While there were many alarming COVID-19 ‘headlines’ over the weekend, noting ‘record case’ numbers, daily US deaths attributed to COVID-19 fell to a new low of 253, besting the prior record low of 292 on 6/23/2020 and total deaths are down 91% from the peak.
So, while case numbers suggest an uncontained and rapidly transmitting disease (confirmed cases soared to >45,000 Friday), the human tragedy has a diminishing toll. Still, Multiple states are playing a game of Corona ‘whack-a-mole’ as confirmed cases have risen. And the situational picture is not entirely clear.
– Is this due to general economic opening since Memorial Day?
– Is this due to the >350 nationwide protests (we believe a major factor)?
– Why is >40% of incremental cases Latino Hispanic?
Source: internet
Generally, the newly infected are younger and hence, hospitalizations and deaths are not rising to the same degree as cases. And medical treatment regimens and general preparedness are much better as well, so there is an overall picture around Healthcare.
Interestingly, the “course correction” pursued by most states is the same — “shut down” bars. California is the latest state, issuing this edict last night. Already, Texas and Florida have taken similar actions. Bars make a convenient target since packed crowds plus reduced preparedness (alcohol) and the easy chance for COVID-19 transmission between patrons. I worked as a bartender while an undergrad (Penn Catering and also at the newly opened, back in the early 90s, Wharton Executive MBA center) and when bars got busy, and particularly later in the evening, glasses were cleaned in a more expeditious manner (aka dunk in bleach water, vs dishwashing).
https://www.cdph.ca.gov/Programs/CID/DCDC/Pages/COVID-19/Bar-Closure-Guidance.aspx
But is it bars? I do not know. But it seems like policymakers feel this is one place they all seem to agree on course correcting.
There are multiple states which we can cite as examples of ‘safely opening’ including: NY, NJ, CT, PA, MA, MD, MN, Michigan, RI, VT, IN, etc. So solely “opening” is not the problem. COVID-19 is a complex and novel disease and is constantly surprising conventional views (ours included).
The biggest breakouts are in F-CAT –> Florida, CA, AZ and Texas. If NYC is analog, peak <2 weeks away…
Additionally, we also know the biggest breakout of new cases is concentrated in 4 states. And we showed the daily case growth (daily cases per 1mm residents) in the hardest county of each state and compared this trajectory to NYC. NYC peaked in daily cases on 4/2/2020 (stock market bottomed on 3/23/2020, or 11 days before that).
Here is what is interesting:
– Phoenix + Miami daily case gains ~NYC was on 4/2 or 4/3, or <1 week to peak to match NYC
– Houston is where NYC was on 3/25/2020 (or 11 days)
– Los Angeles is where NYC was on 3/21/2020
Source: COVID-19 Tracking Project
NYC was the epicenter of the COVID-19 crisis and was the worst hit of any of the major top 25 cities in the US (based on cases per 1mm residents). So, comparing these F-CAT largest counties to NYC is almost a worst-case scenario. The point of this is that these 4 states, F-CAT are not months away from reaching the same type of “breaking point” of COVID-19 to match NYC. These counties are experiencing daily case gains that mirror what NYC saw in its darkest days of late-March/early-April. Of course, the “half-empty” argument would be that these counties see case growth blow past NYC — we do not expect this.
Source: COVID-19 Tracking Project
STRATEGY: Retail investor is still underweight equities…
And while many are inclined to become “full blown” bearish again, we think the divergence in healthcare in COVID-19 (cases vs deaths) and the trajectories mirroring NYC near its peak tells us the “break point” is closer –breakpoint as in the cases begin to slow. And we also believe investor positioning remains cautious.
In fact, in the latest JPMorgan Flows and Liquidity, Mr. Panizgirtzolou makes a point that we have been writing about for some time. That the older retail investor, who controls 76% of the $100T of US household net worth, has not been buying stocks. But he believes that these retail investors will rotate out of bonds into stocks in 2H2020 (See below).
This is obviously bullish for stocks.
Source: JPMorgan
POINT #1: Daily cases surge >45,000 over the weekend but ease to 38,231 on Sunday…
This is one of those half-full vs half-empty case updates as the Sunday tally is 38,231, which is an exceptionally high tally for COVID-19 cases, but it is meaningfully lower than the >45,000 seen in the past few days.
Source: COVID-19 Tracking Project
We can see this improvement of case growth when comparing daily reported cases vs 7D ago. NJ made a strange 1-time adjustment for probable deaths/cases, so it distorts these slightly. But as you can see, the daily confirmed cases is rising at a slower rate.
Source: COVID-19 Tracking Project
For looking at the state-level daily increases, we are comparing these vs 2D ago (Friday), so one can get a better sense for trends in the past few days:
6 states with sizable increases:Nevada 821 vs 381 (Fri) +440
Arizona 3,857 vs 3,518 +339
Georgia 2,225 vs 1,900 +325
Delaware 135 vs 37 +98
South Carolina 1,381 vs 1,313 +68
Washington 549 vs 498 +51
Total 6 states +1,321
6 states had a sizable declineAlabama 358 vs 977 (Fri) -619
Florida 8,530 vs 8,942 -412
Texas 5,357 vs 5,707 -350
Illinois 646 vs 910 -264
Utah 472 vs 676 -204
Mississippi 361 vs 550 -189
Total 6 states -2,038
Source: COVID-19 Tracking Project
POINT #2: Comparing F-CAT mortality vs NYC and highlights a major divergence
We have talked about for some time about the curious divergence between the soaring case figures reported by F-CAT and the muted deaths, and more muted hospitalizations. And while policymakers attribute this to younger infected, along with better treatment regimens, many observers from the NYC/East Coast area, view what is happening with alarm.
But to really underscore and compare the case growth in these F-CAT areas with NY/NYC, we made 4 scatters:
– X-axis is total cases per 1mm residents
– Y-axis is total deaths per 1mm residents
– we took 4 largest counties in F-CAT and compared to NYC
The reason to compare to NYC is to see whether the level of mortality is higher or lower than a comparable point in the case curve vs NYC. If the F-CAT plots (dark blue) are below NYC (light blue), then that respective county is seeing fewer deaths vs NYC at the same point.
– in 4 of 4 cases, we see the level of deaths seen at each point in case prevalence is FAR LOWER than NYC.
Source: COVID-19 Tracking Project
As to why, we are not entirely sure. Was NYC death rates higher due to nursing homes? Maybe. Are healthcare systems better prepared? Yes.
Even looking at the cumulative mortality rate, we see huge differences:
– NY/NJ/CT are 6.3%, 7.7% and 9.2%
– F-CAT is: 2.5%, 2.8%, 2.1% and 1.6%, respectively
FAR FAR LOWER
Source: COVID-19 Tracking Project
POINT #3: Overall Hospitalization and Death trends in USA are improving…
Similarly, the hospitalization data for the US overall is encouraging. As you can see, both gross and net hospitalizations for USA, in aggregate, fell in the past few days.
And as we mentioned above, USA daily deaths fell to a new low of 259, below the prior record low of 292 on 6/23/2020. And this is down 91% from its peak.
