COVID-19 UPDATE: Israel's latest daily cases 73, a >99% decline since January 2021. "Eye popping" upside in $OIH towards $450/$600 per share if WTI reaches $70/$80

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STRATEGY:  “Eye popping” upside in  OIH 0.32%  towards $450/$600 per share if WTI reaches $70/$80 
The trend in USA cases remains favorable.  And even states like Michigan, which had an idiosyncratic surge in cases last month, is seeing a steady decline in cases.  So while there was some talk about mutations impeding the ability to contain the surge in Michigan, that has not proven to be the case.


COVID-19 UPDATE: Israel's latest daily cases 73, a >99% decline since January 2021. Eye popping upside in $OIH towards $450/$600 per share if WTI reaches $70/$80



COVID-19 UPDATE: Israel's latest daily cases 73, a >99% decline since January 2021. Eye popping upside in $OIH towards $450/$600 per share if WTI reaches $70/$80




The US continues to see a steady retreat in daily cases and that gives us confidence that the vaccination penetration is partially (if not fully) responsible for this decline.  And as such, as vaccine penetration rises, the level of US cases should continue to fall. This is a function of the pathways for the virus to spread are cut off with vaccinated individuals.  Thus, we think cases will continue to drop sharply as the Summer approaches.

COVID-19 UPDATE: Israel's latest daily cases 73, a >99% decline since January 2021. Eye popping upside in $OIH towards $450/$600 per share if WTI reaches $70/$80




Speaking of vaccine effectiveness, look at the latest daily cases from Israel.  The nation had 10,213 cases in January.  And the most recent days around 73.  That is a >99% decline in cases.  Israel exclusively used the Pfizer vaccine.

COVID-19 UPDATE: Israel's latest daily cases 73, a >99% decline since January 2021. Eye popping upside in $OIH towards $450/$600 per share if WTI reaches $70/$80





8 of 10 India’s largest regions are seeing an improvement (or stable) in COVID-19 trends vs last week
India remains one of the most troubled areas for COVID-19, along with Brazil.  And we have been watching India carefully — recall, IHME models suggested India infections peaked on April 27th, and we are watching daily case trends to see if this can be confirmed with a rollover in daily cases (there is a lag, due to inadequacy of testing).

– daily cases “could” be pausing, but the regional data is a better way to look at this

COVID-19 UPDATE: Israel's latest daily cases 73, a >99% decline since January 2021. Eye popping upside in $OIH towards $450/$600 per share if WTI reaches $70/$80



Revisiting the 10 largest areas of India, 8 of 10 have seen improvement in trends (or stable).  This is actually a good sign:

– 3 regions went from “rising” to “flat” or “rolling” –> Rajasthan, Gujarat and West Bengal
– but Karnataka went from “flat” to “rising”

Again, hard to draw strong conclusions, but the situation in India seems to be better this week than last week.

COVID-19 UPDATE: Israel's latest daily cases 73, a >99% decline since January 2021. Eye popping upside in $OIH towards $450/$600 per share if WTI reaches $70/$80




STRATEGY: Market doesn’t have to “fear” Inflation concerns as long as India faces outbreak
Based upon our conversations, financial markets are worried about three things are the moment:

– inflation
– increase in US capital gains tax rate
– “sell in May and go away” and general tired tape

The reality is India’s economic risk is probably allowing financial markets to not “fear” inflation.  Thus, to the extent we need to price in inflation concerns, it is likely sometime after India economy begins to recover.  In other words, even as inflationary pressures are increasingly mentioned in earnings calls, or even in surveys such as ISM, the downside economic risks from India alleviate the market’s focus on inflation.  But stay tuned, this could change.

…Tom Block, Fundstrat’s Head of Policy Strategy, sees only a 20% chance that Congress passes 39.6% cap gains tax rate
As for capital gains, Tom Block, Head of Policy Strategy, assigns only a 20% chance that Washington passes a higher capital gains rate.  He notes that Senate is too divided and many House Dems would not support a higher rate.


