COVID-19 UPDATE. NY hospitalizations soon to turn "net negative" = Good. Despite 3 waves of crisis coming, S&P 500 >2,800 confirms bottom is in (we realize this makes no sense)

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


Taking a step back, it is clear that in the past week (few weeks), the US progress against COVID-19 is outperforming expectations.  This is evidenced by the case data (which we discuss below) but it is also evident in the powerful recovery of risky assets, both equity and credit (investment-grade and high-yield).  In fact, the S&P 500 closed above a key milestone (2,793, specifically, which is a 50% retrace) and since 1929, a bear market recovering 50% of losses historically signals the bottom is in (we realize some of you may protest that we don't know if this is the low low, but see our comments later, we explain this).

You might think that this recovery in stocks is mere "noise" or a "deadcat bounce" and that we will soon resume a deadly decline.  But think of it this way.  After February 19th, the equity markets felt into a slide and by the time the first US non-Wuhan/non-cruise case was reported in early March, the S&P 500 was already down 15%. And by end of the first full week of March (10th), the US only reported 300 cases yet the S&P 500 was down 27%.

In other words, as COVID-19 spread, the equity markets were WAY AHEAD of the data.  

If this is true, then the converse should be similarly true.  After all, if it was "signal" on the velocity of the decline, this blistering recovery is also "signal"--and this milestone is even more critical as S&P 500 closing above 2,793 is a 50% recovery of losses.  Since 1929, this has signaled a bottom in.  

So in this note, we discuss progress around COVID-19, including some proposed framework by CA and NY governors.  But we just observe that the stock market fierce recovery is telling us that the economic recovery path may be a lot steeper than many expect.

POINT #1:  With each day passing, it looks like past "apex" for the USA.  Still not entirely clear why New York City metro area was worst
From a high level, the incoming data for new cases and even hospitalizations for the US and NY state support the notion that we may already be past-"apex" on daily new case growth.  Now this doesn't mean that there will not be more cases, nor more deaths, rather, this is observing that we are:

- past exponential growth
- past linear growth
- entering declining growth <-- we are here!
- towards zero growth

NY state reported 7,177 new COVID-19 cases today.  This is an uptick from Monday but this is not the "two-step forward, three steps back" but rather, a lumpy but steady decline in cases.  

- Gov Cuomo in his press briefing today was more definitive in his belief we are past the apex.  Interestingly, during Q&A, there was some discussion of the "real prevalence" of COVID-19 because testing misses undiagnosed cases plus asymptomatic patients.  He and his team estimated at 10%-20% of NY state has or recovered from COVID-19.  

- NY state has a reported 10,394 cases per 1mm residents, or about 1% of the state is "confirmed positive" and Cuomo's team estimated it is closer to 10X to 20X the reported number.  Michael Hourigan, of Fortress Investments, shared with me a New England Journal of Medicine article (link to NEJM article) where an NYC hospital administered COVID-19 tests to all incoming birthing mothers and found 13% were positive and yet, 90% of the positives had no symptoms.

COVID-19 UPDATE. NY hospitalizations soon to turn net negative = Good. Despite 3 waves of crisis coming, S&P 500 >2,800 confirms bottom is in (we realize this makes no sense)
An FSI Macro, or FSI Pro subscription is required in order to access this content.
If you are already a member at FS Insight, please If you don’t have a subscription to FS Insight yet, you can sign up below.

We accept crypto via BitPay for yearly subscriptions.

