COVID-19 UPDATE: Alternative 'big data' shows stronger global boom vs consensus = OW Energy + Materials.

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: China economy = boom now.  Energy stocks need to “catch-up” to Oil + Copper
Daily COVID-19 cases are rolling over –> hopefully for “real” now that holidays are behind us…
Daily COVID-19 cases fell -3,031 compared to 7D ago.  This is the first drop since December and coming during a potentially “clean week” — a period that is not impacted by holiday closures/etc.  This is interesting and potentially positive, because it could be COVID-19 cases are finally rolling over in the US.

– if cases are rolling over now, AND the vaccine works, we could see a sharp decline in US cases in the coming weeks
– but we need to see multiple days, and hopefully weeks, of negative 7D delta to affirm this
– so for now, it is a good thing, but a mere artifact, at the moment

Source: COVID-19 Tracking and Fundstrat  

Big data showing “boomy” conditions in 2021…
Even as COVID-19 spreads rapidly around the world, the global economy is staging an impressive recovery.  The contemporaneous data shows this — recent PMIs, etc — and many forward looking indicators.  In fact, the steepening of the 30Y less 10Y is one of the strongest signals for continued strength.  Our clients recall that we have shown that since 1987, the 30Y less 10Y curve has led the ISM by 17 months, pointing to strengthening growth in 2021.

Deep Macro, the big data macro intelligence firm, has alternative data that is also suggesting “boomy” conditions in 2021.  Deep Macro is one of our favorite independent economic providers, and is led by Jeff Young.  Their data shows that global manufacturing is on the “upswing” and this growth is accelerating.

– yes, global GDP growth is accelerating, not peaking

Below is their datasets for NO (nitrogen oxide concentrations) and is showing YoY change. The regions for China and global are shown.
– The China data shows a massive surge YoY, reaching >20% in November and continuing positive in Jan
– Global NO is accelerating in January, and looks to surpass the November levels
– If the global data is correct, GDP growth globally is gaining strength

STRATEGY: Copper and Oil suggest a big “catch-up” trade in Energy ahead…Deep Macro data suggests that cyclical strength stronger than consensus expects.  In fact, Copper is up +27% since the start of 2020, and as many know the adage, Dr. Copper is smart and rises when economic growth is accelerating.  

So the natural question is, what is the obvious trade?
– Long Energy
– Long Cyclicals


There could be a considerable “catch up” trade for Energy in 2021.  Look at Energy and Energy Services compared to Copper and Oil. Since the start of 2020:
– Copper        +27% 
– Oil                  -5%

– Energy          -38%
– Oil Services  -39%

Notice the gap?  Energy companies have SLASHED costs.  
– operating leverage higher
– EPS potential greater

If there is a bull market starting in Energy, we may be in the earliest days.  Below is the price performance of Energy stocks in the various bull markets since WWII.  The current bull market is marked in light blue:

– Bull runs seem to last 3 years or more
– Typical gain is 5,000-7,500bp relative to S&P 500
– So far, 2,500bp. 
– Could be early days?

Source: Fundstrat and Bloomberg and FAMA

Energy remains one of our top 3 sectors for 2021…
Thus, we see a catch-up trade coming.  Energy remains one of our top 3 sectors for 2021 (others are Industrials and Discretionary).  But as we warned, Energy is the least consensus and most risky/tricky. 

– Energy is 2.5% of the S&P 500 index
– Anything above 2.5% of your portfolio is an “overweight” in Energy
– Most institutions have ZERO weight, so there is upside

Below is our trifecta stock lists (*) for Energy and Basic Materials (since copper up).  These are trifecta because it is OW by: DQM (quant by tireless Ken), Global Strategy (Rauscher) and Technicals (Sluymer).

