Futures tumbled and recovered last night, following White House trade adviser Peter Navarro’s interview on Fox News’ “The Story” hosted by Martha MacCallum, where he says China trade deal is “over.” There are multiple media stories carrying this story and the timing of the dive in futures is consistent with this interview. But as someone pointed out, Navarro made this statement, only after a lengthy interview and it actually comes across as more of an “off the cuff” statement.
https://www.foxnews.com/media/peter-navarro-trump-china-trade-deal-over
This is the actual question and his response. And the question does not say “trade deal” and Navarro only chose to make his statement after this question. But the interview up this point, was more of a long-winded criticism of China and its deceptive practices, etc. So it will interesting to see if the White House backtracks or qualifies these comments on Tuesday am, especially after Navarro’s clarification last night.
https://www.foxnews.com/media/peter-navarro-trump-china-trade-deal-over
Later, Peter Navarro clarified that the US/China Phase one deal is not over and his comments in the interview have been taken “wildly out of context.” The stock futures also rebounded sharply after the clarification.
https://www.cnbc.com/2020/06/23/white-house-trade-advisor-peter-navarro-denies-saying-china-trade-deal-is-over.html
The recent surge in COVID-19 cases is taking a slight reprieve, with total USA reported daily cases coming in at 26,745 vs 28,486 on Sunday and 31,825 on Saturday. Mississippi reported cases for the first time in 5 days, and excluding their +1,646, the tally on Monday would have been 25,099. But the fact is, the trend in cases is up and this is understandably troubling. But as we have noted, hospitalizations and deaths have been trending down. Total COVID-19 deaths in the US came in at 292, the second consecutive day <300 and down 90% from its peak. COVID-19 is a new disease and hard to understand. But the divergence of cases vs hospitalizations vs deaths is new and completely different from what we saw in March/April.
More “V”s appeared on the economy today. The Chicago National Fed Activity Index posted an upside read.
– Street -10.0 (May)
– Actual +2.61
And as the chart below shows, this is yet again, another economic sign showing a “V”-shape. We will get the June Markit US PMIs on Tuesday am (Street looking for 50 vs 39.8 in May). And if the Chicago Fed is a leading indicator, we should see an upside surprise.
In fact, Blackstone CEO, Steve Schwarzman, also believes we will see “V-shaped” activity in the next few months. But his comments are somewhat more limited, as he is referring to the bounce coming from “things being shut to open.” He made his comments at the Bloomberg Invest Global virtual event.
https://www.bloomberg.com/news/articles/2020-06-22/schwarzman-sees-big-v-economic-rebound-over-next-few-months?sref=NVS0rEaE
But on the margin, these comments are considerably more “half-full” than comments made by Blackstone in April. As the WSJ reported back then, the President of Blackstone, commented he doesn’t see a “V” but an elongated recovery. So this is progress.
https://www.wsj.com/articles/blackstone-battered-by-selloff-gray-sees-elongated-recovery-11587639783
Interestingly, the TSA traveler throughput data is still tracking this trendline (created by our data scientist, tireless Ken). On 6/10/2020 (first date of trendline shown) throughput was 430, 414 and as of Monday 6/22/2020, it is 590,456, +37% in 12 days. And this traffic growth is still following this trendline closely. And as ludicrous as it sounds, it implies traffic could recover by August 2020. We realize capacity reductions, etc., might limit this:
– But this trendline is a “V” recovery in travel
– So far, TSA traveler throughput is recovering on this exponential trendline
Source: TSA
POINT #1: USA cases remain elevated, but the surging trend is ethnicity, more than states…
Total US daily COVID-19 cases fell to 26,745, -1,741 from 1D ago and would have actually fallen -3,200 as Mississippi reported case data on Monday (1st time in 5 days). But cases are still elevated compared to a week ago and are bringing quite a lot of concern about the efficacy of existing mitigation measures.
Source: COVID-19 Tracking Project
One a week ago basis, cases are up +8,252, but this figure is really up +6,606 (need to exclude MS) and while that is a slight improvement compared to Sunday’s +7,270, the sign on that case delta is the wrong one (vs 7D ago).
Source: COVID-19 Tracking Project
4 states see a rise in cases vs 1D ago:
Georgia 1,227 vs 892 (1D) +335
Ohio 729 vs 546 +183
Arkansas 522 vs 419 +103
South Carolina 1,008 vs 907 +101
Total 4 states +722
6 states see sizable declines vs 1D ago
North Carolina 804 vs 1,412 (1D) -608
Texas 3,280 vs 3,866 -586
Florida 2,926 vs 3,494 -568
Arizona 2,196 vs 2,592 -396
Iowa 88 vs 467 -379
California 4,230 vs 4,515 -285
Total 6 states -2,822
Source: COVID-19 Tracking Project
Daily COVID-19 deaths in the USA are <300 for the second consecutive day…
Despite the rise in cases, both hospitalizations and daily deaths are drifting lower. Deaths have fallen sharply to <300 per day, two days in a row. As we have written about extensively, there was not really a lag between cases –> hospitalizations –> deaths early in this crisis. But we are now seeing one emerge. Does this mean COVID-19 is less deadly?
Source: COVID-19 Tracking Project
POINT #2: Is Latin American behind the USA case surge? In the past week, 42% of US cases were Latino
In the past few weeks, the share of Latino/Hispanic daily COVID-19 confirmed cases rising and now 42% The share of new COVID-19 cases that are Latino/Hispanic is rising as the chart below shows (based on 7D rolling average). And the share of White (now 33%), Black (now 16%) and Asian (now 2%).
