First Word

COVID-19 UPDATE: VIX looks ready to break to 2020 new lows = risk-on. Daily deaths still trailing Wave 1 and Wave 2

Click HERE to access the FSInsight COVID-19 Daily Chartbook.

STRATEGY: The VIX looks ready to make a move below 20 = risk-on
The VIX, a measure of market’s anticipated volatility, is shown below, showing spot VIX over the past 18 months. As is apparent, the VIX has not been below 20 since the start of the pandemic:

– But is the VIX ready to make a move below 20? finally?
– If so, this would be the first move below 20 since the pandemic started

In our view, a move <20 would be a major risk-on signal, as it would suggest that investors see lower volatility in the coming months.  This would be quite a change for much of 2020.  And if so, a drop in VIX would also suggest investors would not only be more “risk-on” but we could see a risk on investment leverage as well.  

In other words, this would be more firepower to buy equities.

COVID-19 UPDATE: VIX looks ready to break to 2020 new lows = risk-on. Daily deaths still trailing Wave 1 and Wave 2




COVID-19 is spreading at an accelerated rate across the US.  On the one hand, we know that therapeutics are much better today, so the risk of mortality overall is lower than it was 8 months ago.  However, no one wants to get COVID-19, given its mysterious side effects.  But we were really surprised to see this headline below:

– One of VP Biden’s advisors is suggesting the US pursue a 4-6 week lockdown to control the pandemic.

This is a policy pursued by Europe and as we have written previously, we see this as a flawed strategy.  In fact, the WHO has even said widespread lockdowns is not a recommended strategy, because of the social and devastating economic impact.  

COVID-19 UPDATE: VIX looks ready to break to 2020 new lows = risk-on. Daily deaths still trailing Wave 1 and Wave 2


https://www.bloomberg.com/news/articles/2020-11-11/new-york-state-to-order-restaurants-bars-closed-at-10-p-m?sref=NVS0rEaE


We are frankly pretty surprised to see the US even considering such a strategy.  There is growing evidence to show that specific activities account for the lion’s share of spread.  Just yesterday, a peer-reviewed article showed that the majority of infections stem from indoor dining.  So, restrictions around dining would be more effective than a widespread nationwide economic lockdown.


In fact, NY Gov Cuomo is ordering a soft-lockdown around dining, ordering NY restaurants and gyms to close by 10pm.  While this sounds somewhat arbitrary, this action is pretty much supported by research:

– As we highlighted yesterday, restaurants and gyms are the two largest source of COVID-19 spread in the US for almost every metro area

COVID-19 UPDATE: VIX looks ready to break to 2020 new lows = risk-on. Daily deaths still trailing Wave 1 and Wave 2


https://www.bloomberg.com/news/articles/2020-11-11/new-york-state-to-order-restaurants-bars-closed-at-10-p-m?sref=NVS0rEaE




ADDENDUM: We are attaching the stock lists for our 3 portfolios:
We get several requests to give the updated list for our stock portfolios.  We are including the links here:

– Granny Shots  –>       core stocks, based on 6 thematic/tactical portfolios
– Trifecta epicenter  –> based on the convergence of Quant (tireless Ken), Rauscher (Global strategy), Sluymer (Technicals)
– Biden vs Trump  –>   based on correlation to either candidate odds

Granny Shots:
Full stock list here –> Click here

Trifecta Epicenter:
Full stock list here –> Click here

Biden White House vs. Trump White House:
Full stock list here –> Click here











POINT 1: Daily cases 140,854, +39,784 vs 7D ago — on pace to hit 200,000 by mid-Nov
The latest COVID-19 daily cases came in at 140,854, up +39,784 vs 7D ago. Wave 3 is gaining momentum, so we are not really near a peak in daily cases

– 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 and dominating top 10 are essentially all previously “unscathed” states
– we all should be cognizant that cooler weather is making spread faster, perhaps due to weaker immune systems or “indoor” time


COVID-19 UPDATE: VIX looks ready to break to 2020 new lows = risk-on. Daily deaths still trailing Wave 1 and Wave 2


Source: COVID-19 Tracking Project  and Fundstrat


7D delta is now running at >40,000, which means we could be at 200,000 cases in two weeks
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,
– It is rising at >40,000 7D delta

At this pace, we could see daily cases rise to >200,000 within two weeks.  So wave 3 is clearly gaining momentum.


COVID-19 UPDATE: VIX looks ready to break to 2020 new lows = risk-on. Daily deaths still trailing Wave 1 and Wave 2


Source: COVID-19 Tracking and Fundstrat  


COVID-19 UPDATE: VIX looks ready to break to 2020 new lows = risk-on. Daily deaths still trailing Wave 1 and Wave 2
COVID-19 UPDATE: VIX looks ready to break to 2020 new lows = risk-on. Daily deaths still trailing Wave 1 and Wave 2

Source: COVID-19 Tracking and Fundstrat  



COVID-19 UPDATE: VIX looks ready to break to 2020 new lows = risk-on. Daily deaths still trailing Wave 1 and Wave 2

Source: COVID-19 Tracking and Fundstrat




POINT 2: Wave 3: Daily deaths (per 1mm) below wave 1 and wave 2
We have been looking at different ways to give the best context to Wave 3.  Up until now, 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

New:
– Daily cases per 1mm for wave 1 (NY tristate) and wave 2 (F-CAT) are identical for the first time


Comparing Daily cases (per 1mm) versus Daily Deaths (per 1mm)… Wave 3 is a lot more muted
As many of you know, we have been writing more commonly about daily cases in COVID-19.  There are many reasons for this:

– daily cases are a leading indicator to hospitalizations and deaths
– daily cases is more relatable, as none of us wants to catch COVID-19
– daily cases is a metric used by the media

So as you can see, it is a common metric.  

