Thoughts ahead of 4th of July weekend... VIX cares about "deaths" > "cases" and watch 4 "nucleus" cities this weekend

July 4th long weekend is ahead of us.  And most Americans will be enjoying time-off, outdoor cooking and family time, and generally enjoying the long weekend.  But in the back of my mind, I will be minding developments for COVID-19, because the US is facing a delicate balance between mitigating this horrendous pandemic versus safely keeping this economy open.

So here are some of what we believe will be the key thing we are watching;

-  US daily cases to continue to surge, perhaps to >60,000 as CA is in "early prevalence curve"
-  US deaths hopefully continue this curious divergence (downtrend) while cases explode
-  Watching the 4 "nucleus" cities of Houston, Phoenix, Miami and Los Angeles.  These are the most important cities in each of the 4 F-CAT "new epicenter" states (FL, CA, AZ, TX)
-  Scanning for evidence of improved "compliance" with mitigation measures like masks, social distance, etc.

COVID-19 is spreading at an uncontained rate currently.  There has been "course correcting" by states (good) and states are moving ever closer to the "infection break point" so, at some point, this surge will turn into a "turning the corner"


Continuing this divergence is important -- that cases and deaths are not linked, a curious divergence since late May
Since late May, daily cases have exploded (see red scatter) but the daily deaths have trended down.  This is an important divergence.  Why is this happening?  We are not sure, but our guess:

- better hospital/healthcare preparedness
- healthier and less naturally vulnerable infected
- younger patients
- disease is weakening?


Source: COVID-19 Tracking Project


This is the week equity markets pivot to focusing on "deaths" not "cases..."
Arguably, one of the most significant developments this week is that equities did not really "flinch" with the massive new highs in cases. 
In other words, this is the week the market made a "pivot" to focus on "deaths" over cases.

The VIX is the best barometer of this.  The VIX was tracking cases since late March, both moving together and even surged as US cases began to rise

- But notice that VIX is now tracking "deaths" more closely
- Thursday is an example -- FL reports record cases and VIX is down.

The VIX is the market's perception of future volatility.  Hence, surging cases is not causing the VIX to expect greater volatility.  Rather, it seems falling deaths is soothing VIX.

checkout-thomas-lee image
checkout-logo image

Become a Member To Access FS Insight Research

FS Insight gives individual investors access to Tom Lee's research, previously only available to banks and hedge funds.

Monthly

$199/mo

Includes 30-Day Free Trial

Join Now

Annual

-15% $2,028/yr

List Price: $2,388

Savings: $360

Join Now

What's included in your FSI Membership?

tom lee iamge

Thomas J. Lee

Head of Research

Type Publication Mon Tue Wed Thu Fri Monthly
Reports First Word
The best market research out there -- on a near-daily basis.
Intraday Alerts
These are released periodically after crucial market developments.
Real-Time
Weekly Roadmap
Weekly summary of market events and updates on our key theses.
Webinars & Videos Macro Minute Video
Daily video commentary on market conditions & key events.
Outlook Webinars
We host over 12 LIVE webinars per year with our research team and high-profile special guests. Incredible value and market insights!
Yearly
Granny Shots Webinars
CEO Interview Webinars Quarterly
Appearances Archive Real-Time
Allocation Tools "Super Granny" Shots Stock List
Granny Shots we expect to tactically outperform and underperform.
Granny Shots Stock List
Thematic investment stock picks that aim to outperform the S&P 500.
Sector Allocation
A sector allocation strategy that is designed to outperform the S&P 500 while taking minimal risk.
Market Alerts ⚡️FlashInsights
Real-time market commentary about macro and crypto events from our research heads.
Real-Time
tom lee iamge

Mark L. Newton

Head of Technical Strategy

Type Publication Mon Tue Wed Thu Fri Monthly
Reports Daily Technical Strategy
Daily commentary on market trends and short term opportunities.
Weekly Roadmap
Weekly summary of market events and updates on our key theses.
Webinars & Videos Daily Technical Strategy
Daily commentary on market trends and short term opportunities.
Live Technical Analysis
Outlook Webinars
We host over 12 LIVE webinars per year with our research team and high-profile special guests. Incredible value and market insights!
Yearly
Appearances Archive Real-Time
Allocation Tools Newton's Upticks Stock List
Technically derived, intermediate-term picks of attractive risk/reward opportunities from the S&P 500.
Market Alerts ⚡️FlashInsights
Real-time market commentary about macro and crypto events from our research heads.
tom lee iamge

L. Thomas Block

Washington Policy Strategy

Type Publication Mon Tue Wed Thu Fri Monthly
Reports US Policy
Weekly update on developments in Washington DC and how they may impact Wall Street.
Weekly Roadmap
Weekly summary of market events and updates on our key theses.
Market Alerts ⚡️FlashInsights
Real-time market commentary about macro and crypto events from our research heads.
Real-Time
sean farrell Crypto Team

Sean Farrell & Crypto Team

Type Publication Mon Tue Wed Thu Fri Monthly
Reports Market Update
Stay on top of the crypto markets with macro commentary, technical analysis, and the most relevant news.
Weekly Strategy
Weekly summary of market events and updates on our key theses.
Funding Fridays
Are you looking for investment opportunities in the crypto space? We explore early-stage crypto opportunities in this note about where the smart money is being invested!
Crypto Concepts
We periodically provide in-depth research on the leading protocols, companies, and funds shaping the crypto ecosystem.
Liquid Ventures
A recurring research note focused on delivering unique insights into high-risk investment opportunities within the crypto ecosystem, primarily centered on early-stage or small-cap tokens.
Deep Research
We periodically provide in-depth research on the leading protocols, companies, and funds shaping the crypto ecosystem.
Quarterly
Weekly Roadmap
Weekly summary of market events and updates on our key theses.
Webinars & Videos Outlook Webinars
Ongoing webinars exploring crypto opportunities, in depth research, and exclusive research offerings from our team of analysts and leading cryptocurrency firms.
Yearly
Crypto Comments Daily Technical Strategy
From Bitcoin, Ethereum and Solana to other coins, our Head of Technical Strategy highlights important price movement to help give you an edge.
Allocation Tools Crypto Core Strategy
A powerful tool designed to help crypto investors build a crypto portfolio that outperforms the industry’s king – bitcoin – regardless of market conditions.
Market Alerts ⚡️FlashInsights
Real-time market commentary about macro and crypto events from our research heads.
Real-Time
Crypto Team

FS Insight Research Team

Type Publication Mon Tue Wed Thu Fri Monthly
Reports First to Market
*Earnings Daily
This note provides investors with a myriad of useful metrics to measure the progress of earnings season
Signal From Noise
Highlights timely market themes and sectors with corresponding stocks, cutting through the day-to-day market “noise” for a distinct perspective.
Community Questions
We gather your inquiries and answer them in the most scalable way. Hear directly from our research principals!
FS Insight Academy
Our main goal is to make you a better investor! This series will guide you through key financial concepts and topics in an understandable way.
Webinars & Videos Free Macro Webinars
Live webinars and Q&A with our research team and high-profile industry leaders.
Quarterly
Free Crypto Webinars
Live webinars and Q&A with our research team and high-profile industry leaders.
Quarterly

*Daily reporting during each quarterly earnings season.

More from the author

Disclosures (show)

Sign in to read the report!

We have detected you are an active member!

Ray: c85018-9dae20-eb73e5-6121b5-22543d

Want to receive Regular Market Updates to your Inbox?

I am your default error :)

Events

Trending tickers in our research