COVID-19 UPDATE: Preliminary Israel data show drastic drop in COVID-19 infections age >60. Market still has "risk-on" undercurrents, despite rising chorus of "top callers"

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STRATEGY: Market still has “risk-on” undercurrents, despite rising chorus of “top callers”
Israel sees 60% drop in age >60 hospitalizations, and even total cases crashing
Israel’s Maccabi Research and Innovation center reported some preliminary analysis from Israel’s COVID-19 vaccination program.  Since getting the first Pfizer doses on December 9, the country has vaccinated >40% of its population, so all eyes are on Israel.  If the vaccine is effective, we should be seeing a meaningful slowing in COVID-19 cases:

– infection rates are plunging for people age >60
– hospitalizations age >60 down 60%
– total COVID-19 cases appear to be “falling off a cliff”

If this data is correct, the vaccine is indeed effective and is a matter of time before other nations begin to see a similar crushing downwards of COVID-19 cases.  Of course, the risk of side effects and the risk of mutations remains out there.

COVID-19 UPDATE: Preliminary Israel data show drastic drop in COVID-19 infections age >60. Market still has risk-on undercurrents, despite rising chorus of top callers

Source: https://www.dailymail.co.uk/news/article-9179677/Israeli-healthcare-group-says-coronavirus-infections-plunged-vaccinated-60s.html


It is apparent when looking at Israel’s daily COVID-19 cases.  It seems to have dropped off a cliff the last few days.  So, this chart is also worth monitoring:
– if the vaccine is effective, the number of Israel cases should soon trend towards ZERO
– yup, zero

COVID-19 UPDATE: Preliminary Israel data show drastic drop in COVID-19 infections age >60. Market still has risk-on undercurrents, despite rising chorus of top callers


Source: Our World in Data and Johns Hopkins



As we mentioned a few times recently, the 3 places in the world that we are watching most closely are:
– Israel (high vaccinations)
– ND and SD, because those states closest to ‘herd immunity’

Take a look at the daily cases (per 1mm) below.  Notice how ND and SD are among the best in the USA?  Is this a sign that both states might be nearing ‘herd immunity’?  Maybe

COVID-19 UPDATE: Preliminary Israel data show drastic drop in COVID-19 infections age >60. Market still has risk-on undercurrents, despite rising chorus of top callers




STRATEGY: Friday had a “risk-on” feel, despite overall indices trading lower…
The chorus of “top callers” is rising.  Over the past few days, we sensed a general heightened level of caution about markets, whether due to “bubble mania” or due to valuation.  And certainly, equity markets certainly seemed to wobble over the past week and with some turbulence in sector rotation.  But in many ways, it really has felt like a healthy consolidation.  In fact, on Friday:

– Friday, Russell 2000 opened down >2% and reversed intraday to rally >1%
– Friday, XLE opened down 3% and closed flat
– Friday had a “risk-on” feel, despite the broader indices closing lower


COVID-19 UPDATE: Preliminary Israel data show drastic drop in COVID-19 infections age >60. Market still has risk-on undercurrents, despite rising chorus of top callers


Source: Bloomberg



We still see positive risk/reward until S&P 500 nears 3,900-4,000 between Feb and April?
Our base case continues to look for a rally in equities with a potential top in the Feb to April 2021 timeframe, and S&P 500 peaking around 3,900-4,000.  This is a rough roadmap and based upon the path taken by the S&P 500 from 1982-1984 and 2009-2011:

– S&P 500 rallied 313 to 410 days before peaking (see below)
– This implies a potential top between Feb and April 2021

This is a rough roadmap.


COVID-19 UPDATE: Preliminary Israel data show drastic drop in COVID-19 infections age >60. Market still has risk-on undercurrents, despite rising chorus of top callers




When do we think equities top? Watch for consensus to declare “nothing can stop this market going higher”  
In the past 10 years, it seems like the “bell is rung” when consensus says “there is nothing stopping this market from going higher.”  The opposite seems to be happening:

– we find many skeptical of stocks
– that this is all “retail driven”
– plurality of our clients are reluctant to be too cyclically tilted

So I find a pretty healthy level of “bearishness” out there.


COVID-19 UPDATE: Preliminary Israel data show drastic drop in COVID-19 infections age >60. Market still has risk-on undercurrents, despite rising chorus of top callers





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: COVID-19 down 12 consecutive days (“full blown retreat”) but cases still high
The latest COVID-19 daily cases came in at 136,755, down -51,890 vs 7D ago.  
– COVID-19 cases have declined (vs 7D ago) for 12 consecutive days
– The strongest retreat in cases since Wave 2


COVID-19 UPDATE: Preliminary Israel data show drastic drop in COVID-19 infections age >60. Market still has risk-on undercurrents, despite rising chorus of top callers


Source: COVID-19 Tracking Project  and Fundstrat


The 7D delta has turned negative for the past 12 days consecutively.  This is impressive and the rate of change is accelerating to the downside.
– this is contributing to the sense that this receding of cases is a much faster retreat than seen in the past few months


COVID-19 UPDATE: Preliminary Israel data show drastic drop in COVID-19 infections age >60. Market still has risk-on undercurrents, despite rising chorus of top callers


Source: COVID-19 Tracking and Fundstrat  


But as this chart below highlights, at 136,000 cases per day, this is still a very elevated figure.  And the next key milestones:
– cases falling <100,000 per day
– cases falling <25,000 per day

Both seem very far away at the moment.

COVID-19 UPDATE: Preliminary Israel data show drastic drop in COVID-19 infections age >60. Market still has risk-on undercurrents, despite rising chorus of top callers

Source: COVID-19 Tracking and Fundstrat  


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 certainly seems to be rolling over = good sign.