COVID-19 UPDATE: Israel's latest daily cases 73, a >99% decline since January 2021. Eye popping upside in $OIH towards $450/$600 per share if WTI reaches $70/$80




…the US already has the highest capital gains tax rate 20% compared to other “financial centers” at 14%
Moreover, the US already has the highest capital gains tax rate compared to comparable financial centers, like Germany, Singapore, Switzerland and other nations.  

– the average of the 14 comparable nations is a 14% capital gains tax rate
– Germany     +25%
– Singapore     +0%
– Switzerland   +0%
– UK               +20%
– Hong Kong   +0%

You get the picture.  20% is already not competitive.  A 40% capital gains tax rate would make the US non-competitive.  Does this deter financial returns in the US?  I am not entirely clear, but I imagine that this would make US financial markets look less competitive.  And the financial sector is one of the 3 sectors the US dominates globally.  The other two sectors are Healthcare and Technology.

COVID-19 UPDATE: Israel's latest daily cases 73, a >99% decline since January 2021. Eye popping upside in $OIH towards $450/$600 per share if WTI reaches $70/$80





…Wall Street is beginning to get constructive on Energy stocks = BIG UPSIDE!!!!
Oil continues its quiet and stealthy bull market.  As shown below, WTI is well above its 50D and looks to be ending a period of consolidation.  We think the targets of $80 oil by summer, both echoed by Goldman Sachs and by DeMark indicators, seem reasonable.

– the most recent high was $67.98 in early March
– WTI is at $64.53 currently, or ~$3 off its highs
– thus, $68 is the next key level


COVID-19 UPDATE: Israel's latest daily cases 73, a >99% decline since January 2021. Eye popping upside in $OIH towards $450/$600 per share if WTI reaches $70/$80




…Barclays upgrades Oilfield Services ( OIH 0.32%  ETF is a proxy)
Barclays David Anderson upgraded the oilfield services sector yesterday.  I know David from my days at JPMorgan and he is a well regarded Energy analyst. 

– He expects the sector to outperform the “next several years”
– “upstream spending continues to expand out into 2025”

This is no “trading buy” — this is a bona fide things are better and things will stay better for the foreseeable future.  As many of our clients know, this fits with our thesis.  We believe there is a structural alignment of supply and demand, of a type that has not been seen for decades.  In fact, this is why we think the Energy sector could be outperforming for a multi-year period.


COVID-19 UPDATE: Israel's latest daily cases 73, a >99% decline since January 2021. Eye popping upside in $OIH towards $450/$600 per share if WTI reaches $70/$80


COVID-19 UPDATE: Israel's latest daily cases 73, a >99% decline since January 2021. Eye popping upside in $OIH towards $450/$600 per share if WTI reaches $70/$80


https://www.cnbc.com/2021/05/03/barclays-upgrades-the-oilfield-sector-stocks-including-halliburton-and-baker-hughes.html


… OIH 0.32%  could rise to $450/$600 if Oil reaches $70 and $80
The upside in Energy stocks remains eye-popping.  For instance, take a look at the comparative price of WTI and  OIH 0.32%  for the past 10 years.

– If WTI reaches $70,  OIH 0.32%  was NEVER below $450
– If WTI reaches $80,  OIH 0.32%  was NEVER below $600
–  OIH 0.32%  is $191 right now

So, if Barclays view is correct, and there is a 5-year roadmap to a sustained recovery in oilfield services, this sector has at least 150% and maybe 250% upside in 2021.  This is, without a doubt, the most upside for any major S&P 500 group.

COVID-19 UPDATE: Israel's latest daily cases 73, a >99% decline since January 2021. Eye popping upside in $OIH towards $450/$600 per share if WTI reaches $70/$80




Bottom line: Stick with Epicenter and Energy shares are the most undervalued, in our view
So for the month of May, we think the most non-consensus trade, hence, least crowded, is to be long Epicenter

– Energy is the most undervalued
– If interest rates do rise, this strengthens the case
– Recall, DeMark in the webinar last week, expects all indices to make “new highs”
– Energy recorded what looks like a major bottom






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: GOOG, AMZN, EBAY, GRMN, TSLA, BF/B, MNST, MO, PG, PM, PSX, AXP, BIIB, GILD, REGN, AAPL, CSCO, MSFT, MU, MXIM, NVDA, PYPL, QCOM, QRVO, SWKS, XLNX, D, EIX