– In the past few weeks, USA cases have surged >+8,000 per day
– The share of cases Latino/Hispanic jumped from <35% to >42% in that same timeframe
Source: COVID-19 Tracking Project
Why is this happening? Not entirely clear, but the US states with case breakouts have high % cases Latino
We are not entirely sure. We have been writing for some weeks now about the likelihood that the surge in cases in CA, TX, AZ have been “imported” from the overflow of Mexico. And while this has not received wide attention, there have been some scattered articles about this. And certainly, within those states, the share of cases that are Latino/Hispanic is much higher than the respective state’s population average.
These 8 states below have seen a surge in cases within the past two weeks. We did not include Texas, as our Head data scientist, tireless Ken, noticed a massive reclassification done by Texas on Sunday evening. But the table below shows: (i) share of past 7D “known” cases (where ethnicity collected) Hispanic/Latino and (ii) Hispanic share of state population:
– In 8 of 8 states (below), the Latino/Hispanic share is meaningfully higher than population share
– We do not believe this surge is due to “economic” re-opening, because we would expect ethnicity of cases to match population share (if mobility is the factor).
Source: COVID-19 Tracking Project
Positivity rate in Latin American nations 17% to 80% vs USA at 6% vs 1% in select European nations
Another example that is startling is the reported high positivity rates in Latin America. This is data from Johns Hopkins, so it is possible this data is entirely mis-reported. But the level of mis-reporting would have to be quite systematic — as every Latin American nation has an incredibly high positivity rate. A few things could explain this:
– Only symptomatic cases seek tests
– Only certain entities report data
– Data is wrong
Source: Johns Hopkins, Our World in Data
Are the US Southern states seeing massive overflow from Latin America? Including Florida?
Any of these could explain this, but the fact that these are dramatically higher is shocking. As for Mexico, that figure is 64%. Hence, we believe there could be quite a lot of credence to the notion that the Southern US states seeing a surge in cases could be seeing a massive surge in overflow cases from Latin America.
– Keep in mind, that Florida, while not sharing a border with Latin America, is a popular entry point/destination for Latin travelers.
COVID-19 is absolutely exploding in Latin America…
And as we have written about in many of our recent commentaries, Latin America is seeing an explosion in cases. The continent has the highest number of daily reported cases and has been the case for the past 3 weeks — the quilt below shows this.
– The other region surging is India+Pakistan+Bangladesh and that region is likely going to overtake the US
Source: Johns Hopkins
Chile and Peru have surged way past the US in case prevalence (cases per 1mm residents) and Brazil looks like it is soon set to overtake the US. The bottom line, in our view, is that there seems to be some evidence suggesting the surge seen in the Southern US state stems from the overflow of Mexico and Latin America.
Source: Johns Hopkins
POINT #3: Early reports on USA contact tracing are not great…, many challenges
Contact tracing has been championed by many nations as the reason for containing the COVID-19 crisis. Among those touting its success are Singapore, South Korea, Taiwan, China, Iceland, among others. And as we commented last week, there are some implementation challenges in the US — namely, US states are making their own regimens for contact tracing, and thus, interstate movements are not well tracked. Moreover, there are few standards and in many cases, good old fashioned “legwork” is how this is done, versus using technology-based tracking.
NYC is only able to contact track 37% of cases so far…
The NY Post had an article yesterday about the city’s efforts to contact trace and it is not a flattering assessment. Since the start of June, the city has had ~7,500 cases and only 2,800 gave information that would be considered useful to contact trace. A mere 37% and only marginally better than 35% in the prior period.
In fact, the article misstates the success, claiming they found another 650 cases from this. But there is no evidence these people were infected by those original patients — so it could simply be serendipity and the fact that COVID-19 is so prevalent in NYC anyways (serology says >20% of NYC residents are COVID-19 positive).
https://nypost.com/2020/06/22/nycs-coronavirus-tracing-program-still-seeing-less-than-40-percent-success/?utm_campaign=iphone_nyp
Are the mediocre results in NYC the result of poor execution or a flawed approach? It is too early to tell, but this is hardly promising. And it does also raise the issue of how does one to contact tracing on 30,000 US daily cases?
Florida Attorney General now warns of scammers disguised as contact tracers…
Contact tracing requires contacting individuals who have been in contact with an infected patient. And this requires private details to be shared. Well, I guess criminals find this a convenient way to extract information from victims as well. And Florida State AG Ashley Moody warned that scammers are using this ruse to get personal information.
https://www.winknews.com/2020/06/22/florida-atty-gen-ashley-moody-warns-of-contact-tracing-scams/
So be forewarned, someone could be claiming to be a contact tracer, and the person is simply a scammer.
STRATEGY: 32 epicenter stock ideas meeting 3 of 3 criteria — a trifecta…
We have asked our team to find the “intersect” of stock ideas within the epicenter + Technology. We found 32 stocks within the Russell 1000 that meet 3 of 3 criteria:
– Ranked DQM quintile 1 (quant model)
– Rated OW by Brian Rauscher, Head of Global Portfolio Strategy
– Rated OW by Rob Sluymer, Head of Technical Strategy.
Discretionary: GNTX, BBY, GRMN, TPX, DHI, LEN, EBAY
Energy: CVX, XOM, COP, PXD
Financial: GS, MS, SBNY, SIVB
Industrials: GD, ALK, FBHS, MAS, CMI, OSK, ITT, GWW, MSM, SNDR
Technology: MXIM, OLED, XLNX, MSFT, AAPL
Comm Svcs: GOOGL, Z
Source: Fundstrat