The % of USA with daily cases per 1 million >300 is a record high…
As this chart below shows, about 40% of the US is seeing daily cases >300 per 1mm, which far exceeds the values seen in wave 1 and wave 2:

– in Wave 1 (NY tristate), about 10% of the US saw daily cases >300 per 1mm
– in Wave 2, (F-CAT), this figure jumped to 25%
– in Wave 3, this figure is now 45%

So Wave 3, is leading to a much greater level of case prevalence than seen in wave 1 and wave 2.

COVID-19 UPDATE: VIX looks ready to break to 2020 new lows = risk-on. Daily deaths still trailing Wave 1 and Wave 2


Source: COVID-19 Tracking and Fundstrat 


Mortality, as measured by daily deaths (per 1mm) was extreme in Wave 1 and reached high levels in Wave 2…
Below is a look at daily deaths per 1mm by region (wave 1 was NY tristate and wave 2 is F-CAT) and as you can see below, Wave 1 saw a massive level of carnage in the NY tristate area. 

– Wave 2 saw the states of FL, CA, AZ, TX, or F-CAT see daily deaths of 7 per 1mm

Wave 3, so far, is running below that level of 7 deaths per 1mm residents seen in wave 2 for F-CAT states.

COVID-19 UPDATE: VIX looks ready to break to 2020 new lows = risk-on. Daily deaths still trailing Wave 1 and Wave 2

Source: COVID-19 Tracking and Fundstrat 



If we were to look at county-level data and see what % of the US is seeing daily deaths >7.0 per 1mm (matching Wave 2), this is what we would see:

– Daily deaths >7.0 per 1mm reached 22% in wave 1
– in Wave 2, this figure hit 15% of the US
– in Wave 3, so far, it is <12%

So despite, record cases in Wave 3, the daily deaths have trailed what we saw in Wave 1 and Wave 2.  In other words, the level of mortality is far lower.

COVID-19 UPDATE: VIX looks ready to break to 2020 new lows = risk-on. Daily deaths still trailing Wave 1 and Wave 2


Source: Johns Hopkins and Fundstrat 








POINT 3: The World is gearing up to distribute a COVID-19 vaccine 
The momentum around a COVID-19 vaccine is considerably stronger this week than any period since the start of this horrific pandemic.  Below are just a handful of the multiple articles we saw in the past 24 hours.  A vaccine is the surest way for the world to reach herd immunity.  

Various nations are gearing up for massive vaccination distribution, millions of millions of doses in a large logistical plan.  This is quite impressive and at a scale that probably has never been done at any time in history.  In fact, this is something more akin to what happens in a disaster movie.

As such, we think the world could reach some type of herd immunity in 2021.   The WHO has not provided what % of the world needs to be vaccinated for herd immunity to be reached.  Assuming ~10% of the world has already caught COVID-19, the maximum figure is 90% but this figure is likely lower given it is estimated that universal mask usage is equivalent to 35% vaccination equivalent (per IHME).  

– thus, perhaps 55% of the population needs to be vaccinated and we have effective herd immunity
– if the recent study (see yesterday’s flash) is correct, just vaccinating restaurant workers, and other essential workers, probably confers considerably benefits.


State Health departments are making the first public pronouncements about distributing a vaccine…
Texas DSHS (Health Dept) is preparing the state-level logistics to distribute the COVID-19 vaccine.  Based on an analysis by our data science team, led by tireless Ken, prior to this week, no other state in the US has made any public comments about a vaccine logistics program.


COVID-19 UPDATE: VIX looks ready to break to 2020 new lows = risk-on. Daily deaths still trailing Wave 1 and Wave 2


Source: twitter


In Canada, Pfizer is already planning logistics for vaccine distribution, according to Freightwaves…
Similarly, just north of us, Canada is planning to create the necessary supply chain to deliver this vaccine.  As we noted earlier this week, the Pfizer vaccine needs to be stored at extremely cold temperatures and thus, the logistics are key.

COVID-19 UPDATE: VIX looks ready to break to 2020 new lows = risk-on. Daily deaths still trailing Wave 1 and Wave 2


https://www.freightwaves.com/news/pfizer-plans-just-in-time-covid-19-vaccine-distribution-in-canada?utm_source=piano&utm_medium=email&utm_campaign=2631&pnespid=kbVg8PkCAF2NyiEHtMjXQy9igxzgN.nuUBKfNDUm


UK also planning to rollout Pfizer vaccine…
The UK Chief Medical Officer is also talking about the UK getting ready to distribute tens of millions of doses of the COVID-19 vaccines.  It looks like the UK is referring to the Pfizer product.  The focus is on being able to effectively distribute the vaccine at the volumes they expect to receive.

COVID-19 UPDATE: VIX looks ready to break to 2020 new lows = risk-on. Daily deaths still trailing Wave 1 and Wave 2


https://www.reuters.com/article/uk-health-coronavirus-britain-vaccine-idUSKBN27R17Z



Israel is preparing to acquire Russia’s Sputnik COVID-19 vaccine, which has shown to be 92% effective
Even Israel has confirmed it is preparing to receive the Sputnik vaccine developed by Russia.  This vaccine is reported to be 92% effective.  And Israel plans to acquire 1.5 million doses.

COVID-19 UPDATE: VIX looks ready to break to 2020 new lows = risk-on. Daily deaths still trailing Wave 1 and Wave 2
COVID-19 UPDATE: VIX looks ready to break to 2020 new lows = risk-on. Daily deaths still trailing Wave 1 and Wave 2


https://www.jpost.com/breaking-news/russias-sputnik-v-covid-19-vaccine-candidate-92-percent-effective-study-shows-648740

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