Trifecta Epicenter (*):
Full stock list here –> Click here
Tickers: AAP, AN, AZO, F, GM, HOG, BBY, GRMN, GPC, LEG, TPX, PHM, NWL, MAT, PII, RL, MGM, HLT, MAR, NCLH, RCL, WH, TNL, SIX, FL, GPS, KSS, LB, VFC, WTFC, ASB, FNB, PB, TFC, WBS, PACW, NYCB, MTG, EVR, IBKR, VIRT, BK, STT, BHF, AGCO, OC, ACM, WAB, GNRC, CSL, GE, GGG, IEX, PNR, CFX, DOV, MIDD, SNA, XYL, FLS, EAF, ITT, ALK, DAL, JBLU, LUV, MIC, KEX, JBHT, R, UBER, UHAL, MAN, XOM, HP, BKR, HAL, NOV, SLB, COP, EOG, FANG, HES, MRO, MUR, PXD, XEC, HFC, MPC, PSX, EXP, CF, NEU, NUE, RS, SON, IP, ARE, BXP, HIW, JBGS, ESS, UDR, KIM, NNN, O, WRI, PSA

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 43,738, -7,503 vs 7D ago…

_____________________________

Current Trends — COVID-19 cases: 
– Daily cases    43,738 vs 51,241 7D ago, down -7,503
– 7D positivity rate   3.9% vs 4.2% 7D ago
– Hospitalized patients   35,030  down -8.9% vs 7D ago
– Daily deaths    614,  down -10.3% vs 7D ago
_____________________________



– The latest COVID-19 daily cases came in at 43,738, down -7,503 vs 7D ago.

– The 7D delta has been negative in the past 20 days. In the past few days, the decline has been stable. If this decline persists, we could see the daily cases drop sub-20k by mid-May.

– As we wrote before, at this stage of pandemic, as long as vaccinations work, eventually the rollout of the vaccines will lead to a decline in the pervasiveness of the COVID pandemic. And according to the recent data, this decline seems to finally arrive.



COVID-19 UPDATE: Israel's latest daily cases 73, a >99% decline since January 2021. Eye popping upside in $OIH towards $450/$600 per share if WTI reaches $70/$80






7D delta in daily cases has turned negative in the past 20 days
The 7D delta has been negative in the past 20 days. In the past few days, the decline has been stable. If this decline persists, we could see the daily cases drop sub-20k by mid-May.
  

COVID-19 UPDATE: Israel's latest daily cases 73, a >99% decline since January 2021. Eye popping upside in $OIH towards $450/$600 per share if WTI reaches $70/$80








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. After a mini-surge in March, the number of patients currently hospitalized starts to roll over again. Compared to the wave 3 peak, it has fallen significantly.

COVID-19 UPDATE: Israel's latest daily cases 73, a >99% decline since January 2021. Eye popping upside in $OIH towards $450/$600 per share if WTI reaches $70/$80




COVID-19 UPDATE: Israel's latest daily cases 73, a >99% decline since January 2021. Eye popping upside in $OIH towards $450/$600 per share if WTI reaches $70/$80





COVID-19 UPDATE: Israel's latest daily cases 73, a >99% decline since January 2021. Eye popping upside in $OIH towards $450/$600 per share if WTI reaches $70/$80



 
 

COVID-19 UPDATE: Israel's latest daily cases 73, a >99% decline since January 2021. Eye popping upside in $OIH towards $450/$600 per share if WTI reaches $70/$80



POINT 2: VACCINE: all states reached ~60% infected + vaccinated… Over 30% of Americans have been fully vaccinated…
_____________________________

Current Trends — Vaccinations: 
Vaccinations ramping steadily
– avg 2.3 million this past week vs 2.7 million last week
– overall, 31.6% fully vaccinated, 44.1% 1-dose+ received
_____________________________



Vaccination frontier update –> all 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, all states are at this level
– RI, SD, MA, ND, CT, NJ, DE, NY, IL and NM  are now above 90% combined penetration (vaccines + infections)
– So gradually, the US is getting to that threshold of presumable herd immunity

COVID-19 UPDATE: Israel's latest daily cases 73, a >99% decline since January 2021. Eye popping upside in $OIH towards $450/$600 per share if WTI reaches $70/$80


All states have reached 60% combined vaccination + infection. Besides, 92.7% of US states (based on state population) have seen combined infection and vaccination >70% and 58.7% of US states have seen combined infection and vaccination >80%.  As the chart below highlights, the US is seeing steady forward progress and this figure continues to rise steadily.

