seen 1 dose penetration >35% and 48.3% of them have seen 1 dose penetration > 40%. - 93.4% of the US has at least 20% of its residents fully vaccinated, However, only 59.0% of US has fully vaccinated >25% - This is still a small figure but this figure is rising sharply now. This is the state by state data below, showing information for states with one dose and for those with two doses. The ratio of vaccinations/ daily confirmed cases is generally trending higher (red line is 7D moving avg) and this is the most encouraging statistic. - the 7D moving average is about ~50 for the past few days - this means 50 vaccines dosed for every 1 confirmed case This figure is rising nicely and likely surges in the coming weeks In total, about 130 million Americans have received at least 1 dose of a vaccine. This is a good pace and as we noted previously, implies 50% of the population by May. POINT 3:Tracking un-restricted and restriction-lifted states We are changing Point #3 to focus primarily on tracking the lifting of restrictions, as states begin to ease various mandates. Keep in mind, easing/lifting restrictions can take multiple forms: - easing indoor capacity - opening theaters, gyms, salons, saloons - eliminating capacity restrictions - eliminating mask mandates So there is a spectrum of approaches. Our team is listing 3 tiers of states and these are shown below. - states that eased in 2020: AK, OK, MO, FL, TN - states that eased start 2021 to now: SD, ND, NB, ID, MT, IA, NC, MS, SC, AZ, TX, MD - states that announced future easing dates: GA, NY, WI, AR, CA, AL, CT GROUP 1: States that eased restrictions in 2020... The daily case trends in these states is impressive and it is difficult to say that lifting restrictions has actually caused a new wave of cases. Rather, the case trends in these states look like other states. GROUP 2: States that eased restrictions in 2021 to now... Similar to the list of states above, 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. - we have previously written about how ND and SD, in particular, have seen an utter obliteration of COVID-19 cases in those states - that seems to be a function of vaccine penetration + infection penetration, leading to something akin to herd immunity GROUP 3: States that announced plans ease restrictions in 2021... These states have upcoming dates to ease restrictions. The dates are indicated on each chart. The cases trends in these states have been mostly positive, with perhaps the exception of NY state: - NY state case levels seem awfully stubborn at these high levels - weather is improving in NY area, so if weather has any effect on virus transmission, it should slow cases

COVID-19 UPDATE: Michigan COVID-19 hospitalizations could surge to new highs in coming weeks. S&P 500 gains YTD explained by +6.4% revisions to 2021 EPS by Street

