Click HERE to access the FSInsight COVID-19 Daily Chartbook.
We are shifting to a 4-day a week publication schedule:
- Monday
- Tuesday
- Wednesday
- SKIP THURSDAY
- Friday
STRATEGY: Focus on stocks benefitting from structural tailwinds and capacity to positively surprise — Epicenter in 2021
I got my first dose of the COVID-19 vaccine today. I am a resident of the state of CT and the eligibility includes adults age >45, which I qualify. I am sharing my experience, because registering, determining eligibility and getting a vaccine appointment was all seamless and smooth.
– the entire process from determining eligibility to registering to vaccination took less than 48 hours.
– Yup. 2 days only. Not kidding.
– super impressive
After googling “CT vaccine eligibility” (3/24/2021 first date I became eligible), I was directed to the CDC’s VAMS (vaccine administration management system) portal. I entered my name, details, etc., and healthcare insurance NOT required (optional).
https://vams.cdc.gov/vaccineportal/s/landingpage
The next morning, I received this email. It was an automated email and once I went to the website, another email was generated sending me a one-time passcode. Boom.
Once on that side, I entered my zip code and did a ring search for vaccines, and set the distance to “50 miles” (I wanted to get it ASAP). And a pop-up clinic had appointments for the next day. That particular clinic offered the Moderna vaccine.
– next morning, I made the 35 mile drive
– the pop-up is a large warehouse, with US National Guard administering
– it was a pretty fast process (some paperwork).
And once I got my shot, I was asked to hang out for 15 minutes and even scheduled my second dose (28 days later). And I received my vaccine card — there is an electronic version as well. Overall, I would rate this as pretty seamless.
Israel cases rolled over at 26% of pop vaccinated… COVID-19 essentially obliterated. Daily cases now 39 vs 1,200 in January
As our data has consistently shown, CT is among the top US states in terms of vaccine penetration (see Point #2) with 30% of the state’s population receiving at least 1-dose. Israel’s case figures began to rollover once the nation reached 26% of population receiving at least 1 dose. Take a look below:
– Israel cases rolled over at 26% vaccine penetration
– Now at 60%, cases are in full retreat
Daily cases are now obliterated in Israel. From a peak of 1,200 cases in January (right before 26% penetration reached) to 39 per day yesterday.
– COVID-19 has been obliterated in Israel.
This is the key takeaway for me. The US is vaccinating ~2.5 million Americans everyday and soon the network effect (penetration) of dosing will confer some type of herd immunity to the regional area. In fact, the US case trends very sharply vs Europe and Latin America.
– recall, both Europe and Latin America are far behind the US in vaccine delivery
In fact, according to Bloomberg data, the UK has dosed 43% of the population with 1-dose.
– no single major European nation is even 10%
– the US reached 26% overall
If Israel is a template, US cases are set to rollover in a sustained way soon.
Source: Bloomberg
STRATEGY: Rolling corrections = diminished odds of a broader index correction…
Equities experienced a rocky few weeks, and it sure feels like a rolling correction. In fact, because of this recent suite of rolling corrections, we believe the prospects for a larger correction in 1H2021 have largely diminished:
– Technology + Growth corrected 15% Feb-March
– Energy stocks correct 13% in past two weeks
– Russell 2000 fell 10% in the past two weeks
There it is. Pretty much, the entire stock market saw a 10% correction, but at different points YTD.
Source: Bloomberg
…Turmoil in part due to markets dealing with 4 new structural factors in 2021…
So far in 2021, stocks have been very challenging, and notably, leadership has changed sharply compared to 2020. Energy is the best performing sector YTD +29% while Technology, last year’s leader is down 1%. While multiple factors are at work, including positioning (Growth + Tech are overowned), 4 structural factors have contributed to the challenges:
1. Long-term interest rates are beginning to rise, the first real rise (non-Fed) since before 1980s, really
2. Inflation expectations are rising, with 5-yr inflation breakevens making one of its fastest ever ascents
3. 2021 Washington is talking about raising taxes, and a seemingly less “pro-capitalist” agenda vs 2020 White House
4. US economy is re-opening and we are now in a “post-war” recovery period, not “pandemic shutdown”
Each of these individual factors would be difficult for a fund manager to discount. But 2021, these 4 are happening simultaneously. Moreover, the first two factors have not been part of the investment playbook for a generation, so it is natural for markets to be uncertain.
