COVID-19 UPDATE: 4 states daily COVID-19 case growth > testing - UT, AK, AZ and AL. 17 "early in barbell recovery" stocks from our team.

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.


The S&P 500 managed to 2.2% gain week to date in a week where mass protests have taken place across >350 communities.  This is incongruous and we understand anyone who thinks the equity market is indeed ignoring massive social unrest.  These protests are the most widespread and resonating with the public so strongly, that one has to go back 50 years to find a similar time in history – 1968.  In fact, I am not sure there was ever a time in history where the President had to “check out” the fortified bunker, as this happened in this past week.

But the fact is, the equity market is not a moral compass.  It is not choosing sides.  And it is not known for its sympathetic traits.  We did get incremental economic news that was “half-full” especially on the cyclical components of the economy.  American airlines increasing capacity this week is highlighting perhaps that Americans may be moving more quickly to a pre-COVID normal than we expect.  The big number is  the May payrolls report on Friday, but that is expected to be another horrific and dejecting figure of major job losses. 

The “epicenter” surged >10% in the past 4 days… that is the real story
But the 2.2% rise in equities is not the real story. Look at the daily increases at the “social distance victim” stocks and the “epicenter” groups. 

– Airlines posted 4 days of spectacular gains and up 13% on Thursday
– Casinos surged this week and up 13% in past two days
– Even hopeless Energy is up 8% in the past 4 days

The huge amounts of “dry powder” seem to be finding their way into cyclical stocks.  This is the reason we think the “fresh money” strategy needs to be “less barbell” and pretty much outright buy the epicenter.

Source: Bloomberg

17 stocks which are “early in the barbell recovery”
We ask our macro team to identify “early in the barbell recovery” stocks are still well off their highs but are considered fundamentally attractive based on the work of our head of Global Portfolio Strategy, Brian Rauscher and/or Head of Technical Strategy, Rob Sluymer, or screen attractively based on the quant work by our data science team led by Ken Xuan (aka tireless Ken).  

We came up with 17 names that are in the earliest stages of what we believe is a strong upward stock move, one that will outperform the S&P 500 and outperform their respective sectors and peer stocks.

The “early in the barbell recovery” tickers are:
– TJX, GM, BKNG, CCL, WYNN, CVX, XOM, FITB, CFG, MS, RE, CMI, NOC, GD, SNA, FLS, PCAR 

Source: Fundstrat

We also have an additional 24 stocks that are mid- to late-Barbell recovery, meaning they already made a big move.  Those stocks are discussed in the commentary below.



POINT #1: USA daily COVID-19 cases not seeing the “midweek” surge, daily cases +1,231 to 21,089 even as tests hit a new high of 474,835

COVID-19 is now a West Coast and Southwest story in the US, less about NY Tri-state
The USA overall COVID-19 cases did not see the typical midweek surge of cases, which could be a positive change — albeit, a one-day effect.  Overall USA cases were up +1,231 to 21,089 (+6.2%) as tests reached a new high of 474,835 (+3.8%).  

4 states with meaningful rises:
North Carolina 1,189 vs 888 1D ago   +301
Virginia               951 vs 666                +285
Georgia               953 vs 687               +266
Iowa                    505 vs 284               +221
Total 4 states                                     +1,073

3 states with sizable declines:
Arizona              530 vs    973 (1D)    -443
California        2,120 vs 2,377            -257
Tennessee          298 vs   447           -149
Total 3 states                                     -849

Yesterday saw less of the typical churn.  But the high case numbers are now generated away from the NY tristate area.  It is now really about:
– CA
– TX
– AZ
– and maybe some Southern states like AL, FL, NC

7D delta (seasonal adjustment), yesterday is a break in trend vs the past few days…
On a 7D rolling basis, to smooth out the weekend lag effects, we can see yesterday’s cases numbers are down 1,666 from a week ago.  This is the first 7D drop in 5 days.  So again, with the rise in tests, it is positive to see the drop in cases.

