COVID-19 UPDATE: USA on cusp of "40%" level that presaged 53% plunge in Israel cases... Updating Granny Shots, +9, -13, net -4 stocks = 28 grREVISED Granny Shot ideas

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: Week 2 of 1Q2021 earnings + better COVID-19 progress + cash coming off sidelines… Updating Granny Shots…
Over the weekend (and Friday), there were several notable COVID-19 developments, all entirely positive

– Israel lifting outdoor “mask mandates” as cases have plunged to near “obliteration” (thanks ES for heads up)
– Dr. Fauci in a CNN interview expects the J&J vaccines to resume by Friday, with labeling
– CDC reported “breakthroughs” (vaccinated but get COVID-19) a mere 5,814 cases of 75 million vaccinated, or 0.0078% of vaccinated.

So 3 of the major items over the weekend were all positive and support the US moving towards a full re-opening by mid-June. Of these developments, to me, Israel’s announcement is the most important.

Source: https://www.haaretz.com/israel-news/as-outdoor-mask-mandate-ends-jubilant-israelis-adjust-to-new-set-of-covid-rules-1.9723288

We have tracked Israel’s case progress closely, as our clients know, but the rapid progress is worth reviewing:

– In 3 months, Israel’s vaccine penetration rose 26% to 62%
– In 3 months, Israel’s cases (per 1mm) fell 97% from 952 to 26
– 26 cases per 1mm is USA equivalent of 8,500 cases per day (vs ~65,000 now)

The chart below show three key milestones that are associated with case plunges
– 26% penetration, daily cases peaked
– 40% penetration, massive “leg down” in cases, -53%
– 58% penetration, massive “leg down” in cases, -93%

Interestingly, while vaccinations rose steadily, daily cases went through plunges and plateaus. While I don’t know the exact reason for this, it likely reflects the combination of: delays in efficacy, offset further by citizen mobility/dropping guard.

– nevertheless, Israel’s cases have plunged to near “obliteration”

USA on cusp of “40%” level that presaged 53% plunge in Israel cases…
Our data science team, led by tireless Ken, overlaid Israel and USA vaccine penetration and COVID-19 cases (per 1mm). And as you can see, the US is on the cusp of that 40% level:

– USA vaccine penetration is set to reach 40% within a week
– Israel saw daily cases take a second “leg down” after reaching 40%

So naturally, we are watching if this analog plays out in the USA. But 40% could be an important level to watch. And if so, USA cases could dip meaningfully once that 40% level is crossed.

In simplistic terms, we think the 7D delta in daily cases might soon make a drastic plunge as indicated below. Daily cases have been flatlining recently. Some of this is the surge seen in the Midwest (MI, MN, etc) but also the Northeast (NY, CT, etc). And while variants + Spring Break could explain this, the pattern in Israel suggests that increasing vaccine penetration leads to a new threshold that leads to a plunge.

Daily cases are starting to rollover again, as you can see below on the chart below, which is only for the past 6 weeks. As you can see, of the last 5 days, each of those saw 5 consecutive declines. And daily cases on Sunday came in at 41,917, which is down from 47,042 last Sunday.

A client of ours in Boston (thanks MF) queried us about “breakthrough infections” which is defined as COVID-19 infections from those fully vaccinated. The CDC released a report late last week on this topic:

– of the 75 million fully vaccinated Americans (4/13)
– 5,814 breakthroughs have been reported
– this is 0.0078%, or 78 infections per 1 million fully vaccinated

That is an astonishingly low rate. And while it is only a snapshot, it does suggest that the 90% effectiveness of the vaccines of Moderna and Pfizer might be accurate.

Source: https://www.cdc.gov/vaccines/covid-19/health-departments/breakthrough-cases.html

And it is encouraging to see J&J vaccine come back online. As you know, financial markets pulled a “fire ready aim” a few weeks ago, stemming from this vaccine pause.

Source: https://www.cnn.com/2021/04/18/politics/fauci-jj-vaccine-friday/index.html

STRATEGY: Market color –> week 2 of 1Q2021 earnings + better COVID-19 progress + cash coming off sidelines
Equities have continued post steady gains, and the S&P 500 is up ~6% month to date, bringing its total gain to ~12% this year. And there are still two weeks left of the month.

But a few things have surprised us this month:

– In the past two weeks, leadership has come from large caps and defensive/ growth
– Part of this is explained by the MI and Midwest COVID surge
– Part of this is the J&J vaccine pause

But we think the movement of cash off the sidelines explains this.