Energy (9 stocks):
HP, NOV, SLB, EOG, PXD, HFC, MPC, PSX, XEC

Basic Materials (11 stocks):
LYB, EXP, MLM, CF, MOS, ESI, NEU, NUE, RS, SON

Source: Fundstrat and Bloomberg and FAMA

(*) These 20 Energy+Material Trifecta stock ideas are the subset of the “Epicenter” Trifecta stock list we published on December 11th, 2020. To view the full list of stock idea, 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.

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
Tickers: AAPL, AMZN, AXP, BF.B, CSCO, EBAY, GOOG, GRMN, GWW, INTC, KLAC, LEN, LOW, MNST, MSFT, MXIM, NVDA, OMC, PM, PYPL, QCOM, TSLA, XLNX

Trifecta Epicenter (*):
Full stock list here –> Click here
Tickers: AN, GM, F, HOG, GRMN, LEG, TPX, PHM, TOL, NWL, HAS, MAT, PII, MGM, HLT, MAR, NCLH, RCL, WH, WYND, SIX, DRI, SBUX, FL, GPS, LB, CRI, VFC, GPC, BBY, FITB, WTFC, ASB, BOH, FHN, FNB, PB, PBCT, RF, STL, TFC, WBS, PNFP, SBNY, NYCB, MTG, AGNC, EVR, IBKR, VIRT, BK, STT, SYF, BHF, AGCO, OC, ACM, WAB, EMR, GNRC, NVT, CSL, GE, MMM, IEX, PNR, CFX, DOV, MIDD, SNA, XYL, FLS, DAL, JBLU, LUV, MIC, KEX, UNP, JBHT, R, UBER, UHAL, HP, NOV, SLB, EOG, PXD, HFC, MPC, PSX, XEC, LYB, EXP, MLM, CF, MOS, ESI, NEU, NUE, RS, SON, STOR, HIW, CPT, UDR, KIM, NNN, VNO, JBGS, RYN

Biden White House vs. Trump White House:
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: Cases rolling over again (for REAL?)…daily cases 205,408, -3,031 vs 7D ago
The latest COVID-19 daily cases came in at 205,408, down -3,031 vs 7D ago.  
– After being positive for two weeks, the 7D delta in daily cases finally turns negative today
– as we wrote previously, the holiday effect was going to cause distortions for several weeks
– and based on previous experience, it normally takes two full weeks before the underlying trends were visible
– We were expecting mid-Jan is when we can start to get a better handle on trends. As we are gradually approaching mid-Jan, the trend starts to become more visible.
– We expect the 7D delta in daily cases will continue to be choppy for a few days until Friday when the holiday data distortion should fade away.

Source: COVID-19 Tracking Project  and Fundstrat


The 7D delta finally turned negative today
– if you look at the chart closely, you will find the two days with the highest 7D delta are Jan 1st (7D following Christmas) and Jan 8th (7D following New Year’s Day).
– although 7D delta in cases is supposed to be impacted by the holiday distortion for another two or three days, the negative reading is a good sign

Source: COVID-19 Tracking and Fundstrat  



If one thing really worries me, it would be those epicenter states in Wave I and II still have the highest daily cases. Especially for the epicenters in Wave II, aka F-CAT (FL, CA, AZ, TX), they are all among the top 5 states with most daily cases today.
– #1 CA 36,487
– #2 TX 22,110
– #3 NY 15,214!!!
– #4 FL 14,896
– #5 AZ 8,559

 
Source: COVID-19 Tracking and Fundstrat 

Source: COVID-19 Tracking and Fundstrat  




POINT 2: Vaccinations reach 8.9 million today. The pace slows due to several states without stats update
According to the CDC vaccination tracker, 330,054 more vaccinations were given today. This number is relatively low compared to the sharp surge in daily vaccines administered in the past few days. This is primarily because 10 states (AR, FL, IA, KY, MD, ME, NE, NY, VA and VT) did not update their stats on CDC website. However, we do not believe these states suddenly stop giving vaccines to their people. Instead, this is more likely a data issue and tomorrow there should be a “catch-up” update for these states. Hence, we still expect US to reach 1 million vaccines administered per day this week.

