COVID-19 UPDATE. Revisiting NYC. Still an inferno, as NYC daily cases > every state in the US and high for 65-plus. NGA (National Governors Associations) puts forth Roadmap to Recovery
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.
We have done many Zoom calls with our clients over the last few days (let us know if you want to do one, we would be glad to set one up, but ignore the sparse furnishings in my home office).
In every conversation, the key topic is the uncertainty - uncertainty of how the world ends this pandemic crisis, uncertainty about when economies open, and more uncertainty about the path and speed of recovery. Another issue, but not as universal, is a general skepticism, or rather, curiosity about why risk markets are actually rallying. This latter point is logical since we are only one month into the "economic depression." These viewpoints are rational. After all, there is no playbook for a global pandemic, and therefore, every citizen, policymaker, and investor is operating in "new territory."
But the prevalence of uncertainty underscores that investors are not bullish at all. Ok, at least our institutional investor clients are not that bullish. But as we have observed, the risk positioning of an uncertain investor is the same as a bearish investor. Thus, widespread uncertainty = bearish positioning. And as uncertainty decreases, the marginal change that matters is someone becoming "less bearish"--if they turn bearish, their positioning is already there largely.
In short, as we move the "way forward" through this crisis, and as visibility improves, uncertainty drops = incrementally risk on = stocks rise. In our view, incremental developments would have to be much worse for stocks to retest/create new lows. But the future is uncertain. We are merely sharing our observations. Take it with a grain of salt.
POINT #1: New York City improving but >3,500 cases/day exceeds every single state in the USA. Plus, new cases elevated for 65-plus despite strict social distance measures--only modest improvement since 4/9/2020.
We have not published NYC level for some days, partially because the city had changed its methodology and data collection several times and our data scientist, tireless Ken, cautioned we need to let the data "season" for a week or so. The summary of NYC's daily net new cases is below and the latest figure is 3,563 net new cases. This is down from 7,520 NYC on 4/9/2020, so NYC is 12 days past its "apex"
- Progress since then has been choppy and slow. NYC had 19 days where cases hovered around 4,000 and even the last figure of 3,563 is close to flat.
- In fact, NYC reports more cases daily than every state in the USA (yup). Even New Jersey (#2 overall) reported 3,478 cases yesterday.
- Think about that, NYC remains the epicenter and even after 12 days, has seen cases ~50% off the peak, but still staying in a ~4,000 per day range.