COVID-19 UPDATE: Preliminary Israel data show drastic drop in COVID-19 infections age >60. Market still has risk-on undercurrents, despite rising chorus of top callers


Source: COVID Tracking Project and Fundstrat



The positivity rate is about to fall below 10%…
Positivity rate is one of the most important metrics we are tracking closely. At one point in wave 3, the positivity rate climbed to near 20%. However, it has been consistently declining in the past two weeks. Currently, about 10.5% of daily tests return positive and if this trend continues, we should see the positivity rate fall below 10% soon. Recall that, 10% is a crucial level that is widely viewed as the sign of “spread is under control”. 

COVID-19 UPDATE: Preliminary Israel data show drastic drop in COVID-19 infections age >60. Market still has risk-on undercurrents, despite rising chorus of top callers


Source: COVID Tracking Project and Fundstrat




 

COVID-19 UPDATE: Preliminary Israel data show drastic drop in COVID-19 infections age >60. Market still has risk-on undercurrents, despite rising chorus of top callers

COVID-19 UPDATE: Preliminary Israel data show drastic drop in COVID-19 infections age >60. Market still has risk-on undercurrents, despite rising chorus of top callers


Source: COVID-19 Tracking and Fundstrat 




COVID-19 UPDATE: Preliminary Israel data show drastic drop in COVID-19 infections age >60. Market still has risk-on undercurrents, despite rising chorus of top callers


Source: COVID-19 Tracking and Fundstrat  

 




POINT 2: Daily vaccinations >1.2 million per day.  Crossed 20 million doses on Sunday
Over the weekend, the US reached the initial target milestone for Operation Warpspeed – 20 million vaccine doses given to Americans.

The pace of vaccinations has generally been picking up and as the chart below shows:
– Daily vaccinations have averaged >1.2 million per day 
– JNJ is close to getting approval for its one-dose vaccine
– daily vaccinations, therefore, could ramp sharply, perhaps reaching 2 million per day in a few weeks

COVID-19 UPDATE: Preliminary Israel data show drastic drop in COVID-19 infections age >60. Market still has risk-on undercurrents, despite rising chorus of top callers

Source: CDC and Fundstrat


Dr. Fauci spoke late Friday (1/22) and noted that it should not take any longer than two weeks to make a decision on the JNJ vaccine.  There are some advantages/virtues to this vaccine:
– it does not need to be kept super cold
– it is one dose
– JNJ could have 100 million doses by April


COVID-19 UPDATE: Preliminary Israel data show drastic drop in COVID-19 infections age >60. Market still has risk-on undercurrents, despite rising chorus of top callers


Source: NY Post



The ratio of vaccinations/ daily confirmed cases is trending higher and this is also encouraging.  After all, this would argue that the US is getting vaccinations out faster than Americans are getting infected.  So the rise in this ratio is intuitively positive. 

COVID-19 UPDATE: Preliminary Israel data show drastic drop in COVID-19 infections age >60. Market still has risk-on undercurrents, despite rising chorus of top callers


Source: CDC, COVID-19 Tracking Project and Fundstrat


As far as % of the population vaccinated, the highest remains in states like ND, SD, WV but also surprisingly Alaska.
– none of these states is near the 40% level of Israel
– but even if these states are weeks behind Israel, we should expect results to track Israel (see point #3) below.

COVID-19 UPDATE: Preliminary Israel data show drastic drop in COVID-19 infections age >60. Market still has risk-on undercurrents, despite rising chorus of top callers


Source: CDC, COVID-19 Tracking Project and Fundstrat 





POINT 3: Preliminary Israel data shows a drastic drop in COVID-19 infections >age 60
For several weeks, our clients know that we have noted 3 areas (in the world) are the key areas to watch for the effectiveness of the vaccine.
– Israel, because >40% population has been vaccinated
– North Dakota + South Dakota,
– because both states are closest to seeing ~60% (of the population) combined total infections + vaccines


Naturally, we are all curious whether Israel is seeing any progress.  The first vaccine doses arrived in Israel on December 9th.  And the nation secured access to large doses of the vaccine because the nation was willing to provide Pfizer with data about its citizens, in order to track the progress of the vaccine.

According to the article in the Daily Mail (UK), there has been a ‘significant decrease’ in the number of COVID-19 infections for Israeli’s over age 60.  And that hospitalizations for that cohort are down 60%.


COVID-19 UPDATE: Preliminary Israel data show drastic drop in COVID-19 infections age >60. Market still has risk-on undercurrents, despite rising chorus of top callers
COVID-19 UPDATE: Preliminary Israel data show drastic drop in COVID-19 infections age >60. Market still has risk-on undercurrents, despite rising chorus of top callers


Source: https://www.dailymail.co.uk/news/article-9179677/Israeli-healthcare-group-says-coronavirus-infections-plunged-vaccinated-60s.html


In fact, the graphic below better shows this.  This shows a big drop off in infections for those over age 60 AND vaccinated.  This is early days, but so far, this is quite encouraging.

COVID-19 UPDATE: Preliminary Israel data show drastic drop in COVID-19 infections age >60. Market still has risk-on undercurrents, despite rising chorus of top callers


Source: https://www.dailymail.co.uk/news/article-9179677/Israeli-healthcare-group-says-coronavirus-infections-plunged-vaccinated-60s.html


It is apparent when looking at Israel’s daily COVID-19 cases.  It seems to have dropped off a cliff the last few days.  So, this chart is also worth monitoring.  Presumably, if the vaccine is effective, the number of cases should trend towards ZERO

– yup, zero

COVID-19 UPDATE: Preliminary Israel data show drastic drop in COVID-19 infections age >60. Market still has risk-on undercurrents, despite rising chorus of top callers


Source: Our World in Data

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