Source: Bloomberg
STRATEGY: Buy stocks benefitting from structural tailwinds and the capacity to positively surprise… hint, Epicenter
The structural tailwinds above describe a very different environment compared to 2020. In 2020, the structural factors were falling inflation, falling rates, economy in tatters and de-regulation efforts by White House.
– 2020 vs 2021 are completely different playbooks
– 2021 winners, therefore, should be completely different than 2020
– make sense?
So here is a simple checklist:
Tech/ Epicenter/ Energy/
Growth Cyclicals Commodity
Benefit from
Higher rates Nope Yes Yes
Inflation Mixed Yes Yes! YES!!
Re-opening Eh Yes! YES!! Yes! YES!!
Capacity
Positive surprise Eh Yes Yes! YES!!
So as you can see, Energy is really the sector facing the best tailwinds in 2021. Recall, Goldman Sachs and other commodity research teams forecast oil to rally +30% by Summer. This will translate into higher FCF and higher equity prices for Energy sector broadly (ETF-XLE), and oilfield services (ETF-OIH).
Conversely… these 2020 winners might have a hard time “positively surprising” the Street
Michael Batnick, Director of Research of Ritholz Wealth Management, and writer of a blog called Irrelevant Investor. Blog post here. These are the stocks that might have a somewhat harder time becoming “darlings again” —
Source: Michael Batnick and https://theirrelevantinvestor.com/2021/03/24/the-worst-type-of-sell-off/
Lot’s of market congestion was cleared up last week… even as the S&P 500 remains overbought
We have found clients incrementally concerned about a potential larger drawdown in markets. Equities are extended and overbought, so there is simply the heightened risk that some pullback could happen. But at the same time, catalysts exist creating a favorable risk/reward, even this week.
Catalysts/ Drivers:
– 1Q2021 EPS season –> surprise higher positive guides
– Vaccine penetration expansion = improving safety across USA
– VIX falling, even as rates rising
– VIX falls below 20, maybe below 15
– NASDAQ showing relative strength, 66% of S&P 500
– Fiscal relief is being delivered to Americans and this is added liquidity
STRATEGY: 25 “Power Epicenter Trifecta” stock ideas(*)
We are introducing a “Power Epicenter Trifecta” stock list. This is designed to identify the strongest stocks within our “Trifecta” epicenter stock list. We essentially added a “power” rating to the stocks in the trifecta list to find stocks with the strongest price appreciation potential. Thus, the criteria for the “Power Epicenter Trifecta” is:
Positive views (i) Quant (tireless Ken),
(ii) Global Portfolio Strategy (Brian Rauscher, aka Rocky) and
(iii) Technicals.
Plus strong “power” rating:
(i) trailing 1M return > 12M return
(ii) outperformed S&P 500 past 6M
(iii) price > 20D MAVG
(iv) price > 50D MAVG
Consumer Discretionary:
RL, NCLH, RCL
Financials:
PBCT, NYCB
Industrials:
NVT, DAL, KEX
Energy:
XOM, HP, NOV, SLB, COP, EOG, MRO, MUR, HFC, PSX
Real Estate:
BXP, HIW, UDR, KIM, WRI, VNO, JBGS
(*) the 25 “Power Epicenter Trifecta” stock ideas are the subset of the original 121 “Epicenter Trifecta” stock list. For the full list of our original “Epicenter Trifecta” stock list, please click the link below. Please note that the stocks rated OW on this list 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.
For the full list of the 121 “Epicenter Trifecta” stock ideas, please Click Here.