– 8.9 million Americans have received a vaccination
– a week ago, 4.3 million, so 2X in 1 week
– we still believe the pace is ramping up sharply.
– we expect US to reach 1 million per day this week

Source: CDC and Fundstrat

Source CDC and Fundstrat


45 states have more than 2% of the population vaccinated…
Below we have plotted the cumulative vaccination rate (% population vaccinated) by states and sorted high to low.  
– so far, 45 states have more than 2% of the population vaccinated.
– WV, SD, ND and AK are the states with the highest cumulative vaccination rate, >5%.
– AZ, MS, GA and AL are falling behind with less than 2% of the population vaccinated.

Thus, the good news is the US is now getting ahead of the curve on vaccinations.

Source: CDC and Fundstrat



Weekly % of the population vaccinated by countries… UAE has 6% of its population vaccinated every week
Yesterday, we showed the implied weekly pace that state’s population is getting vaccinated. and recall, this is based on:

– reported vaccinations for the last 3 data points
– converted to the weekly rate
– calculated as % of the population

Below we have used the same methodology and plotted the implied weekly vaccination pace for countries.

– UAE: 6.2% of the population in UAE are getting vaccinated every week. And according to the table below, UAE also did a great job protecting its people from catching COVID. So far, only 9% of its population is ever infected.

– Israel: current vaccination pace for Israel is 3.3% per week and 22% of its population are already vaccinated. More comments are below.

– US: compared to other countries, US’s pace is actually not bad especially as the vaccination pace in US is ramping up. If US could achieve 1 million doses per day by this week, then the implied weekly vaccination rate would increase to 2.2% (7 million doses / 323 million population), just below UAE and Israel.

Source: Our World in Data, CDC, and Fundstrat

Israel’s daily COVID cases development might be the most worth-tracking chart in the world
We currently estimate about 23% of Israel’s population infected COVID already (table below). As shown below, about 22% of Israel’s population have been vaccinated. Hence, in 4-5 weeks (if Israel maintains the current vaccination rate), Israel should be able to reach the 60% infection + vaccination threshold. The level of 60% is widely viewed as the level to achieve herd immunity. Therefore, COVID vaccination development in Israel is worth watching. If the daily new cases in Israel start to slow down dramatically, it would be a roadmap for the world to end this pandemic.

Source: Johns Hopkins, Our World in Data and Fundstrat


Below is the detail of the COVID vaccination progress by countries. The table is sorted by the implied weekly vaccination rate. And US is currently #5.

Source: Our World in Data, CDC and Fundstrat




POINT 3: Capital storming turned into “super-spreader” event? Lawmakers are testing positive for COVID-19 
Last week’s takeover of the Capital shocked the world, even as financial markets ultimately shrugged its shoulders.  But the storming of the capital created multiple conditions to become a superspreader event:

– thousands of people entered the Capital building, many of whom were not practicing mitigation measures
– lawmakers were sequestered into crowded safe rooms, many shoulder to shoulder
– many lawmakers and staff refused to use masks while in these rooms

The VOX is reporting that already 5 lawmakers have tested positive for COVID-19.

Source: https://www.vox.com/2021/1/12/22227047/lawmakers-positive-coronavirus-capitol-lockdown-laturner-jayapal-coleman-schneider


The list of those is below and is more Democrats than Republicans.  This could be an issue if those lawmakers are incapacitated in any upcoming votes.

Source: https://www.vox.com/2021/1/12/22227047/lawmakers-positive-coronavirus-capitol-lockdown-laturner-jayapal-coleman-schneider


And if you are wondering how this happens.  As the abstract below notes, many refused masks.  Now I realize not everyone agrees that masks prevent spread.  But we can all agree that being in tight quarters raises the risk of transmission.

– So ultimately, we can blame the protestors for creating this superspreader event
– more cases might emerge in subsequent days

Source: https://www.vox.com/2021/1/12/22227047/lawmakers-positive-coronavirus-capitol-lockdown-laturner-jayapal-coleman-schneider