Click HERE to access the FSInsight COVID-19 Daily Chartbook.
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For the week, we are going to be publishing on a shortened holiday schedule:
Week of 12/27…
Monday 12/28
Tuesday 12/29
Wednesday 12/30
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STRATEGY: Wave 3 seems to be rolling over = catch-up trade for Epicenter coming…
President Trump signed the relief bill late Sunday evening (8:15pm). This is an obviously good development, as this will deliver much needed aid to millions of Americans. While $600 per person is short of the larger amount many wanted, this is still a good thing.
Source: CNN
The good news is COVID-19 seems to be definitively turning the corner, sufficiently that Dr. Scott Gottlieb (thanks @apegator) even commented that he sees “signs new daily COVID cases may be peaking nationally.” As our clients know, this potential turn in the data has been visible for >14 days now, but everyone has been tentative in calling this a turn, given we are in the midst of the holiday season (and the midst of social gathering).
– but I see this as a persuasive sign that Dr. Gottlieb sees enough evidence to call the turn
Source: Twitter
62% of the US is seeing contracting COVID-19 cases, the highest since August… WOW
COVID-19 trends have improved so much, that the % of the US with declines in COVID-19 cases is now at 62%. This is the highest since August and one of the most convincing signs that Wave 3 is rolling over. Granted:
– this could be a temporary rollover, since we are in social gathering season and Winter
– but it is nevertheless positive — COVID-19 is rolling over potentially in a far earlier timeline
– our base case was daily cases would peak in Feb/March, but now seems to be taking place 2-3 months earlier
Source: Johns Hopkins and Fundstrat
If Wave 3 is rolling over, we should expect another violent move in Epicenter stocks…
From a market’s perspective, a rolling over of COVID-19 should be a “risk-on” signal for epicenter stocks. The reason, naturally, is that epicenter stocks are more sensitive to lockdowns and benefit from economic re-opening. Hence, we should expect the epicenter stocks to rally.
Take a look at the chart below, we can see the epicenter rally that followed the Wave 2 rolling over:
– Epicenter saw a violent 2,000bp rally (vs S&P 500) in 4 weeks
– Post-Wave 3, we expect a similar violent rally
– Epicenter stocks began to rally late last week
So we would favor being Overweight Epicenter stocks given the obvious divergence. Wave 3 could be rolling over. But Epicenter stocks have been trading sideways/down for the past 3 weeks.
Positive anecdote on Ivermectin (antiviral) effective against COVID-19…
A few weeks ago, several studies came out supporting the use of Ivermectin in the treatment and also prevention of COVID-19. (Thanks TR and SW, my clients in Westport, CT for flagging these studies) Ivermectin is a widely used and safe drug, primarily to treat ringworm and is an effective antiviral. And as we commented, also it is quite inexpensive.
@ApeGator just shared with me a positive anecdote on Ivermectin. The DM from @ApeGator is below:
– His friend Bill F contracted COVID-19 and had his fever surge in a short period of time
– His friend took Ivermectin – Within 24 hours, his fever was gone and recovered
Wow.
Takeaway? We all should have some Ivermectin in our medicine cabinet. It might be a good way to deal with COVID-19 if we catch this and are not able to make it to a hospital for treatment.
– Additionally, please take the Vitamin D!!!!
STRATEGY: 67 stocks (*) in the ‘Top 3’ sectors…
Our data science team, led by tireless Ken, has put together the trifecta list of stocks, coming from the ‘top 3’ sectors: Discretionary, Industrials and Energy. These are stocks that there is consensus between myself, Rauscher and Sluymer.
Consumer Discretionary (30 stocks)
AN, GM, F, HOG, GRMN, LEG, TPX, PHM, TOL, NWL, HAS, MAT, PII, MGM, HLT, MAR, NCLH, RCL, WH, WYND, SIX, DRI, SBUX, FL, GPS, LB, CRI, VFC, GPC, BBY
Industrials (28 stocks)
AGCO, OC, ACM, WAB, EMR, GNRC, NVT, CSL, GE, MMM, IEX, PNR, CFX, DOV, MIDD, SNA, XYL, FLS, DAL, JBLU, LUV, MIC, KEX, UNP, JBHT, R, UBER, UHAL
Energy (9 stocks)
HP, NOV, SLB, EOG, PXD, HFC, MPC, PSX, XEC
Source: Fundstrat
(*) The 67 stock ideas are the subset of the “Epicenter” Trifecta stock list we published on December 11th, 2020. To view the full list of stock idea, click here. Please note that the stocks rated OW on this list meet the requirements of our investment theme as of the publication date. We do not monitor this list day by day. A stock taken off this list means it no longer meets our investment criteria, but not necessarily that it is neutral rated or should be sold. Please consult your financial advisor to discuss your risk tolerance and other factors that characterize your unique investment profile.
