COVID-19 UPDATE: With F-CAT peaking, 9 states near new highs (15% of US, vs 30% F-CAT). Total USA cases adjusted 55,000 down from 59,000 last Sunday

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


The trend in US daily COVID-19 cases is improving, after plateauing about two weeks ago, we are seeing a sustained decline in COVID-19 cases nationally and also within the four states that are the current epicenter, FL, CA, AZ, TX, or F-CAT.  So, the 8-week surge from early June to July is now over.  But investors seem to be weighing a host of new issues, even as US COVID-19 cases are peaking:

– Will other states see a relapse/resurgence?
– What about “back to school”?
– CARES Act is moving slowly but not at pace market wants;
– 2020 elections is proving to be a contested race;
– MLB is seeing renewed outbreaks and postponed 33 games already, only a few weeks into the season;
– Is the vaccine safe and will enough Americans take it?

We discuss some of these topics in this commentary. As we move further into summer, we are starting to see additional but occasional delays in weekend data reporting.  For Sunday, three states did not report data:

– Texas missing Sunday, Louisiana and Washington (missed Sat, but 2 days’ worth yesterday)
– Of these, TX is arguably the only one that matters given the relatively high level of cases reported by that state which has been around 9,000 in the past few days.

But it seems like the DSHS is undergoing a system upgrade and this is resulting in a delay of results until Monday evening.  So, the daily case figure reported yesterday is missing about 9,000 or so cases.  

https://txdshs.maps.arcgis.com/apps/opsdashboard/index.html#/ed483ecd702b4298ab01e8b9cafc8b83


STRATEGY: Everybody is watching the same high-frequency data, but the path of cases is more important (but unknown)
One of our favorite weekend reads is Barron’s (is it any wonder we wanted to bring their senior editor, Vito Racanelli to our firm?).  The article below has a great headline:

“Ignore GDP. Here’s What Investors Should Watch for Economic Insights During the Pandemic.”

It is referring to the fact investors should focus less on the 2Q GDP print (reported last week) and focus on the high-frequency data.  This indeed has been the lens the market has been using.  And this data, from credit card, to OpenTable reservations, or Google/Apple mobility data has been slowing.  It has been slowing because of the resurgence of cases nationally and the resulting caution.

https://www.barrons.com/articles/ignore-gdp-heres-what-investors-should-watch-for-economic-insights-during-the-pandemic-51596222901?mod=hp_LEAD_1


This high frequency data is very good at giving us a contemporaneous state of activity (and is a leading metric for GDP, which is measured quarterly).  But this data itself is not predictive.  Just because data is currently slowing, in response to surging cases, this does not tell us where the data will be if cases/infections fall sharply.  Hence, while this high-frequency data is useful, there are limitations.  

– at the moment, the flattening of this data is causing investors to remain defensively positioned via bond proxies.

But perhaps the best leading for where the high-frequency data will trend is the forecast for COVID-19 infections.  If infections are forecast to continue declining, this should restore a level of confidence among Americans and policymakers.  In our view, the model for looking at future infection trends is the model by IHME (used by the White House).

– their model shows 3 paths for future cases.  
– if masks remain in place, infections are forecast to decline rapidly
– the purple line (middle) is their projection and even that shows infections slowing

https://covid19.healthdata.org/united-states-of-america

So if the US tracks the IHME model, we should start to see cases fall in the next few weeks.


POINT 1: USA COVID-19 cases come in at 48,652 but missing TX, est. the real figure likely 55,000 better vs 7D ago…
Total USA COVID-19 cases came in at 48,652 but this is an unusually low weekend number because TX did not report Sunday (usually one or two states miss, but TX is a biggie). 

– Texas has averaged 9,000 per day (missing)
– Louisiana reported Sat + Sunday combined today of 3,467 (-1,700)
– Washington reported Sat + Sunday combined today of 1,738 (-800)

So adjusting for this, the adjusted figure is likely around 55,000.  

– Last Sunday, total daily new cases were 59,540, so this is an improvement vs 7D ago, the 13th consecutive day.

Source: COVID-19 Tracking Project


The trends in the other “epicenter” states have been good.  Take a look at the rest of F-CAT:

– FL 7,104 is the best in 3 weeks
– CA 9,032 is well off the 13,000 peak
– AZ cases the lowest in 4 weeks

Source: COVID-19 Tracking Project


So even without Texas, the F-CAT states are seeing a significant easing in total cases. 

Where will cases be in a few weeks?  Will it follow NY tristate + MA + RI or will it follow VIMMP?
But this leads us to think about where cases will be in a few weeks.  As we wrote about in a few recent commentaries, there are two paths, the path of NY tristate (plus MA and RI) and the path of VA, IL, MI, MD and PA (VIMMP).

