Click HERE to access the FSInsight COVID-19 Daily Chartbook.
This week, the most important milestone we are watching is 3,393 on the S&P 500. This represents the all-time high (ATH) established in February 2020. If we close above this ATH, we believe our further upside is possible.
How much further could the S&P 500 rise? We have to give this some thought (over next few days), but here are the 4 cohorts within the S&P 500:
– Bond proxies –> Growth stocks, Healthcare, etc. –> low rates means ‘bond proxies’ have price/valuation support
– Defensives –> Low rates support price/valuation
– Epicenter –> still in the “basement’ and getting to Feb 2020 highs –> +200 points to S&P 500
So, if we make ATH and bonds stay flat. Well, we can see +200 coming from the epicenter.
This is 3,600 on the S&P 500.
FYI, this 3,600 is pretty close to the target established by our Head of Global Portfolio Strategy, Brian Rauscher. If you have not met him, he is known as ‘Rocky’ within our offices.
COVID-19 is a mysterious disease. It has no known history and it has caused an economic collapse exceeding that of the Great Depression. The future is uncertain and our data science team, led by tireless Ken, attempts to look at fact-based data. Yesterday, a few clients expressed skepticism regarding our comments on potential t-cell immunity. Basically, they cited that there is no mainstream coverage of this topic and that few healthcare companies are pursuing this path.
Today, Dr. Fauci cited this same study. In an interview, he commented that a new study supports the idea that as much as 50% of the US population has T-cell immunity to coronavirus — and as a consequence, vaccine development might be built around t-cells vs b-cell (antibodies). He is citing a study published in Science this month. FYI, this is the exact same study we referenced yesterday (https://science.sciencemag.org/content/early/2020/08/04/science.abd3871).
https://www.mcclatchydc.com/news/coronavirus/article244852012.html
https://www.dailymail.co.uk/health/article-8617293/Fauci-says-new-study-key-dies-COVID-19.html
https://www.dailymail.co.uk/health/article-8617293/Fauci-says-new-study-key-dies-COVID-19.html
Why does T-cell immunity matter? There are several reasons:
– t-cell immunity can last decades
– if 50% of the US has t-cell immunity, herd immunity reached at 1.25%-2.0% prevalence (10X serology, implies 12.5% to 20% prevalence).
– back-to-school is less risky
– less risk of a second wave
– a cure/vaccine is less key
Anecdotally, we might be seeing this effect in Fairfield County, CT. A few weeks ago, we wrote about the several ‘teen parties’ that caused a mini-surge in cases for the teens attending one of three large parties. Since that event, there are few subsequent community transmissions — those cases didn’t lead to a massive new spread — ala, R0 <1.0. Was this due to contact tracing? Many parents did not cooperate.
POINT 1: Daily cases flat vs 1D ago, and still trending down vs 7D ago (ex-CA)
Daily cases are still drifting lower but at a somewhat slower pace. The 7D daily delta shows cases are falling by 3,000 vs 7D ago, ex-CA. We are excluding CA from delta calculations due to the distortion from the 300,000 backlogs of unrecorded cases.
Source: COVID-19 Tracking Project
As we commented for several weeks, the 7D delta remains the more important metric in our view, as it leads the 7D moving average. As shown below, the 7D delta remains negative and ex-CA, is down ~3,000 vs 1 week ago. So, this further confirms cases are falling.
– we would like to see this fall at a faster pace.
Source: COVID-19 Tracking Project
Looking at the states with the rise in 7D delta, we can see it is led by CA. But FL is also reporting higher numbers vs 7D ago (this was also due to an over 4,000 backlogs of cases over the past 7 weeks from Niznik Lab Corp in Miami which had not been reported until Wednesday). Still, this falls into the normal jumpiness.
– it was only yesterday that TX and AZ reported increase vs 7D ago
– on Wednesday, they both show steep declines
Source: COVID-19 Tracking Project
POINT 2: Is there another set of states with a surge? Less than 10 states are really seeing a meaningful rise in cases…
The surge in cases June-July was centered on 4 states, the epicenter, FL, CA, AZ, TX, or F-CAT, and it was not until these states peaked that we saw cases rollover. With the exception of the backlog of CA, we can see below that F-CAT case trends are universally improving.
Source: COVID-19 Tracking Project
As this table highlights below, AZ has cases down 80% from its high, and TX and FL are down nearly 50%.
– CA would be better, but we have no idea of the organic trends because their case data will reflect the backlog.
Source: COVID-19 Tracking Project
Below is the 12 states that are seeing a meaningful 7D delta rise in cases (based on daily cases per 1mm) and 2 of the 12 are F-CAT.
– Unless we think the US VI is going to be a massive risk, that ranks #2 in case rise along with Puerto Rico (#4)
– MO, CA, KY, ID and MT are seeing increases, but these are not new increases.
They have been seeing cases rise for some time.
Source: COVID-19 Tracking Project
But looking at the composites of various states of the US (below), even daily deaths are generally trending lower. And unless we see a massive spike somewhere, the deaths seen in April/May likely hold as the highwater mark.
Source: COVID-19 Tracking Project
POINT 3: Tracking Progress towards 12,500 cases per 1mm residents…
We are using 12,500 cases per 1mm residents as a simple bogey — at 1.25% case prevalence, this is likely 12.5% population prevalence. And using a simple (very simple) 50% t-cell immunity, would suggest that 62% of the population has usable antibodies. We have sorted the 50 states based on cases per 1mm residents.
Topping this list are Louisiana and Arizona and NY is only now #5. Wow.
Source: COVID-19 Tracking Project
The lower half of the table represents states with <12,500 cases per 1mm residents. So, for simplicity, we added a column showing how many additional cases needed to reach 12,500 cases per 1mm. This assumes these states would see such a rise — this does not have to be the case — these states might contain any subsequent breakout.
– The number of additional cases to get to 12,500 is ~350,000.
– The states with most potential cases are: MI, OH, OR, WA — or MOOW.
In other words, these 4 states would be the most likely place to watch for a renewed breakout in the Fall or in flu season or back to school. These are based on our very simple logic of 12,500 cases per 1mm residents being a benchmark.
Based on county data, about 55% of the US has a COVID-19 case prevalence >12,500 per 1mm, so about half of the US is already there.
Source: COVID-19 Tracking Project