ADDENDUM: We are attaching the stock lists for our 3 portfolios:
We get several requests to give the updated list for our stock portfolios. We are including the links here:
– Granny Shots –> core stocks, based on 6 thematic/tactical portfolios
– Trifecta epicenter –> based on the convergence of Quant (tireless Ken), Rauscher (Global strategy), Sluymer (Technicals)
– Biden vs Trump –> based on correlation to either candidate odds
Granny Shots:
Full stock list here –> Click here
Tickers: AAPL, AMZN, AXP, BF.B, CSCO, EBAY, GOOG, GRMN, GWW, INTC, KLAC, LEN, LOW, MNST, MSFT, MXIM, NVDA, OMC, PM, PYPL, QCOM, TSLA, XLNX
Trifecta Epicenter (*):
Full stock list here –> Click here
Tickers: AN, GM, F, HOG, GRMN, LEG, TPX, PHM, TOL, NWL, HAS, MAT, PII, MGM, HLT, MAR, NCLH, RCL, WH, WYND, SIX, DRI, SBUX, FL, GPS, LB, CRI, VFC, GPC, BBY, FITB, WTFC, ASB, BOH, FHN, FNB, PB, PBCT, RF, STL, TFC, WBS, PNFP, SBNY, NYCB, MTG, AGNC, EVR, IBKR, VIRT, BK, STT, SYF, BHF, AGCO, OC, ACM, WAB, EMR, GNRC, NVT, CSL, GE, MMM, IEX, PNR, CFX, DOV, MIDD, SNA, XYL, FLS, DAL, JBLU, LUV, MIC, KEX, UNP, JBHT, R, UBER, UHAL, HP, NOV, SLB, EOG, PXD, HFC, MPC, PSX, XEC, LYB, EXP, MLM, CF, MOS, ESI, NEU, NUE, RS, SON, STOR, HIW, CPT, UDR, KIM, NNN, VNO, JBGS, RYN
Biden White House vs. Trump White House:
Full stock list here –> Click here
(*) Please note that the stocks rated OW on this list meet the requirements of our investment theme as of the publication date. We do not monitor this list day by day. A stock taken off this list means it no longer meets our investment criteria, but not necessarily that it is neutral rated or should be sold. Please consult your financial advisor to discuss your risk tolerance and other factors that characterize your unique investment profile.
POINT 1: Case trends good but holiday closures affect the quality of the signal. Daily cases 143,579, -40,962 vs 7D ago.
The latest COVID-19 daily cases came in at 143,579, down -40,962 vs 7D ago.
– Cases have been rolling over for some time now
– Christmas day saw a distorted collapse
– But it has been falling consistently
Source: COVID-19 Tracking Project and Fundstrat
There were some notable gaps in data on 12/25.
– 22 states did not report case data on 12/25
– In addition to states not reporting, many labs/offices were closed, thus creating further gaps
But the bigger question is that a new surge in infections could happen as close social gatherings lead to new infections.
The 7D delta is again negative and ex-CA, daily cases are rolling over more noticeably.
– ex-CA, daily cases are indeed rolling over in the US for the past 13 days
Source: COVID-19 Tracking and Fundstrat
CA remains the state with the highest daily count in cases and also among the biggest 7D jump in cases.
Source: COVID-19 Tracking and Fundstrat
Source: COVID-19 Tracking and Fundstrat
POINT 2: Finger pointing continues on UK mutant COVID-19, now in Canada…
Early last week, revelations of a mutant UK variant of COVID-19 (with 23 mutations) created concerns, because this variant was potentially more easily transmitted. This ease of transmission has not yet been proven, but its growing prevalence is the concern. And last week, we found the UK policymakers seemed to be doing a bit of “blame shifting” regarding this mutation.
Over the past week, UK policymakers suggested this variant originated in South Africa as this mutation also has some characteristics in common with the South African strain 501.V2. And in fact, on Christmas eve (12/24), the UK banned flights from South Africa to the UK.
https://www.businesstoday.in/current/world/south-africa-rejects-uk-allegation-over-new-mutant-covid-19-strain/story/426073.html
Naturally, South Africa took umbrage at these actions and denied this connection. The South African Health Minister, Zweli Mkhize, commented the strains are completely different.
Already, 5 other nations have reported cases of the UK variant…
Already, 5 other nations have reported cases of this UK variant:
– Japan
– France
– Spain
– Sweden
– Canada
Source: NY Times
Canada sees UK variant in citizens…
Canada also announced that 4 cases of the UK variant have been detected in Ontario and British Columbia. And this has prompted new lockdown measures in the nation. The ban, which started Saturday:
– bans indoor gatherings
– limits outdoor gatherings to 10 people
– capacity limits in stores
The nature of the restrictions again is not necessarily based on an empirical measure, but rather in pursuit of limiting activity.
https://www.cbc.ca/news/health/coronavirus-variant-ontario-info-1.5855396
The interesting thing about two of the cases (of 4) is that these people had no known travel. Thus, this is a case of community transmission of this strain.
https://www.cbc.ca/news/health/coronavirus-variant-ontario-info-1.5855396
In any case, if it has made its way to Canada.
POINT 3: Asia dealing with renewed outbreaks
Japan and South Korea are dealing with renewed outbreaks in COVID-19 and as the commentary above noted, Japan is also one of the nations where the UK mutation has been identified. Japan took the step of banning foreign travelers after this renewed outbreak:
– the ban starts 12/28/2020 (Monday)
https://www.timeslive.co.za/news/world/2020-12-26-japan-bans-new-entries-of-foreigners-after-virus-variant-arrives/
In a way, the “new highs” for Japan and South Korea is a relative term. The latest 7D average shows ~3,000 cases for Japan and ~1,000 cases for South Korea. Japan and South Korea population are 170 million and 60 million, respectively, compared to 330 million for the US. Thus, Japan’s figures are the equivalent of 6,000 for the US.
– if the US had 6,000 cases per day (vs ~200,000 currently), the US would largely view COVID-19 as under control.
Source: Johns Hopkins and Fundstrat
Adjusted per capita, the outbreaks in Japan and South Korea are fairly identical. About 20-25 cases per 1mm residents. This is a jump from earlier levels, but fairly well controlled.
Source: Johns Hopkins and Fundstrat
