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COVID-19 UPDATE: Nationwide protests have effectively cancelled all “shelter at home” restrictions. 2020 might be more “shattered” than 1968. Like 2020, in 1968, stocks disconnected from “mood of America”

June 1, 2020
COVID-19 UPDATE: Nationwide protests have effectively cancelled all “shelter at home” restrictions.  2020 might be more “shattered” than 1968.  Like 2020, in 1968, stocks disconnected from “mood of America”

COVID-19 remains a global crisis and we realize that many people need to keep up with COVID-19 developments, particularly since we are moving into the more critical stage ("restart economy"), so feel free to share our commentary to anyone who has interest.


Protests erupted across the US, in response to outrage over the death of George Floyd.  And the protests are so widespread, nearly 40 cities in the US have imposed curfews.  Most of the protests are peaceful, but there are reports of looting and violence as well.  What is becoming evident is the mood in America has underlying simmering anger, about the restrictions borne out of the COVID-19 pandemic, political divisiveness, and now senseless death of individuals from perceived abuses of law enforcement tactics.  
Tom Block, our head of Policy Strategy, even emailed the firm over the weekend, commenting on the widespread and passionate protests reminded him of 1968 -- then, he was a college student and interning on the Hill.  One of the implications was the permanent damage to many cities and even DC had burned buildings and neighborhoods that did not get repaired for years.  We wrote about 1968 below (see Point #2) and it was called the "Year that shattered America" -- it was that bad.  And there are many parallels to today.  Senseless murders.  Pandemic flu killing 100,000 Americans.  Space missions.  Global war.

In 1968, the S&P 500 fell 9% from Jan to March, then rallied >24% to YE and managed a total return of >10% (price gain 7.6%).  So, 2020 and 1968 also share the "disconnect" between the stock market and the political turmoil, violence and general ugly mood of America.  It is a reminder that the equity markets are not ignoring the economic crisis.  In fact (discussed below), the epicenter groups collapse in March.  Many down 80%.  As for COVID-19's progress, these mass gathering protests, without following social distance protocols, effectively ended "stay at home" for most of the country.  Whatever "stay at home" restrictions, limits on gathering size, etc., -- these ended this weekend.  While we are not qualified to judge the healthcare implications of this, these large gatherings effectively canceled all the efforts over the past 10 weeks to "shelter at home" and mitigate transmission.  So, the next 2 weeks will be important to watch.



POINT #1: Cases rising in CA, due to Imperial County, which borders Mexico and is seeing "overflow" from the border...
Total US cases eased over the weekend, but again, as we have seen for each of the past 10 weeks, this drop is pretty typical. The testing lags, office closures and maybe even potential patients waiting after the weekend, etc.

- So cases are down to 21,587 from 23,500 1D ago and 24,770 Friday
- But Sunday-Tuesday tends to be lower than Thu-Sat.
- Total tests administered came in at 375,502, down from 418,351 2D ago.  So this is the weekend effect again.
- The positivity rate was 6.6%, steady with the last few days.

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