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), Technicals
– Violence in USA –> companies that are involved in some aspect of home or personal security. We are not “recommending” these stocks, but rather, bringing these stocks to your attention.
Granny Shots:
Full stock list here –> Click here
Tickers: AAPL, CSCO, INTC, MXIM, NVDA, EBAY, KLAC, GRMN, GOOG, MNST, MSFT, AMZN, QCOM, TSLA, PYPL, AXP, BF/B, PM, XLNX, TGT, PG, XOM, VLO, GL, RF, ATVI, BBY, GE, AMAT, LRCX, MU, HPQ
Trifecta Epicenter (*):
Full stock list here –> Click here
Tickers: AN, GM, F, GRMN, LEG, TPX, TOL, NWL, MAT, PII, RL, MGM, HLT, MAR, NCLH, RCL, WH, TNL, SIX, DRI, SBUX, FL, GPS, KSS, LB, VFC, FITB, WTFC, ASB, BOH, FHN, FNB, PB, PBCT, RF, STL, TFC, WBS, PNFP, PACW, SBNY, NYCB, MTG, EVR, GS, IBKR, VIRT, BK, STT, SYF, BHF, AGCO, OC, ACM, WAB, EMR, GNRC, NVT, CSL, GE, IEX, PNR, CFX, DOV, MIDD, SNA, XYL, FLS, EAF, TTC, ITT, ALK, DAL, JBLU, LUV, MIC, KEX, UNP, JBHT, R, UBER, UHAL, LSTR, MAN, XOM, HP, BKR, HAL, NOV, SLB, COP, EOG, FANG, HES, MRO, MUR, PXD, XEC, HFC, MPC, PSX, LYB, EXP, MLM, CF, MOS, ESI, NEU, NUE, RS, SON, IP, BXP, HIW, UDR, KIM, NNN, WRI, VNO, JBGS, RYN
Violence in USA:
Full stock list here –> Click here
(*) Please note that the stocks rated OW on this list 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.
POINT 1: Daily COVID-19 cases 60,429, +1,250 vs 7D ago… 7D delta in daily cases has been flat over the past 12 days…
_____________________________
Current Trends — COVID-19 cases:
– Daily cases 60,429 vs 59,179 7D ago, up +1,250
– 7D positivity rate 4.7% vs 4.4% 7D ago
– Hospitalized patients 35,437 down -1.5% vs 7D ago
– Daily deaths 980, down -8.3% vs 7D ago
_____________________________
– The latest COVID-19 daily cases came in at 60,429, up +1,250 vs 7D ago.
– The decline in daily cases has been paused – 7D delta in daily cases has been flat over the past 12 days…
Source: Fundstrat and state health departments
7D Delta flatlined over the past 9days…
The decline in daily cases seems to be paused. Daily cases have been flat over the past 12 days.
Source: Fundstrat and state health departments
US hospitalization still rolling over … and even US deaths seem to be rolling over…
Below we show the aggregate patients who are currently hospitalized due to COVID. It has fallen significantly from the wave 3 peak.
Source: Fundstrat and state health departments
Source: Fundstrat and state health departments
Michigan has the largest 7D delta in daily cases (+2,595). Excluding Michigan, the 7D delta in daily cases would be negative.
Source: Fundstrat and state health departments
Source: Fundstrat and state health departments
POINT 2: VACCINE: 38 states (+2 from Tuesday) near ~60% infected + vaccinated and one fourth of American received at least one-dose of vaccines…
_____________________________
Current Trends — Vaccinations:
Vaccinations ramping steadily
– avg 2.5 million this past week vs 2.5 million last week
– overall, 14.2% fully vaccinated, 26.1% 1-dose+ received
_____________________________
Vaccination frontier update –> 38 states now near or above 60% combined penetration (vaccines + infections)
Below we sorted the states by the combined penetration (vaccinations + infections). As we commented in the past, the key figure is the combined value >60%, which is presumably near herd immunity. That is, the combined value of infections + vaccinations as % population > 60%.