– but the caveat remains that the mass protests have now triggered a 1,000 or even 10,000 superspreader event and thus, we will not know for 2 weeks whether a second wave is upon the US.

Source: COVID-19 Tracking Project

Source: COVID-19 Tracking Project

As for daily tests, we are now seeing a new level of consistency, with high numbers of tests.  The daily tests reached 474,835 which is the highest so far.

Source: COVID-19 Tracking Project


POINT #2: FLARE-UPS: 4 states are seeing growth in cases > tests — Utah, Arkansas, Arizona and Alabama — new “hot spots?”
When it comes to looking at COVID-19 case growth, we have to keep in mind many states have increased testing substantially, so the rise in cases is a result of expanded testing.  For instance, look at the 10D increase in cases by state below (sorted by highest to lowest 10D % change).

– Testing has increased and that has also resulted in greater cases
– Only 4 states have case growth > test growth –> UT, AK, AZ and AL

But this is only suggesting that reported cases have grown because of better testing.  For contrast, look at: 

– CA, total cases are up 27% in past 10D but total tests are up 33% in the same timeframe
– NY, total cases are up 3% in past 10D but total tests are up 32%

So we can see how increased tests can result in more cases detected.

Source: COVID-19 Tracking Project

We sorted the 50 state table below by the “adjusted 10D growth” (less % change in 10D tests) and you can see that Utah has the highest overall increase.  Reported cases are up 27% but that exceeds the 16% rise in tests during that period of time.



The states at bottom of this list might have “eradicated COVID-19″… NY, NJ, South Dakota, Michigan, Maine and Missouri
The states at the very bottom of this list might be states that have effectively controlled COVID-19, especially if the 10D rise in cases is low. 

– NY has a 3% rise in cases and a 32% rise in tests and positivity rate of test of 2.2% 
– NJ 5% rise in cases and 38% rise in tests and 3.2% positivity rate

In a way, these hard-hit states have seen the best improvements, almost as if the states have “exhausted” the vulnerable population and thus, see case growth diminish.  We will also want to see if these are the states where we would like to see if the mass protests lead to a second wave.  If these states do not see a subsequent surge, that would be positive.

Source: COVID-19 Tracking Project

POINT #3: “LESS BARBELL” Stock Ideas.  17 stocks in the “early barbell recovery”
We believe investors should use “less barbell” and OW stocks in the “epicenter” and also “social distance victim” stocks. 

The rationale being as the economic visibility improves, these stocks stand to see the strongest gains.  And additionally, the fact that these stocks are under-owned and also still well off their highs and with valuations on a P/S basis that are attractive, make the risk/reward solid.

– As shown below, on 3D and 7D basis, we have seen strong moves.  However, they have fallen the most and still well off their highs.

Source: Fundstrat

17 stocks which are “early in the barbell recovery”
We have identified 17 stocks that are “early in the barbell recovery” as these stocks are still well off their highs but are considered fundamentally attractive based on the work of our head of Global Portfolio Strategy, Brian Rauscher and/or Head of Technical Strategy, Rob Sluymer, or screen attractively based on the quant work by our data science team led by Ken Xuan (aka tireless Ken).  

The “early in the barbell recovery” tickers are:
– TJX, GM, BKNG, CCL, WYNN, CVX, XOM, FITB, CFG, MS, RE, CMI, NOC, GD, SNA, FLS, PCAR

The “middle of barbell recovery” tickers are:
– ROST, ULTA, EOG, SIVB, STT, JCI, DOV, AOS, ETN, CSX, PNR, UNP, JBHT, CAT, DE, DAL, PH, EMR

The “late in the barbell recovery” tickers (but still buyable) are:
– AAP, BWA, DLTR, IEX, GWW

17 “Early in the barbell” stocks…

Source: Fundstrat



18 “Mid-stage in the barbell” stocks…

Source: Fundstrat


5 “Late-stage in the barbell” stocks…

Source: Fundstrat