Click HERE to access the FSInsight COVID-19 Daily Chartbook.
STRATEGY: Marketing ending the tumultuous election weeks on a good note…
Today (Thursday) is D+2 after 2020 election day, and markets are ending this week on a very good note. Equity markets have continued the rally that started on 10/30/2020 (see below) and we are nearing the September 2020 highs.
– given the outcome of the 2020 election is still undecided, I consider this a huge, huge win!
Source: Bloomberg
We have written exhaustively about why the “epicenter stocks” (aka cyclical tilt) post-election day was the most logical (both under a Biden and a Trump win, and even contested). But consider the timeline shown below:
– into YE, rollover Europe COVID + fiscal stimulus = epicenter leads
– into 2021, vaccines/therapeutics + US COVID-19 wave 3 ending = epicenter leads
Source: tireless Ken
Thus, we think epicenter stocks still make the most sense into YE.
STOCK LISTS: BIDEN VS TRUMP
23 “Biden White House” Stock ideas (*)
Tickers: GRMN, UEIC, AAN, RH, BKNG, EXPE, HOG, NEM, RGLD, JOE, PSB, WRE, JBGS, OPI, AIV, CPT, SAM, WBA, CCRN, CVS, AVNS, VIVO, LMNX
(*) Please note that the stocks in the list above meet the requirements of our investment theme as of the publication date. We do not monitor this list day by day. A stock taken off this list means it no longer meets our investment criteria, but not necessarily that it is neutral rated or should be sold. Please consult your financial advisor to discuss your risk tolerance and other factors that characterize your unique investment profile.
Source: Fundstrat
27 “Trump White House” Stock ideas (**)
Ticker: LVS, MGM, PHM, TOL, CCL, NCLH, RCL, MAR, HLT, WH, WYND, SIX, LMT, NPK, DAL, JBLU, LUV, MTRX, NOV, EOG. PXD, GPRE, REGI, AGNC, NYMT, RMAX, ANDE
(**) Please note that the stocks in the list above meet the requirements of our investment theme as of the publication date. We do not monitor this list day by day. A stock taken off this list means it no longer meets our investment criteria, but not necessarily that it is neutral rated or should be sold. Please consult your financial advisor to discuss your risk tolerance and other factors that characterize your unique investment profile.
Source: Fundstrat
As for COVID-19, spread continues at an accelerating pace. It is not yet parabolic, in the Europe sense. The most rapid spread is in North Dakota and South Dakota, with daily cases in most of the state surpassing what we saw in NYC at its peak. These states also have very low levels of testing as the positivity rate is >50%.
Policymakers in ND and SD are taking the hands-off, or laissez-faire approach. But since they are hands-off, these states provide a template for when we might see “herd immunity.” In fact, it may be possible that SD is approaching herd immunity.
– there is a sudden drop in the velocity of cases in 20% of the state (Point #2)
– if this is not a data fluke, this is a big deal
– cases per 1mm residents might be peaking at around 60,000 or roughly 6% of the state
– assuming true infections are 3X-10X, closer to 10X given massively high positivity, about half the state of SD might be at 60% infected now
We should all celebrate the US did not descend into chaos and revolution. At least, that seems to be the reaction of the stock market.
PS: please remember Vitamin D!!!!!!
POINT 1: Wow. Daily cases 114,056, +26,374 vs 7D ago
The latest COVID-19 daily cases came in at 114,056, up +26,374 vs 7D ago. This is the first time daily cases exceeded 100,000 and daily cases are actually set to rise further:
– the spread of cases across the US is widening
– the fastest spread remains in the wave 3 states, in particular, WI, IL, ID, ND, SD, UT, or WIINSU.
– but other states are seeing higher cases
– we all should be cognizant that cooler weather is making spread faster, perhaps due to weaker immune systems or “indoor” time
Source: COVID-19 Tracking Project and Fundstrat
7D delta rose to 26,374, the highest level since wave 3…
Again, the daily change vs 7D ago, in our view, is the leading indicator as it is what influences the 7D moving average.
– Daily cases are rising vs 7D ago,
– last week, it looked semi-parabolic
– the 7D rise in the most recent day is a big jump
Source: COVID-19 Tracking and Fundstrat
Source: COVID-19 Tracking and Fundstrat
Source: COVID-19 Tracking and Fundstrat
POINT 2: Wave 3: Signs of herd immunity in South Dakota, too early for North Dakota
Wave 3 for COVID-19 differs from Wave 1 and Wave 2 for several reasons:
– it is spreading across states previously unscathed in wave 1 and wave 2
– it is more geographically disperse but mostly in the Mountains region
– 6 states are seeing the fastest spread, WI, IL, ID, ND, SD, UT, or WIINSU
– Unlike Wave 1 and Wave 2, states caught up in wave 3 are largely laissez-faire, without any policy intervention
The two states with the fastest growth in cases are North Dakota and South Dakota (see below). Both states are absolutely exploding in daily cases with 4X the amplitude seen in wave 1 and wave 2 states. These are shown in daily cases per 1mm, to common-size the cases.
