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.

Some new milestones were achieved today.  California, the largest state in the US, announced plans to open the economy (Stage 2) this Friday, making 24 states with phased opening and 54% of GDP.  And NY state saw daily cases CRASH to 2,538, capping 5 days of declining cases and bringing total cases down 76% below peak.  NY state has made much progress in the past week and the recent data, including hospitalizations down, decisively show sustained slowing of COVID-19.  NJ also saw cases fall 50% today (1,525 from 3,027) so NY is not necessarily a "fluke"-- is it the weather?

In any case, so many states saw a decline that the total new cases in the US fell to 21,783, which is down from 25,614 yesterday, 30,507 two days ago (you get the picture) and is down 39% from the 4/24/2020 peak of 36,090 cases. 

By the way, the big data provider, Deep Macro, posted updated consumer movement, and it looks like retail visits, even to automotive retail, is rising.  As more states open, the question of how consumers re-engage will be answered.  But so far, it looks better than what many feared (see below).

Equity markets today posted an interesting reversal, opening down 1% and closing up.  Stocks are holding up exceptionally in what we can only describe as the worst earnings season in modern financial times.  Companies are missing 1Q2020 EPS by ~10%, worse than any time during the GFC and most are withdrawing guidance.

This is not a bearish observation.  This is highlighting something apparent for some time, stocks are looking past the bad data and one could argue, sensing upside and good news ahead.  For those saying stocks are ignoring bad news is simply ignoring what happened between 2/19/2020 and 3/23/2020.  And as Goldman Sachs and JPMorgan proprietary positioning data shows (see below), retail is a seller and risk-parity funds are very bearishly positioned.  And everyone else is "uncertain" = bearish. 

The state openings and case counts peaking, and also "earnings confessions" are all acting to reduce uncertainty.  And this is, in our view, the primary reason stocks are drifting higher and shifted into the hands of buyers (half full) -- that is, the market was overwhelmed with sellers, causing the fastest crash ever.  So we think risk/reward still favors buyers.


POINT #1: WOW!  Good news from both coasts.  CA is opening this Friday (Now 24 states --> 54% GDP).  NY state cases crash to 2,538 and now 76% off-peak.  Also Nebraska opened today.
California is the biggest state in the US and many of the top states are opening --> CA, TX, FL...
CA Gov Gavin Newsom announced the state will begin easing restrictions this week, as the state moves to "Stage 2."  The state had already eased rules around elective surgeries and this move is allowing many 'low risk' businesses to resume operations.  California is an economic giant, representing 15% of US GDP.  So this is a big deal.


The guideline for Stage 2 is listed below from the CA state roadmap.

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