– Currently, 38 states (see below) are basically all at this level
– SD, ND and RI are now above 80% combined penetration (vaccines + infections)
– So slowly, the US is getting to that threshold of presumable herd immunity
Source: CDC and Fundstrat
Collectively, these 38 states represent about 72.5% of the US population. So while it is now more than half of the states, it is a slightly smaller share of the population. But still, as the chart below highlights, the US is seeing steady forward progress and this figure continues to rise steadily.
Source: CDC and Fundstrat
There was a total of 2,820,280 doses administered on Thursday, slightly up from 7D ago. The pace overall is steadily rising, as evidenced by the 7D moving average (see blue line).
Source: CDC and Fundstrat
~73% of the US has seen 1-dose penetration >25%… still not wide geography
To better illustrate the actual footprint of the US vaccination effort, we have a time series showing the percent of the US with at least 10%/15%/20% of its residents fully vaccinated, displayed as the orange line on the chart. Currently, almost all US states have seen 10% of their residents fully vaccinated. However, when looking at the percentage of the US with at least 15% of its residents fully vaccinated, this figure is only 24.5%. And only 2 states (NM, AK) have seen 20% of their residents fully vaccinated – 0.9% of US population.
– While almost all US states have seen vaccine penetration >20%, 73.2% of them have seen 1 dose penetration >25% and only 5.2% of them have seen 1 dose penetration > 30%.
– All of the US has at least 10% of its residents fully vaccinated, However, only 24.5% of US has fully vaccinated >15%
– This is still a small figure (10%/15% of residents fully vaccinated) but this figure is rising sharply now. This figure could rise even more rapidly after the JNJ’s 1-dose vaccines roll out.
Source: CDC and Fundstrat
This is the state by state data below, showing information for states with one dose and for those with two doses.
Source: CDC and Fundstrat
The ratio of vaccinations/ daily confirmed cases is generally trending higher (red line is 7D moving avg) and this is the most encouraging statistic.
– the 7D moving average is about ~50 for the past few days
– this means 50 vaccines dosed for every 1 confirmed case
This figure is rising nicely and likely surges in the coming weeks
Source: CD and Fundstrat
In total, about 82 million Americans have received at least 1 dose of a vaccine. This is a good pace and as we noted previously, implies 30% of the population by April.
Source: CDC and Fundstrat
POINT 3:Tracking “un-restricted” and “restriction-lifted” states
We are changing Point #3 to focus primarily on tracking the lifting of restrictions, as states begin to ease various mandates. Keep in mind, easing/lifting restrictions can take multiple forms:
– easing indoor capacity
– opening theaters, gyms, salons, saloons
– eliminating capacity restrictions
– eliminating mask mandates
So there is a spectrum of approaches. Our team is listing 3 tiers of states and these are shown below.
– states that eased in 2020: AK, OK, MO, FL, TN
– states that eased start 2021 to now: SD, ND, NB, ID, MT, IA, NC, MS, SC, AZ, TX, MD
– states that announced future easing dates: GA, NY, WI, AR, CA, AL, CT
GROUP 1: States that eased restrictions in 2020…
The daily case trends in these states is impressive and it is difficult to say that lifting restrictions has actually caused a new wave of cases. Rather, the case trends in these states look like other states.
GROUP 2: States that eased restrictions in 2021 to now…
Similar to the list of states above, the daily case trends in these states are impressive and it is difficult to say that lifting restrictions has actually caused a new wave of cases.
– we have previously written about how ND and SD, in particular, have seen an utter obliteration of COVID-19 cases in those states
– that seems to be a function of vaccine penetration + infection penetration, leading to something akin to “herd immunity”
GROUP 3: States that announced plans ease restrictions in 2021…
These states have upcoming dates to ease restrictions. The dates are indicated on each chart. The cases trends in these states have been mostly positive, with perhaps the exception of NY state:
– NY state case levels seem awfully stubborn at these high levels
– weather is improving in NY area, so if weather has any effect on virus transmission, it should slow cases