Source: COVID-19 Tracking and Fundstrat
Daily deaths in ND and SD surpass Italy during its worst days…
But daily cases can be misleading, to the extent that COVID-19 cases are not necessarily leading to mortality. The chart below shows daily deaths per 1mm residents. ND and SD have surpassed F-CAT for mortality, but are not near the peaks seen in NYC.
– But ND and SD daily deaths surpassed Italy in its darkest days.
Source: COVID-19 Tracking and Fundstrat
Given positivity rates in ND and SD >50%, infections are probably 3-10X greater than confirmed cases…
Incidentally, ND and SD are probably way, way behind on testing. Look at the massively high positivity rates below.
– Positivity rates in ND are 60%
– Positivity rates in SD are 50%
So I think it might be safe to assume that for every “detected” (confirmed case), there is probably 3-10 real infections. This is not that different than what we saw in NYC during its peak days.
Source: COVID-19 Tracking and Fundstrat
People are masking up in ND and SD…
But even as policymakers have not really intervened in ND or SD, residents in these states are increasing their usage of masks. Below is data collected by Delphi and is based on Facebook surveys. So it does seem like there is some action taking place.
Source: Delphi Research Group and Fundstrat
Granted, individual cities in wave 1 and wave 2 were similarly as bad as what we are seeing in wave 3. Below, we highlight NYC and Miami. And as you can see, NYC peaked at ~800 daily cases per 1mm and in Miami ~1,200.
Source: Johns Hopkins and Fundstrat
Is South Dakota showing signs of “herd immunity”? Maybe…Looking at internals, or rather, county level data, is instructive. Below is South Dakota. We look at the % of the state where daily cases are exceeding certain thresholds:
– 1,000 cases per day matches NYC at its peak
– 1,500 cases per day roughly matches Miami at its peak
The data is pretty surprising.
South Dakota is showing a drop in the share of the state with daily cases exceeding 1,500 daily cases per day. See the dark blue line below.
– this could be a data fluke, although it is based on 7D moving averages to smooth out the lumpiness
– or it could be the first signs of herd immunity
This bears watching.
Source: Johns Hopkins and Fundstrat
Almost 40% of South Dakota has case prevalence >6%, or 60,000 cases per 1mm residents. Assuming true infection rates are 3X to 10X the “detected cases,” a 6% prevalence is 20% to 60% total attack rate for the state. So you can see, South Dakota is closer to an infection break point. Thus, seeing how COVID-19 progresses will be key.
Source: Johns Hopkins and Fundstrat
North Dakota: >85% of North Dakota has daily cases/1mm >NYC peak and >52% Miami peak
Below shows the % of North Dakota (based on county-data) that have daily cases growing faster than NYC at its peak or Miami:
>85% of ND has daily cases surpassing NYC peak
>50% of ND has daily cases surpassing Miami peak
These are astounding levels of case spread. And what is interesting is that we have not found a single statewide policy action taken. So the state is taking a relatively hands-off approach to COVID-19. This is what makes this a useful study in COVID-19 spread.
– as ND moves through this pandemic, we can get an idea when the infection reaches its “break point”
Source: Johns Hopkins and Fundstrat
Almost 40% of North Dakota has case prevalence >6%, or 60,000 cases per 1mm residents. Assuming true infection rates are 3X to 10X the “detected cases,” a 6% prevalence is 20% to 60% total attack rate for the state. So you can see, North Dakota is closer to an infection break point. Thus, seeing how COVID-19 progresses will be key.
Source: Johns Hopkins and Fundstrat
POINT 3: Parts of Europe already rolling over… mere days into lockdown…
When a nation institutes a “lockdown,” it is like someone shocking a pool with chlorine. The slowing of movement will certainly cause COVID-19 case spread to slow. The cost for the citizens, however, is enormous.
– emotional toll of isolation
– economic devastation
– not a complete solution
So, for these reasons, we are not that favorably inclined to see lockdowns. But several European nations are pursuing this. And it is guaranteed to arrest the spread of COVID-19, to an extent. This is the “good news” story for Europe. Among the nations:
– France
– Germany
– UK
– Belgium
– now, Italy
As shown below, the daily cases per 1mm for France and UK already seem to be slowing, to an extent.
Source: Johns Hopkins and Fundstrat
And if we look at the regions with the UK, we can see a pronounced rollover in Northern Ireland and Scotland.
– Daily cases are plateauing in London
– Daily cases per 1mm in UK are lower than what we see in the epicenters in the US
Source: GOV.UK and Fundstrat
