COVID-19 UPDATE: Europe COVID-19 daily cases collectively 3X US, improving standing of US handling of COVID-19. Hawaii opens borders.

Click HERE to access the FSInsight COVID-19 Daily Chartbook.

STRATEGY: Stimulus still a big deal, and the market wants visibility more than anything
Equity markets sold off hard Monday with a pretty intensive downside as VIX rose to 29.  Several factors could explain this, but this weakness is a reminder that equities generally prefer visibility.  And uncertainty around the fiscal stimulus, coupled with the potential for a contested election, are headwinds for equities.  We still believe stocks have seen their pre-election low as the S&P 500 held 3,224 (62% retracement) and even with Monday’s weakness, the S&P 500 remains above the other key level, 3,663.

Over the next 24 hours, however, arguably the most important issue to watch for is a resolution on fiscal stimulus.  On Sunday, House Speaker Pelosi set a 48-hour deadline for the White House to agree to a plan.  And while markets might see this as less significant (since a deal is likely post-election day), it is a big deal for those Americans with expiring benefits.  So, we think it is very important for Washington to get a deal done.

COVID-19 cases rose Monday to 51, 495, which is up +8,157 vs 7D ago, so COVID-19 is spreading.  But this rate of spread is surprisingly linear–that is, it is not going parabolic (i.e., cases are not rising at 2X vs a week ago) and this suggests that Americans are taking some steps to contain this spread. 

By contrast, Europe’s handling of COVID-19 now could arguably be deemed a failure — if measured by case counts.  Europe’s daily cases now exceed 140,000 daily, or 3X the US level, and as shown below, the per-capita daily cases for the major nations is parabolically surpassing the US.  As we discuss below in point #2, based on either case counts or deaths, the US handling of COVID-19 compares pretty well to Europe, Latin America, South Asia (India) but not well against China/Southeast Asia.

– so the US can claim the prize of being the best house in a “bad neighborhood”

COVID-19 UPDATE: Europe COVID-19 daily cases collectively 3X US, improving standing of US handling of COVID-19.  Hawaii opens borders.


Source: Johns Hopkins




POINT 1: Daily cases 51,495, up 8,157 vs 7D ago — COVID-19 still spreading in US
The latest COVID-19 daily cases came in at 51,495, up +8,157 vs 7D ago.  In the Monday update, WI and MS provided a detailed breakdown of daily cases for Sunday and Monday.


COVID-19 UPDATE: Europe COVID-19 daily cases collectively 3X US, improving standing of US handling of COVID-19.  Hawaii opens borders.


Source: COVID-19 Tracking Project  and Fundstrat


US daily cases 7D delta is up but not exponential…
Again, the daily change vs 7D ago, in our view, is the leading indicator as it is what influences the 7D moving average.

– As you can see below, the 7D delta in daily cases is flat last few days
– This is not an exponential surge, which is good
– It has not yet happened, but it could
– Next few weeks are key
– As we wrote last week, some states seem to be hitting the “upper limit” of daily case velocity
– Meaning, we could see cases slow within the next few weeks

COVID-19 UPDATE: Europe COVID-19 daily cases collectively 3X US, improving standing of US handling of COVID-19.  Hawaii opens borders.

Source: COVID-19 Tracking and Fundstrat  

COVID-19 UPDATE: Europe COVID-19 daily cases collectively 3X US, improving standing of US handling of COVID-19.  Hawaii opens borders.
COVID-19 UPDATE: Europe COVID-19 daily cases collectively 3X US, improving standing of US handling of COVID-19.  Hawaii opens borders.
COVID-19 UPDATE: Europe COVID-19 daily cases collectively 3X US, improving standing of US handling of COVID-19.  Hawaii opens borders.

Source: COVID-19 Tracking and Fundstrat




POINT 2: Can anyone really claim Europe is handling COVID-19 better than the US?
It has been widely reported that Europe is now seeing a resurgence in cases.  But the magnitude and the policy implications, in our view, have not been properly discussed.  From a magnitude perspective, look at this chart below, which compiles daily cases (7D avg) by region:

– Europe has 140,000 daily cases, absolutely dwarfing cases anywhere else in the World
– This pace is ~3X the US levels, and even 3X the levels in Latin America and even India
– Europe is now the new epicenter for COVID-19


COVID-19 UPDATE: Europe COVID-19 daily cases collectively 3X US, improving standing of US handling of COVID-19.  Hawaii opens borders.


