COVID-19 UPDATE: Watching India, 6 of 10 largest states are seeing COVID-19 cases flat/rolling over...Epicenter stocks are regaining leadership, even oil is strengthening

Webinar with Tom DeMark and myself Today at 3PM ET
A reminder, we are hosting a webinar to talk about equities and Bitcoin (BTC) today at 3PM ET.  Some important insights we want to highlight:

– potential scenario for stocks over next few weeks (hint, more significant ripper)
– Bitcoin roadmap, prior ’13’ saw 20% fall (already happened) and why trading this week is key to next few months

Tune in, there are some key alignments taking place and this will be timely

Link to register –> CLICK HERE
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STRATEGY:  Epicenter stocks are regaining leadership, and even oil is strengthening
Today, the CDC updated its guidelines on mask requirements for outdoor activity — in short, if one is fully vaccinated, a mask is not required unless one in a “crowd.”  This revised guideline shortly follows the Op-Ed by Dr. Scott Gottlieb who urged the CDC to move faster on reducing mask mandates and recognizing the benefits of vaccinations.  And I have actually found some of the CDC guidelines to be overly restrictive — so it looks like policymakers are becoming more open to relaxing needless restrictions.  

– states make their own guidelines and these impact residents more than CDC rules itself

Source: https://www.npr.org/sections/health-shots/2021/04/27/991181424/cdc-if-youre-vaccinated-you-dont-need-to-mask-outdoors-unless-youre-in-a-crowd


There is a certain irony to the revised CDC guidelines.  Check out this comment from FiveThirtyEight’s Nate Silver.

– he noted Florida policy of mask requirements indoors, but not outdoors, is a policy that other “purple” states have followed
– the CDC revised guidelines essentially mirror what these states have been doing
– slight difference is CDC guidelines only apply to “vaccinated” Americans

Source: https://twitter.com/NateSilver538/status/1385199695958614018



In any cases, USA cases are falling and at a very healthy pace.  Today’s daily cases came in at 46,339.  This is the progress for Tuesdays:

– yesterday Tuesday    46,339
– week ago            54,720
– two weeks ago    72,417
– three weeks ago 55,870
– four weeks ago   58,113

In other words, the case figures reported today are a vast improvement compared to prior trends.

Watching India, 6 of 10 largest states are seeing COVID-19 cases flat/rolling over…
India has become a focal point for risk because of the surge in cases.  And investors worry the continued surge would lead to an economic shutdown — as a counterpoint, earlier this week we pointed out that on a “daily cases per 1mm” residents, India is well below USA/Brazil/Europe but India has 1.3 billion citizens.

– looking at daily cases below, it does seem like some sort of plateau might have been reached
– this is what we are watching closely

Below are the 10 states in India with the largest outbreaks and their associated daily cases.  We also labelled the trends in each state:

– Of the 10 areas, 6 of 10 are seeing cases flat to rolling over
– 4 are seeing rising cases, but 3 of the 4 are potentially early in the “flattening”

So, to us, India’s risks might be plateauing at this moment.  But the key for a sustained improvement in India is a vaccination program.

This is why the Novavax vaccine might be the most important new vaccine to be developed.  This vaccine is set to be produced in India. And President Biden today talked about shipping vaccine production equipment to India to facilitate the country’s efforts.

Source: https://www.politico.com/news/2021/04/27/novavax-coronavirus-vaccine-484731?cid=apn



STRATEGY: Epicenter stocks are regaining leadership, even oil is strengthening
Below is the chart for WTI crude oil (spot) since December 2019.  And as the chart below highlights, oil has been in a strong uptrend.

– oil has been skidding along the 50D moving average, and could be ready to surge higher
– the recent pullback from $67 to $64 reflects the rising risks of an economic impact from an India economic shutdown
– next key level is clearing $64.25 and then $67.98
– This would propel Energy stocks higher, if those two levels are cleared

But we don’t expect India to shutdown.  And if cases there do rollover, oil should recover strongly.  Moreover, we think the US economic recovery has the potential to surprise to the upside in coming weeks as vaccine penetration increases and the re-opening moves forward.