But at the national level, the IHME forecast, particularly with masks is showing a pretty steep forecasted drop in infections within the next 4 weeks. 

https://covid19.healthdata.org/united-states-of-america

If we add this IHME model to “detected” cases (confirmed via PCR + serology tests), this IHME forecast shows a few interesting things:

– USA infections probably recently peaked at 120,000 infections
– detected cases reached ~77,000, or about 64% of infections detected

– by September, the IHME forecast is 40,00 infections 
– at 64% detection, this implies 25,000 cases within 4 weeks
At that pace, we would view this as a steep drop-off.

https://covid19.healthdata.org/united-states-of-america

6 states had sizable 3D increase
Louisiana      3,467 vs 1,799 (Fri) +1,668
California      9,032 vs 8,086            +946
Washington   1,738 vs   818             +920
Puerto Rico      292 vs    77               +215
Alabama        2,095 vs 1,961          +134
Wisconsin        922 vs    832             +90
Total 6 states                               +3,973


6 states had sizable 3D declines
Florida                7,104 vs 9,007 (Fri) -1,903
Arizona               1,465 vs 3,212        -1,747
Tennessee          1,443 vs 3,088        -1,645
Missouri                 582 vs 1,489           -907
Georgia               3,165 vs 4,066          -901
North Carolina     1,341 vs 1,954         -613
Total 6 states                                     -7,716

Source: COVID-19 Tracking Project



POINT 2: New heatmaps to track outbreaks by state –> Slide 3 + 4
With F-CAT seeing a plateau in cases, the good news is that about 60%-70% of the US has seen a large enough outbreak in cases (>12,500 cases per 1mm residents) to see infection rates slow (infection break point?).  But this does not mean other states will not see a relapse, particularly those with lower prevalence rates.

So we are adding a few new heatmaps to track this across the US.  These are now Slide 3 and 4 in the attached chartbook (updated daily).

Slide 3 Heatmaps:
– Daily New cases (absolute number)
– 7D delta in daily cases  (absolute number)
– Daily New cases per 1mm residents (common-size)
– 7D delta in daily new cases per 1mm residents (common-size)

The more “red” the state, the larger its contribution.  Thus, watch for “red”


Slide 4 Heatmap:
– # days since a peak in daily cases
– if days 0-7, these states are making new highs…

Taking a look at this case heat map, I marked states that stand out in each of these 4 maps.  Looking at these 4 heatmaps, few states are seeing a surge in cases enough to overtake F-CAT:

top-left –> Maybe GA cases are large enough to overtake AZ, but this is not a large state overall

top-right –> Increases in daily cases (7D delta) is shown by these states:
– OR
– NV
– MI
– IL
– TN
– OK

9 states are seeing new highs in COVID-19 daily cases, and these are 15% of US population, half of F-CAT
The charts below highlight how many days since a state made an all-time high.  The more “green” the longer since a new high.  We marked those states with the most recent new highs.  I think OR remains interesting.  This is the state that is having widespread protests and even had the intervention of Federal officers.

– OR is another argument pointing to protests as having a role in the resurgence of cases

In total 9 states made a new high within the past week and this is about 15% of the US.  So even if the case prevalence in these states surge ala F-CAT, their amplitude will be half of F-CAT:

– F-CAT peaked at 40,000 cases
– these 9 states might peak at 20,000 cases

Overall, these states do not likely lead to a new high in overall US cases

Source: Fundstrat, Chart #4 in Chartbook

Source: Fundstrat Chart #4 in Chartbook

POINT 3: MLB, a live experiment of a fully open economy
So far, a few weeks into Major League Baseball season, 33 games have been postponed due to coronavirus cases, primarily within two teams — Miami Marlins (20 players) and St Louis Cardinals (6 players).  In total, more than 30 players and team staff have tested positive for COVID-19 so far.

https://www.si.com/mlb/indians/news/mlb-now-at-33-postponed-games-after-a-week-of-chaos-and-positive-covid-19-tests

In fact, the MLB Commissioner Rob Manfred warned that he may shut down the shortened season if players and team do not do a better job of managing existing protocols.

https://www.cnn.com/2020/07/31/us/mlb-coronavirus-cardinals-brewers/index.html

Here is a selection of games postponed in the past few days stemming from the outbreak seen at these two teams.  Because teams play at other cities (serially) and these games are multi-day series, a postponement creates a daisy chain cascade of delays.

Source: ESPN


An obvious observation, but the MLB is a microcosm of the US economy, and MLB will be useful to monitor…
There is obvious disappointment with the postponement and COVID-19 outbreaks within the teams, particularly for sports fans and sponsors.  The outbreaks are a reminder that COVID-19 is highly contagious and like the economy overall, every person needs to play a role in the mitigation of spread.  Fortunately, most cases so far have been asymptomatic.

But at the same time, the league is a mini-economy, in the sense that teams interact with other teams across various cities.  So, there is a lot to be gained from monitoring how the league manages these outbreaks and we expect them to ultimately mitigate these spreads.  But among the things we think will prove to be worthy useful insights:

– what percentage of cases prove to be asymptomatic –> MLB is testing far more regularly than the overall US
– what will contact tracers determine to be the primary source of spread –> still not known –> clubhouse, the ball, travel
– what protocols limit spread and infection?
– can a player be infected twice?
– if cases continue to spread, what will be the “herd immunity” for the league? 

In other words, MLB is a fully open US mini economy.