Click HERE to access the FSInsight COVID-19 Daily Chartbook. We are shifting to a 4-day a week publication schedule: MondayTuesdayWednesdaySKIP THURSDAYFriday STRATEGY: S&P 500 gains YTD explained by +6.4% revisions to 2021 EPS by StreetFor the most part, US COVID-19 trends have been stable. Below is the 7D delta chart and while it has been choppy, the trend in cases is not necessarily accelerating to the upside. But the overall US state figures are masking the bifurcating trends in the US. The rise in cases is really attributable to 5 states: - MI- ME- MD- MN- VT Source: Fundstrat and US state healthcare websites Take a look for yourself at the 50 states here (slide from our chartbook) and you can see the rise in these 5 states versus their own timeline. There are other states seeing increases, but hardly of this magnitude. Is there a common thread to explain this? I am not entirely clear. And of these states, MI seems to be experiencing the worst of the surges. Gov Whitmer has attempted multiple explanations for this from mutations to vulnerability of population due to low prior exposure. But the reasons are not entirely clear to me: - the state's daily cases could make a new all-time high and the 7D avg seems to be there- currently hospitalizations certainly look to be making new highs- perhaps there is some solace that daily deaths are muted And Dr Scott Gottlieb weighed in on Michigan, noting that the Biden administration may need to allocate new resources to the state. While MI Gov Whitmer would like additional vaccine allocations, the Biden administration is targeting other measures. Source: And if there is some half-full view of the situation in Michigan. It appears that the older adults are accounting for a smaller rise in cases. The surge in daily cases stems from age 20-29 and by contrast, age 70-79, while higher, is considerably more muted. Thus, one might believe this could reflect the benefit of vaccinations. STRATEGY: 1Q2021 Earning seasons starts soon... S&P 500 2021 EPS revised +6.4% so far, Energy +80%... Earning season is starting in the next few weeks, and 1Q2021 will differ from the last 4 earnings season for a few reasons: - top-line growth is expected to be solidly up YoY (due to March 2020 being easy comps) - company visibility should be considerably stronger for 2021, compared to three months ago - economy should be largely open by mid-June, so companies are going to see roadmap to normalcy finally - Cyclicals are leading the upwards earnings revisions ...S&P 500 2021 EPS forecasts are up 6.4% since start of year while Energy is up +80% Earnings revisions have solidly for 2021 and in fact, have largely explained the YTD gains in equities. - S&P 500 2021 EPS is +6.4% to $174.33 - S&P 500 is up ~10% YTD - Most of the gains YTD are due to EPS revisions to 2021 EPS Source: Fundstrat and Bloomberg ... Energy 2021 EPS is +80% in 2021 and yet the stocks are only up +27%... hmmmmThe positive revisions to the Energy sector have been even stronger: - Energy has seen 2021 EPS revised +80% since the start of the year.- Energy stocks are up +27% YTD So Energy EPS is up +80%, only 3 months in 2021. And yet, investors think this sector is not attractive? To me, this is old-fashioned beat and raise for Energy. Source: Fundstrat and Bloomberg Our Head of Global Portfolio Strategy, Brian Rauscher, made a similar comment in his latest Wall Street Whispers report which was published late last week. He notes there has been no deterioration in the favorable readings for Energy stocks. Hence, he think this is simply profit taking hitting the stocks. Source: Fundstrat ... Epicenter leading positive revisions only 3 months in 2021, suggesting these stocks lead during earnings season I am going to state something potentially obvious: - Epicenter stocks have been driving the positive 2021 EPS revisions YTD - Visibility is improving as US should be fully opened by mid-June - We are only 3 months into 2021, thus, positive revisions should continue To me, this seems like a formula for Epicenter stocks to continue to lead. And as shown below, since the start of April, Epicenter stocks have been performing well, except for Energy, which is down since the start of the month. In our view, Energy is way oversold and given the potential for positive EPS surprise, we expect Energy stocks to recover over the coming weeks. Source: Fundstrat and Bloomberg STRATEGY: Updating our Power Trifecta, adding net 10 stocks, now Power Trifecta 35 (*)We are updating our Power Trifecta list. In this rebalance, 3 stocks are deleted and 13 stocks are added. Thus, the total number of stocks has risen by 10 to 35. This makes sense given the recent pullback in the Epicenter names (more stocks are attractive). 3 Deletions:$PBCT, $NVT, $VNO 13 Additions:$AZO, $HOG, $GRMN, $MGM, $WH, $GPS, $LB, $VIRT, $AGCO, $OC, $UBER. $EXP, $NUE 35 Power Trifecta Stocks Ideas:Consumer Discretionary:$AZO, $HOG, $GRMN, $RL, $MGM, $NCLH, $RCL, $WH, $GPS, $LB Financials:$NYCB, $VIRT Industrials:$AGCO, $OC, $DAL, $KEX, $UBER Energy:$XOM, $HP, $NOV, $SLB, $COP, $EOG, $MRO, $MUR, $HFC, $PSX Materials:$EXP, $NUE Real Estate:$BXP, $HIW, $JBGS, $UDR, $KIM, $WRI Source: Fundstrat, Bloomberg (*) the 35 Power Epicenter Trifecta stock ideas are the subset of the original 108 Epicenter Trifecta stock list. For the full list of our original Epicenter Trifecta stock list, please click the link below. 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. For the full list of the 108 Epicenter Trifecta stock ideas, please click here 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 hereTickers: AAPL, CSCO, INTC, MXIM, NVDA, EBAY, KLAC, GRMN, GOOG, MNST, MSFT, AMZN, QCOM, TSLA, PYPL, AXP, BF/B, PM, XLNX, TGT, PG, XOM, VLO, GL, RF, ATVI, BBY, GE, AMAT, LRCX, MU, HPQ Trifecta Epicenter (*):Full stock list here --> Click hereTickers: AAP, AN, AZO, F, GM, HOG, BBY, GRMN, GPC, LEG, TPX, PHM, NWL, MAT, PII, RL, MGM, HLT, MAR, NCLH, RCL, WH, TNL, SIX, FL, GPS, KSS, LB, VFC, WTFC, ASB, FNB, PB, TFC, WBS, PACW, NYCB, MTG, EVR, IBKR, VIRT, BK, STT, BHF, AGCO, OC, ACM, WAB, GNRC, CSL, GE, GGG, IEX, PNR, CFX, DOV, MIDD, SNA, XYL, FLS, EAF, ITT, ALK, DAL, JBLU, LUV, MIC, KEX, JBHT, R, UBER, UHAL, MAN, XOM, HP, BKR, HAL, NOV, SLB, COP, EOG, FANG, HES, MRO, MUR, PXD, XEC, HFC, MPC, PSX, EXP, CF, NEU, NUE, RS, SON, IP, ARE, BXP, HIW, JBGS, ESS, UDR, KIM, NNN, O, WRI, PSA 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 46,821, +9,265 vs 7D ago... Easter is throwing off the 7D delta... case trends still stable _____________________________ Current Trends -- COVID-19 cases:- Daily cases 46,821 vs 37,556 7D ago, up +9,265- 7D positivity rate 5.1% vs 4.8% 7D ago- Hospitalized patients 39,171 up +6.4% vs 7D ago- Daily deaths 716, down -8.9% vs 7D ago_____________________________ - The latest COVID-19 daily cases came in at 46,821, up +9,265 vs 7D ago.