COVID-19 UPDATE: Yesterday's White House briefing shows "great mask debate" largely ending = good. Virus peaking + Mask mandate = Economy resuming = Epicenter OW

COVID-19 UPDATE: Yesterday's White House briefing shows great mask debate largely ending = good. Virus peaking + Mask mandate = Economy resuming = Epicenter OW

The White House held its first coronavirus briefing in more than 12 weeks and unlike previous briefings, the primary speaker was President Trump, while Dr. Birx and Dr. Fauci were not present.  Overall, I thought it was an overall solid briefing and my takeaways are:

- Trump's stance is now pro-mask.  It is "patriotic" and this largely ends any public/political resistance to the mask stance;
- Trump came out speaking favorably towards expanded testing - this came during the Q&A;
- He warned "things would get worse before they get better" but this strikes us as typical of policymakers "over-reacting;"

This is a welcome shift in messaging from the White House.  While there are the ongoing debates about the science supporting the effectiveness of mask use to mitigate spread, several studies and contact traces show the effectiveness of a simple mask:

- the Singapore to China flight by an infected person, but since he wore a mask, not a single passenger nor crew member tested positive, (even 1M later);
- two infected hair stylists in Missouri who had served >100 clients, but not a single client became infected;
- according to the big-data model by IHME, daily infections would fall 80% by September with full mask compliance (see below)

And this is coming at a time when the surge was seen in the new epicenter, FL, CA, AZ and TX, or F-CAT, is peaking.  Thus, the US is essentially having a "redo" of where we were 8 weeks ago in early June, where the restrictions can be eased and if cases continue to abate, the level of anxiety and panic will recede.  This will be good for asset prices.

Yesterday's data showed the usual "Tuesday bump" in cases and deaths.  Deaths are up but this pace of increase is hardly keeping up with the surge in cases.  And thus, we believe, those daily deaths increasing, while tragic, is not going to warrant a rollback of the economic opening.



STRATEGY: Value underperformance so bad, not seen since "Great Depression" (1930, 1931)
At the risk of oversimplifying the sector framework, we think the biggest influence on sector positioning is the virus path.  The reason is as follows:

- virus path leads
- economic opening which leads
- cyclically sensitive vs stay at home

Thus, the virus path, expanding or receding, essentially governs sector positioning.

COVID-19 UPDATE: Yesterday's White House briefing shows great mask debate largely ending = good. Virus peaking + Mask mandate = Economy resuming = Epicenter OW
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