COVID-19 UPDATE: Daily cases keep plunging and >70% of US sees cases 50% off their highs (highest ever).

Click HEREto access the FSInsight COVID-19 Daily Chartbook.

STRATEGY: The daily ‘seasonality’ is so pronounced, looking vs 7D is the only way to see trends…
Over the past 10 days, many of our clients have questioned whether daily cases trends are falling — the reason is that day by day, we see fluctuations in daily cases.  There are several reasons for this:

– weekend lags due to lab closures
– weekend lags as people seek testing during midweek
– general seasonality

But as we have been saying for >10 days now, we believe daily cases peaked on 7/24 and are now in a steep decline.  To really appreciate this, we re-arranged daily cases, but based upon the “day of the week” — this way, you can see how each day of the week compared to the same period in prior weeks.

– as this chart shows, the daily cases have fallen 4 weeks in a row (same day)
– cases reported to be highest on Thursday/Friday in any given week

Source: Fundstrat

Now some prefer to look at 7-day moving average, and we think this is good for smoothing out the lumps, but it is also slower moving.  That is, it is not necessarily going to reflect changes quickly.  The 7-day moving averages are highlighted in the blue boxes above the daily cases.

Source: Fundstrat

But if we compared the 2 7-day moving average, I want to highlight the end points.  This is what is different between the two 7D moving averages — one day to the next.

– this is simply the 7D delta
– that is why we prefer to look at 7D delta     

Source: Fundstrat


If the 7D delta is negative, daily cases are trending lower.  And as a proxy for R0, it is saying that R0 is less than 1.0.  As the chart below highlights, the 7D delta is falling faster than it was in April/May.  So, this means we are seeing an even faster collapse in daily case trends.

Source: COVID-19 Tracking Project


Why does this matter?  The US economy has remained largely open.  But cases are collapsing.  They are collapsing because a lot of mitigation steps were taken:

– closed bars
– mandated masks
– enforced social distance

But the economy remained open.  This is a win for the US because it shows the US can deal with a surge, by enforcing measures.  Granted, there will be new challenges in the Fall — reopening schools and flu season.  But we are also that much closer to a vaccine.

Ultimately, this is a better situation than what investors perceived in June/July.  And as a consequence, we think if this trend continues, this further justifies a surge in epicenter stocks.  

That is not the only issue the market is grappling with, however.  The passage of fiscal package is key.  But our Head of Policy Strategy, Tom Block, believes Donald Trump’s Executive Order (over the weekend) is actually moving the ball forward.

https://twitter.com/TomBlock_FS/status/1292533439477014531

So we could see progress this week.  We remain positive on markets and see new all-time highs before the end of the year and perhaps before September.




POINT 1: Daily cases plunge below 50,000 and -7,117 vs 7D ago
Daily cases continue to fall and at a pretty substantial pace.  While there will be ebbs and flows, it certainly looks like daily cases indeed peaked on 7/24/2020 or 16 days ago. The US economy did not shut down and already ~40% off their highs.  And as we wrote last week, the pace of the decline in daily cases is faster than what we saw in April/May.

– Daily cases for Sunday came in at 47,899, and this is down from 54,000 on Friday

Source: COVID-19 Tracking Project

The key figure, in our view, is watching 7D delta.  As we discussed above, we believe this matters more than 7D moving average — simply because 7D delta leads the moving average.  And this smooths out seasonality.  To really gauge how case trends are doing, it makes sense to look at 7D delta.

– 7D delta is solidly negative and reflects the fact that R0 has now become <1.0 for COVID-19. 
– This is a good thing

Source: COVID-19 Tracking Project

Source: COVID-19 Tracking Project




POINT 2: Trends improving in epicenter states, F-CAT, plus new high in % counties with cases 50% off highs…
Below are the daily case trends for the 4 states at the epicenter, FL, CA, AZ and TX.  And the daily case trends have been making lower highs (seasonality).

Source: COVID-19 Tracking Project

The daily case declines in F-CAT are tracking the NY tristate pretty closely.  And if this analog continues, daily cases would be down -75% in the 4 states by the end of August.  It is already -84% in Arizona.

Source: COVID-19 Tracking Project

And looking at a broader diffusion measure, the number of US counties with cases >50% off their highs is now 70%.  This is the highest ever recorded figure.
– this leads the second series, % counties with cases >75% off their highs

Thus, this is further confirmation that the downtrend in cases is now accelerating.

Source: COVID-19 Tracking Project



POINT 3: Duke University publishes study on the effectiveness of masks — N95 + Cotton = good
Duke University published a study on the effectiveness of masks.  They looked at 14 types of masks and they measured the droplets that came through the mask.  So it seems like it was a reverse study because it measures how much a mask prevents the spread of respiratory droplets exhaled — versus inhaled.

https://nypost.com/2020/08/09/scientists-tested-14-types-of-masks-in-preventing-spread-of-covid-19/?utm_campaign=iphone_nyp

I was surprised at some of the conclusions.  The link to the full study is below.

https://advances.sciencemag.org/content/early/2020/08/07/sciadv.abd3083

The 14 masks are shown below.  Not surprisingly, surgical and N95 masks were proven to be quite effective.

– but they also found cotton masks quite effective.  
– I am surprised at this, given cotton is not a densely woven fabric.

But apparently, the thickness of the material ends of capturing droplets.

Other materials which were not effective “split” droplets, making their spread even greater.

https://advances.sciencemag.org/content/early/2020/08/07/sciadv.abd3083

Among the items that are essentially ineffective:
– bandanas
– knitted face coverings
– worst are neck fleeces, or neck gaiters, often worn by runners

In fact, the scientists point out that fleece actually allowed more respiratory droplets to escape than not wearing a mask at all.

https://advances.sciencemag.org/content/early/2020/08/07/sciadv.abd3083