- 7D delta in daily cases surged last Friday and today. This was primarily due to the underreport 7D ago (in observance of the holidays). That said, the overall case trend is still stable. The positivity rate has been flat-lined, at ~5%, since the start of March. The number of currently hospitalized people has been up slightly, while the number of daily deaths continues to trend downward.- At this stage of pandemic, vaccinations might matter more than daily case trends. As long as vaccinations work, eventually the rollout of the vaccines will lead to a decline in the pervasiveness of the COVID pandemic. Source: Fundstrat and state health departments 7D delta in daily cases surged last Friday and today - primarily due to the data distortion last week... 7D delta in daily cases surged last Friday and today. This was primarily due to the underreport 7D ago (in observance of the holidays). That said, the overall case trend is still stable. The positivity rate has been flat-lined, at ~5%, since the start of March. The number of currently hospitalized people has been up slightly, while the number of daily deaths continues to trend downward. Source: Fundstrat and state health departments US hospitalization still rolling over ... and even US deaths seem to be rolling over... Below we show the aggregate patients who are currently hospitalized due to COVID. It has fallen significantly from the wave 3 peak. Source: Fundstrat and state health departments Source: Fundstrat and state health departments Source: Fundstrat and state health departments Source: Fundstrat and state health departments POINT 2: VACCINE: 48 states (+2 from last Thursday) near ~60% infected + vaccinated... _____________________________ Current Trends -- Vaccinations: Vaccinations ramping steadily - avg 3.1 million this past week vs 3.1million last week - overall, 21.7% fully vaccinated, 35.7% 1-dose+ received _____________________________ Vaccination frontier update --> 48 states now near or above 60% 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. That is, the combined value of infections + vaccinations as % population > 60%. - Currently, 48 states (see below) are basically all at this level - SD, ND and RI are now above 90% combined penetration (vaccines + infections) - So slowly, the US is getting to that threshold of presumable herd immunity Source: CDC and Fundstrat Collectively, these 48 states represent about 94.8% of the US population. As the chart below highlights, the US is seeing steady forward progress and this figure continues to rise steadily. Source: CDC and Fundstrat There were a total of 3,555,818 doses administered on Sunday, up 6.1% from 7D ago. Overall, the pace is steadily rising, as evidenced by the 7D moving average (see blue line). Source: CDC and Fundstrat ~92.0% of the US has seen 1-dose penetration >30%... 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 20%/25%/30% of its residents fully vaccinated, displayed as the orange line on the chart. Currently, 80.5% of US states have seen 20% of their residents fully vaccinated. However, when looking at the percentage of the US with at least 25% of its residents fully vaccinated, this figure is 11.6%. And currently no states have seen 30% of its residents fully vaccinated. - While all US states have seen vaccine penetration >25%, 92.0% of them have seen 1 dose penetration >30% and only 52.1% of them have seen 1 dose penetration > 35%. - 80.5% of the US has at least 20% of its residents fully vaccinated, However, only 11.6% of US has fully vaccinated >25% - This is still a small figure but this figure is rising sharply now. This figure could rise even more rapidly after the JNJ's 1-dose vaccines roll out. Source: CDC and Fundstrat This is the state by state data below, showing information for states with one dose and for those with two doses. Source: CDC and Fundstrat The ratio of vaccinations/ daily confirmed cases is generally trending higher (red line is 7D moving avg) and this is the most encouraging statistic. - the 7D moving average is about ~50 for the past few days - this means 50 vaccines dosed for every 1 confirmed case This figure is rising nicely and likely surges in the coming weeks Source: CD and Fundstrat In total, about 118 million Americans have received at least 1 dose of a vaccine. This is a good pace and as we noted previously, implies 50% of the population by May. Source: CDC and Fundstrat POINT 3:Tracking un-restricted and restriction-lifted states We are changing Point #3 to focus primarily on tracking the lifting of restrictions, as states begin to ease various mandates. Keep in mind, easing/lifting restrictions can take multiple forms: - easing indoor capacity - opening theaters, gyms, salons, saloons - eliminating capacity restrictions - eliminating mask mandates So there is a spectrum of approaches. Our team is listing 3 tiers of states and these are shown below. - states that eased in 2020: AK, OK, MO, FL, TN - states that eased start 2021 to now: SD, ND, NB, ID, MT, IA, NC, MS, SC, AZ, TX, MD - states that announced future easing dates: GA, NY, WI, AR, CA, AL, CT GROUP 1: States that eased restrictions in 2020... The daily case trends in these states is impressive and it is difficult to say that lifting restrictions has actually caused a new wave of cases. Rather, the case trends in these states look like other states. GROUP 2: States that eased restrictions in 2021 to now... Similar to the list of states above, 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. - we have previously written about how ND and SD, in particular, have seen an utter obliteration of COVID-19 cases in those states - that seems to be a function of vaccine penetration + infection penetration, leading to something akin to herd immunity GROUP 3: States that announced plans ease restrictions in 2021... These states have upcoming dates to ease restrictions. The dates are indicated on each chart. The cases trends in these states have been mostly positive, with perhaps the exception of NY state: - NY state case levels seem awfully stubborn at these high levels - weather is improving in NY area, so if weather has any effect on virus transmission, it should slow cases

FSInsight logo
150 East 52nd St, 3rd Floor, New York, NY 10022

Subscribe to our Free Weekly Report

An insitutional-grade report delivered to your inbox every week.

© 2021 FSInsight. All rights reserved. Developed by HANGAR115.

Illustrations by Karl Wimer.