Choose one of our yearly plans to save nearly 15%

    • Macro + Crypto
      FSI Pro
      The Complete Package
      FSI Macro + FSI Crypto
      from
      $
      249
      /mo
      billed anually
      First Month Free!
    • Macro
      FSI Macro
      from
      $
      199
      /mo
      billed anually
      First Month Free!
      What's included?
      Webinars and Media
      Webinars
      We host over 12 LIVE webinars per year with our research team and high-profile special guests. Incredible value and market insights!
      Weekly
      Coming Soon
      Fireside Chats
      Weekly interviews with our research heads about market opportunities and important updates.
      Research
      Weekdays
      Tom Lee's First Word
      The best market research out there -- on a near-daily basis.
      On market events
      Tom Lee's Intraday Word
      These are released periodically after crucial market developments.
      Daily
      Daily Technical Strategy
      Daily commentary on market trends and short term opportunities.
      Weekly
      Wall Street Whispers
      Exclusive insights based on discussions with institutional clients.
      Weekly
      Quantitative Strategy
      Quantitative market research utilizing industry-leading analytical methods.
      Weekly
      US Policy
      Weekly update on developments in Washington DC and how they may impact Wall Street.
      Weekly
      Weekly Roadmap
      Weekly summary of market events and updates on our key theses.
      Earnings season
      Earnings Daily
      A multi-faceted update of earnings developments.
      Updated bi-weekly
      Signal From Noise
      Highlights timely market themes and sectors with corresponding stocks, cutting through the day-to-day market “noise” for a distinct perspective.
      Stock Lists
      Updated quarterly
      Granny Shots
      Thematic investment stock picks that aim to outperform the S&P 500.
      Updated monthly
      Brian’s Dunks
      Single stock pics that are poised to outperform the index by leveraging sector outperformance and earning revisions strategies.
      Updated monthly
      FSI Sector Allocation
      A sector allocation strategy that is designed to outperform the S&P 500 while taking minimal risk.
      Updated monthly
      Factor Strategy
      List of ETFs based on quantitative models that should outperform the S&P 500 on a monthly basis.
      And More!
      FSI Academy
      Our main goal is to make you a better investor! This series will guide you through key financial concepts and topics in an understandable way.
      Community Questions
      We gather your inquiries and answer them in the most scalable way. Hear directly from our research principals!
      Community Interviews
      Get questions answered directly by our research heads and guest speakers.
      Get access to all the macro research on FS Insight
      First Month Free!
    • Crypto
      FSI Crypto
      from
      $
      99
      /mo
      billed anually
      First Month Free!
      What's included?
      Webinars and Media
      Webinars
      Ongoing webinars exploring crypto opportunities, in depth research, and exclusive research offerings from our team of analysts and leading cryptocurrency firms.
      Weekly
      Crypto Chats
      Digestible videos expanding on important market events and metrics that are shaping cryptocurrency markets.
      Research
      Daily
      Crypto Daily Report
      Stay on top of the crypto markets with macro commentary, technical analysis, and the most relevant news.
      Intra month
      Crypto First Word from Tom Lee
      Hear directly from Tom Lee about important cryptocurrency developments.
      Weekly
      Crypto Technical Strategy
      From Bitcoin, Ethereum and Solana to other coins, our Head of Technical Strategy highlights important price movement to help give you an edge.
      Weekly
      Crypto Weekly
      A must-read summarizing our key thoughts about the crypto market, price action, and developing trends.
      Weekly
      Funding Fridays
      Are you looking for investment opportunities in the crypto space? We explore early-stage crypto opportunities in this note about where the smart money is being invested!
      Weekly
      Coming Soon
      Crypto Events
      Never miss another conference, a high-impact software update, or an event that could be market-moving!
      Intra-month
      Deep Research Reports
      Our consulting business delivers incredible deep research reports to highlight the economics and viability of exciting crypto projects.
      Update daily
      Bitcoin Misery Index
      Keep track of bitcoin sentiment to plan your digital assets strategy.
      And More!
      FSI Academy
      Our main goal is to make you a better investor! This series will guide you through key financial concepts and topics in an understandable way.
      Community Questions
      We gather your inquiries and answer them in the most scalable way. Hear directly from our research principals!
      Community Interviews
      Get questions answered directly by our research heads and guest speakers.
      Get access to all the crypto research on FS Insight
      First Month Free!

More from the author

Disclosures (show)

Want to receive Regular Market Updates to your Inbox?

I am your default error :)