COVID-19 UPDATE: Surprisingly, no "payback" in daily cases which come in at 30,059, -8,146 vs 7D ago. NYC opens for "indoor dining" --> big deal

Click HERE to access the FSInsight COVID-19 Daily Chartbook.

Daily cases yesterday came in at 30,059, which is a surprisingly low figure — it is down -8,146 from 7D ago.  And given the holiday Monday, we would have expected some “payback” for the case figures on Wednesday.  Instead, the declines in daily cases vs 7D ago seem to be accelerating.  This despite the headwinds of back to school and even back to work.

There may be general disbelief that US cases are receding.  But the way to put this in perspective is to look at the states at the center of the two waves of the pandemic in the US.  The Feb-March was NY tristate and June-July was FL, CA, AZ, TX or F-CAT:

– NY tristate has seen cases fall 90%-95% from the peak with ZERO resurgence
– F-CAT cases are down 78%-95% with no renewed resurgence

The message, again, is that once a region/state sees its local peak, we see cases in that state/region recede.  This is the template that has worked time and time again and is a positive leading indicator.  In other words, we think COVID-19 is organically retreating and as we stated last week, the possibility of sub-30,000 cases this week is likely (Tuesday).  But projecting this, we could see sub-20,000 cases within the next 10 days.  that would be VERY eye-opening.

Source: Fundstrat


STRATEGY: Let’s not forget reason #10 –> Fed “put” –> Buy the dip
Markets rebounded strongly on Wednesday.  After a horrific 11% slide in the Nasdaq 100 (QQQ) and 7% in the S&P 500, we saw a major bounce on Wednesday.  The short-term direction of markets has always been a mystery to me, and even after multiple decades in market research, what happens day to day is difficult to forecast.  But there is a broader message in the bounce Wednesday.  Yesterday, we provided multiple reasons we expect equities to ultimately rally into YE and reason #10 is –> Fed is dovish.

– And this might be the most important message.  Ultimately, if the Fed is dovish and monetary policy is easy, markets have a backstop.
– In other words, we must still buy the dip.

In the meantime, given the multiple factors of:
– improving case trends
– economic re-opening strengthening
– relative value divergence of epicenter vs FANG

We think the better risk/reward is in the epicenter stocks.  We realize investors are simply scared to own these cyclical names — after all, these companies don’t have earnings visibility and are not household names nor obvious winners from COVID.  But they are going to be primary contributors to EPS growth in 2021.  Thus, we see better risk/reward. 

POINT 1: No “payback” in daily cases which come in at a tame 30,059 down -8,146 vs 7D ago
Daily cases continue to show a dramatic organic improvement.  Daily cases came in at 30,059, which is down -8,146 vs 7D ago.  Given the holiday Monday and the likelihood Tuesday was “artificially low” as a result, we are seeing little payback on Wednesday. 

– key –> this is a downside break in case trends
– cases are organically retreating across the US, despite back to school

Source: COVID-19 Tracking Project


Again, the daily change vs 7D ago, in our view, is the leading indicator as it is what influences the 7D moving average.  After seeing daily cases essentially flat for nearly 10 days, the last 4 days were good gains and yesterday’s drop of -8,146 is encouraging given the chances for payback. 

Source: COVID-19 Tracking and Fundstrat 

Source: COVID-19 Tracking and Fundstrat




POINT 2: NYC is resuming indoor dining on 9/30 — a big sign of a return to normalcy
In the surest sign of an eventual return to normalcy, NYC is going to resume indoor dining on 9/30.  This was announced yesterday by NY Gov Cuomo.  This is a big deal.  The heart of the character of NYC is its restaurant scene and “sidewalk dining” has it limits in both delivering the restaurant experience and the economics for a restaurant.  

– while the limit is initially 25%, this combined with outdoor capacity, is probably closer to 50% of overall restaurant capacity.  
– and factor in expanded takeout and delivery, NYC restaurants have a fighting chance now to survive.

Source: Twitter


NYC has been reporting about 200 cases per day for the last 8 weeks (see below) so I am not sure why yesterday was the day the NY Governor chose to announce this move. 

– As is the case with many cities and states, the severity of the currently reported cases is also far lower.

Source: NYC


And take a look at the level of hospitalizations in NYC.  It is pretty close to zero at this point.  So, the city for the past 8 weeks has had few cases (many could be “false positives”) and few, if any hospitalizations.

But re-opening for indoor dining is a big step and return to normalcy.  This is likely going to positively impact sentiment towards consumer activities, potentially nationwide.


POINT 3: India, Latam and Europe now exceed USA in daily COVID-19 cases…
As COVID-19 cases organically retreat in the US, they have continued to grow elsewhere, both on an absolute basis, such as India and Europe and on a relative basis (to US) such as Latin America.  The quilt below highlights this:

– the US now ranks #4 in regions
– and is even lower than Europe currently

Source: Johns Hopkins.  

In fact, the retreating of cases in the US is now resulting in Spain and France reporting more cases (per 1mm residents) than the US.  As shown below:

– France and Spain are reporting daily cases surpassing their all-time highs in Feb/March
– the US, by contrast, is seeing cases 50% off their highs

So, I would view this as an example of how the US is doing a pretty good job of controlling COVID-19.  And we are not hearing about the need for Spain and France to close again. This despite what is apparently a massive surge in cases there.

If we were to “adjust” for population, Spain’s daily reported cases is the equivalent of 60,000 US cases per day.

– we know there was a lot of panic in the US when the US had that many cases
– yet, it seems like Europe is taking a different attitude.

Source: Johns Hopkins.  

Another country that has shown vast improvements, similar to the US, is Sweden.  Below is the daily cases and daily deaths reported by Sweden.  The country’s approach was unconventional as they avoided any shutdowns.  But despite that, as you can see below, the daily cases have drifted lower (7D).

Source: Johns Hopkins. 


And daily deaths have fallen to nearly zero.  The country is essentially not seeing any more COVID-19 deaths.  

Source: Johns Hopkins.  

In short, two countries are arguably standing out because of the organic decline in cases.  The US and Sweden.