India is the 3rd largest market for oil at 4.77 million barrels per day but it is a distant third to USA and China:

– USA    20.51 mbpd
– China 13.89
– India     4.77


So India matters, but it is not nearly as big as USA.  And we think the risk of a shutdown is overstated.

Oil has recovered far faster than Energy equities, and this is true in multiple timeframes.  The left chart is since end of 2019 and the right one is since WTI Oil’s recent high of $67. 

– Since end of 2019, Oil is +2% but Energy equities are down -19%/-33% XLE/OIH
– Since March 8th, Oil is -6%, but XLE/OIH are down -9%/-20%, respectively

So equities seem to be reflecting an additional downside risk.  We think this is the “India risk premia” — and if India cases rollover, we expect Energy equities to outperform oil.

…S&P 500 reaches new highs, now being led by Epicenter aka Cyclicals
The S&P 500 is up >5% this month, which we believe qualifies as a significant ripper.  And this breakout is taking place after a few weeks of consolidation.  The breakout is highlighted below, and we believe sets the stage for a move towards S&P 500 4,400.

The groups leading since April 15th are cyclicals.  As shown below, the leading groups are all cyclically sensitive and again support our view that a decline in COVID-19 cases would lead to a resumption of the Epicenter trade.

– this seems to be the case

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 46,339, -8,381 vs 7D ago… 7D delta has been negative in the past 14 days and accelerated to the downside…

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Current Trends — COVID-19 cases: 
– Daily cases    46,339 vs 54,720 7D ago, down -8,381
– 7D positivity rate   4.1% vs 5.2% 7D ago
– Hospitalized patients   38,594  down -8.5% vs 7D ago
– Daily deaths    657,  down -6.5% vs 7D ago
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– The latest COVID-19 daily cases came in at 46,339, down -8,381 vs 7D ago.  

– The 7D delta has been negative in the past 14 days and accelerated to the downside (7D avg shown as blue dash line). On average, the 7D delta in daily cases was over negative 10k in the past 7 days. If this decline persists, we could see the daily cases drop below 20k in the early/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.

7D delta in daily cases has turned negative in the past 14 days…
The 7D delta has been negative in the past 14 days and accelerated to the downside (7D avg shown as blue dash line). On average, the 7D delta in daily cases was over negative 10k in the past 7 days. If this decline persists, we could see the daily cases drop below 20k in the early/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.
  

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.

POINT 2: VACCINE: all states reached ~60% infected + vaccinated… Nearly 30% of Americans have been fully vaccinated…
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Current Trends — Vaccinations: 
Vaccinations ramping steadily
– avg 2.7 million this past week vs 3.0 million last week
– overall, 29% fully vaccinated, 42.4% 1-dose+ received
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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 and NJ are now above 90% combined penetration (vaccines + infections)
– So gradually, the US is getting to that threshold of presumable herd immunity

All states have reached 60% combined vaccination + infection. Besides, 80.3% of US states (based on state population) have seen combined infection and vaccination >70% and 56.4% 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 1,626,114 doses administered on Monday, down 10% from 7D ago. The 7D moving average has been trending downward recently. It could be caused by the pause of JNJ vaccines or/and the vaccine hesitancy because of the JNJ vaccines. As both CDC and FDA lifted the recommended pause of JNJ vaccines last week, the vaccination pace could re-accelerate again in the near future.

~89.3% 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, 89.5% 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 41.1%. And only 2.6% of US (by state population) have seen 35% of its residents fully vaccinated.

• While 89.3% of US states have seen vaccine penetration >35%, 61.4% of them have seen 1 dose penetration >40% and 42.0% of them have seen 1 dose penetration > 45%.
• 89.5% of the US has at least 25% of its residents fully vaccinated, However, only 41.1% of US has fully vaccinated >30% and 2.6% of US has fully vaccinated >35%.
• 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 ~45 for the past few days
• this means 45 vaccines dosed for every 1 confirmed case

This figure is rising nicely and likely surges in the coming weeks

In total, about 140 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