Source: Johns Hopkins


Europe’s handling of COVID-19 now looks like a gigantic failure
So Europe is now the central region where COVID-19 cases are exploding.  Foremost, this seems to be a narrative that has been hardly addressed.  Europe underwent the strictest lockdown in 2020 and daily cases fell to a low of 18,000 per day, but those cases never went to zero. And since their re-opening, cases have been steadily accelerating and in the past few weeks, exploded.

– With Europe seeing the worst outbreak of any region, by country mile, shouldn’t we view their handling of COVID-19 as an absolute failure?
– Shouldn’t we regard the US handling of COVID-19 in a considerably better light?

Let’s compare the US vs other regions in terms of COVID-19 cases and trends YTD:

– Latam vs US –> US way better
– India vs US –> US way better
– Europe vs US –> US way way better
– China/SE Asia vs US –> Asia way better

So, outside of Southeast Asia, the US has vastly outperformed Europe.

Nope, even Germany is beginning to suck wind…
One might be tempted to argue this is only Spain, France and maybe UK, with a surge in COVID-19.  Nope.  Take a look at the chart below.

– Italy is going parabolic
– Germany is going parabolic
– France is aiming for galactic heights

COVID-19 UPDATE: Europe COVID-19 daily cases collectively 3X US, improving standing of US handling of COVID-19.  Hawaii opens borders.

Source: Johns Hopkins


So, ultimately, while I am disappointed the US has not gotten COVID-19 under control, ala China and ala Australia and ala Southeast Asia, the US has vastly outperformed other nations.  But one reason the US could be outperforming is that COVID-19 prevalence is simply higher.  And with higher prevalence, there is a smaller share of a “vulnerable” population — hence, less likelihood of a parabolic outbreak.

– From this chart, Germany and Italy could be dangerous in terms of the risk of surging mortality


COVID-19 UPDATE: Europe COVID-19 daily cases collectively 3X US, improving standing of US handling of COVID-19.  Hawaii opens borders.


Source: Johns Hopkins




POINT 3: Hawaii is ending quarantine using a smart criterion — PCR test
Hawaii has largely avoided the worst of the COVID-19 outbreak by taking advantage of its geographical virtue.  By being an island, the state could manage imported case risk and the state did so by requiring a mandatory quarantine.  And because of that, the state has managed pretty well through this crisis.  As you can see below, daily cases are about 50 per day in Hawaii, and well off the higher levels in August.

COVID-19 UPDATE: Europe COVID-19 daily cases collectively 3X US, improving standing of US handling of COVID-19.  Hawaii opens borders.

Source: COVID-19 Tracking Project


But the consequence of this is the state’s economy has suffered badly.   The state’s unemployment rate is 12.5%, well above the US level of 8.8% and as the chart below shows:

– pre-COVID-19, Hawaii’s UE rate was well well below the US

So the state obviously paid the economic price for keeping its citizens safe from COVID-19.

COVID-19 UPDATE: Europe COVID-19 daily cases collectively 3X US, improving standing of US handling of COVID-19.  Hawaii opens borders.

Source: Bloomberg

So the state recently dropped its strict quarantine requirements for inbound US travelers to Hawaii.  Instead of a mandatory 14-day quarantine, the state now allows citizens to enter as long as they have tested COVID-19 negative, using one of the agreed upon testing centers.

COVID-19 UPDATE: Europe COVID-19 daily cases collectively 3X US, improving standing of US handling of COVID-19.  Hawaii opens borders.



https://thepointsguy.com/guide/is-hawaii-open-for-travel/


The key is to use one of their affiliated testing centers and this needs to be within 72 hours of departure.  So this does require planning on the part of a traveler.

COVID-19 UPDATE: Europe COVID-19 daily cases collectively 3X US, improving standing of US handling of COVID-19.  Hawaii opens borders.

https://thepointsguy.com/guide/is-hawaii-open-for-travel/



And this only applies to US travelers. Hawaii will not allow entry for someone from a CDC-prohibited country.  At this point, this should include all of Europe.

COVID-19 UPDATE: Europe COVID-19 daily cases collectively 3X US, improving standing of US handling of COVID-19.  Hawaii opens borders.


https://thepointsguy.com/guide/is-hawaii-open-for-travel/

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