COVID-19 UPDATE: Weekend takeaway --> "it could have been worse" = "half-full" and positivity rate is plateauing
Please join Brian Rauscher, Head of Global Portfolio Strategy and Asset Allocation at FS Insight, on Wednesday, July 15th at 2:00 pm Eastern Time for a Webinar "Climbing the COVID Wall of Worry – Positioning for 2H20" with Q&A. Register here to attend
The data over the weekend highlights the continuing rapid spread of COVID-19 across much of the US as US cases remained >60,000 for much of the weekend (testing did reach an all-time high of 823,000) but the "half-full" side is that reported deaths eased with 476 deaths reported on Sunday. This highlights the dilemma facing both policy makers and financial markets.
- uncontained rapid spread of COVID-19 risks eventually reaching the "vulnerable" population
- but there is offset of tremendous economic and social carnage from closing economies.
The resilience in equity markets in the past week and Sunday evening show that markets have been bracing for a more dire path regarding COVID-19. In fact, as we discuss below, positioning data shows how abruptly hedge funds switched to bearish positioning in June. And coupled with high levels of mutual fund cash, balanced funds have the highest cash balances (% of AUM) since before 2009. Thus, the fact "it could have been worse" = risk-on.
The hospitalizations and the daily deaths also eased over the weekend. Notice how much both "gross hospitalizations" and "net hospitalizations" fell over the weekend. While I am not positive on the following, admissions to hospitals should not be affected by the "weekend" effect, meaning, a drop over the weekend is a drop. So, this is encouraging.
Choose one of our yearly plans to save nearly 15%
- Macro + Crypto
- Macro + Crypto