COVID-19 UPDATE: Israel's latest daily cases 73, a >99% decline since January 2021. Eye popping upside in $OIH towards $450/$600 per share if WTI reaches $70/$80





There were a total of 1,176,023 doses administered on Monday, down 44% from 7D ago. The 7D moving average has been trending downward in the past 3 weeks. It could be caused by the pause of JNJ vaccines or/and the vaccine hesitancy resulted from the JNJ vaccines. As both CDC and FDA lifted the recommended pause of JNJ vaccines, the vaccination pace could re-accelerate again in the near future.

COVID-19 UPDATE: Israel's latest daily cases 73, a >99% decline since January 2021. Eye popping upside in $OIH towards $450/$600 per share if WTI reaches $70/$80




93.4% of the US has seen 1-dose penetration >35%…
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 25%/30%/35% of its residents fully vaccinated, displayed as the orange line on the chart. Currently, 96.6% of US states have seen 25% of their residents fully vaccinated.   However, when looking at the percentage of the US with at least 30% of its residents fully vaccinated, this figure is 70.1%. And only 20.4% of US (by state population) have seen 35% of its residents fully vaccinated.


– While 93.4% of US states have seen vaccine penetration >35%, 68.1% of them have seen 1 dose penetration >40% and 47.4% of them have seen 1 dose penetration > 45%.
– 96.6% of the US has at least 25% of its residents fully vaccinated, However, only 70.1% of US has fully vaccinated >30% and 20.4% of US has fully vaccinated >35%.
– This is still a small figure but this figure is rising sharply now.


COVID-19 UPDATE: Israel's latest daily cases 73, a >99% decline since January 2021. Eye popping upside in $OIH towards $450/$600 per share if WTI reaches $70/$80






This is the state by state data below, showing information for states with one dose and for those with two doses.

COVID-19 UPDATE: Israel's latest daily cases 73, a >99% decline since January 2021. Eye popping upside in $OIH towards $450/$600 per share if WTI reaches $70/$80





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


COVID-19 UPDATE: Israel's latest daily cases 73, a >99% decline since January 2021. Eye popping upside in $OIH towards $450/$600 per share if WTI reaches $70/$80









In total, about 146 million Americans have received at least 1 dose of a vaccine.  This is a good pace and as we noted previously, implies 50% of the population by mid-May.  

COVID-19 UPDATE: Israel's latest daily cases 73, a >99% decline since January 2021. Eye popping upside in $OIH towards $450/$600 per share if WTI reaches $70/$80









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.

COVID-19 UPDATE: Israel's latest daily cases 73, a >99% decline since January 2021. Eye popping upside in $OIH towards $450/$600 per share if WTI reaches $70/$80



COVID-19 UPDATE: Israel's latest daily cases 73, a >99% decline since January 2021. Eye popping upside in $OIH towards $450/$600 per share if WTI reaches $70/$80







GROUP 2: States that have eased all 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”


COVID-19 UPDATE: Israel's latest daily cases 73, a >99% decline since January 2021. Eye popping upside in $OIH towards $450/$600 per share if WTI reaches $70/$80



COVID-19 UPDATE: Israel's latest daily cases 73, a >99% decline since January 2021. Eye popping upside in $OIH towards $450/$600 per share if WTI reaches $70/$80







GROUP 3: States that are still easing 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

COVID-19 UPDATE: Israel's latest daily cases 73, a >99% decline since January 2021. Eye popping upside in $OIH towards $450/$600 per share if WTI reaches $70/$80



COVID-19 UPDATE: Israel's latest daily cases 73, a >99% decline since January 2021. Eye popping upside in $OIH towards $450/$600 per share if WTI reaches $70/$80




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