– In past two weeks, $45 billion of cash has come off sidelines
– Institutional investors, mostly HF, $30 billion in last two weeks, the largest since Dec
– HF tend to favor large caps and FANG
– Hence, outperformance of FANG/Growth

STRATEGY: Updating Granny Shots –> +9 additions, -13 deletions, -4 net = 28 REVISED Granny Shots (*)
We updated our “Granny shots” list on April 9th. We rebalance Granny Shots every three months, and this is the first rebalance of 2021. Granny Shots has continued to lead to relative “stability” and steady market outperformance:

– 2021 YTD outperformance +547bp
– 2020 outperformance +3,015bp
– 2019 outperformance +879bp

9 Additions:
Health Care:BIIB2.03% , GILD0.94% , REGN0.32%
Consumer Staples:MO1.89%
Utilities:EIX2.64% , D2.61%
Technology:QRVO-2.74% , SWKS
Energy:PSX0.91%

13 Deletions:
Technology:INTC-2.43% , KLAC-2.67% , AMAT-2.34% , LRCX-2.10% , HPQ0.69%
Consumer Discretionary:TGT, BBY0.20%
Comm. Services:ATVI
Energy:XOM, VLO0.86%
Financials:GL2.85% , RF-0.53%
Industrials:GE-3.22%

The revised list of Granny Shots is below. And we marked the additions and deletions, so you can see the changes to the list, both before and after.

(*) Please note that the stocks 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.


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: 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 41,917, -5,125vs 7D ago… 7D delta has been negative in the past five days…

_____________________________

Current Trends — COVID-19 cases:
– Daily cases 41,917 vs 47,042 7D ago, down -5,125
– 7D positivity rate 5.3% vs 5.1% 7D ago
– Hospitalized patients 40,728 up +4.0% vs 7D ago
– Daily deaths 708, down -1.1% vs 7D ago
_____________________________

– The latest COVID-19 daily cases came in at 41,917, down -5,125 vs 7D ago.

– After surging to ~16k on last Tuesday, 7D delta in daily cases has turned negative in the past five days. Especially in the past three days, the 7D delta has accelerated to the downside. This is a good sign and 7D delta in daily cases might soon make an even more drastic plunge.

– 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.

Source: Fundstrat and state health departments

7D delta in daily cases has turned negative in the past five days…
After surging to ~16k on last Tuesday, 7D delta in daily cases has turned negative in the past five days. Especially in the past three days, the 7D delta has accelerated to the downside. This is a good sign and 7D delta in daily cases might soon make an even more drastic plunge.

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

Source: Fundstrat and state health departments

Source: Fundstrat and state health departments

POINT 2: VACCINE: 49 states near ~60% infected + vaccinated… 1 in 4 Americans have been fully vaccinated…
_____________________________

Current Trends — Vaccinations:
Vaccinations ramping steadily
– avg 3.2 million this past week vs 3.1 million last week
– overall, 25.2% fully vaccinated, 39.3% 1-dose+ received
_____________________________

Vaccination frontier update –> almost 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 except OR and HI (see below) are basically all at this level
– SD, ND and RI are now above 90% combined penetration (vaccines + infections)
– So slowly, the US is getting to that threshold of presumable herd immunity

Collectively, these 49 states represent about 97.3% of the US population. In fact, 77.5% of US states (based on state population) have seen combined infection and vaccination >70% and 29.0% 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.

There were a total of 3,521,144 doses administered on Sunday, slightly down from 7D ago. Overall, the pace is steadily rising, as evidenced by the 7D moving average (see blue line).

~73.6% 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 20%/25%/30% of its residents fully vaccinated, displayed as the orange line on the chart. Currently, 93.4% of US states have seen 20% of their residents fully vaccinated. However, when looking at the percentage of the US with at least 25% of its residents fully vaccinated, this figure is 59.0%. And only 3.1% of US (by state population) have seen 30% of its residents fully vaccinated.

– While 96.6% of US states have seen vaccine penetration >30%, 73.6% of them have seen 1 dose penetration >35% and 48.3% of them have seen 1 dose penetration > 40%.
– 93.4% of the US has at least 20% of its residents fully vaccinated, However, only 59.0% of US has fully vaccinated >25%
– This is still a small figure but this figure is rising sharply now.

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

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

In total, about 130 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 May.

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