Click HERE to access the FSInsight COVID-19 Daily Chartbook.
We are shifting to a 4-day a week publication schedule:
- Monday
- Tuesday
- Wednesday
- SKIP THURSDAY
- Friday
STRATEGY: Energy down 8 of the last 10 days, in past 20 years >8 of last 10 days point to strong 3M gains
Daily vaccinations hit an all-time high again in the US at 3,200,732 (based on 7D average). If there is anything we have learned over the past year, forecasting COVID-19 has been virtually impossible, in part because of the multiple effects of population behavior, plus weather (seasonal effects) plus mutations.
On the other hand, research continues to support that those infected and those vaccinated are less likely to: spread and catch the disease. And if one does catch it, while vaccinated or re-infected (rare), severity can be reduced. Thus, the cumulative impact of infections and vaccinations should be reducing the overall impact of COVID-19 in terms of hospitalizations.
Michigan is of particular focus at the moment because cases and hospitalizations are surging and likely to take out prior all-time highs. The rare state that is seeing this happen.
– But Michigan is also among the states with the lowest combined infections + vaccinations at ~60%
– States with higher combined ratios have an exponentially lower rate of hospitalizations
– ND, SD and RI have the highest combined ratio and only 93 hospitalized per million
– states with 60%-65% combined are 1,689 per 1mm.
Huge difference. So again, it appears vaccinations are having a positive impact.
…do restrictions make a difference?
Again, Michigan is an outlier because the state has in place some of the strictest restrictions, and yet, daily cases are surging to new highs. While the CDC today called for Michigan to “shut down” and not get extra vaccines.
– “shutting down” is a blunt instrument
– and other states have not pursued shutdowns and yet have managed to contain the virus
Source: NY Times
And we realize that guidance from trusted advisors is important to heed. However, not all the advice given by these advisors has been necessarily correct. Today, Dr Fauci reiterated his view that indoor dining is not safe. Below is a link to an interview he did on MSNBC. His rationale is reasonable, that since daily cases are high, Americans should not be taking unnecessary risks.
– but the key question is whether indoor dining is actually a source of infection spread
– there have not been any recent studies that have made this evident one way or another
Source: https://twitter.com/townhallcom/status/1381600900263870467?s=20
In fact, recall the White House and advisors all expected Texas to have a massive new surge after lifting restrictions on March 14th, 2021. Even Dr. Fauci called it “risky and potentially dangerous.”
– yet, a month later, Dr. Fauci is “not sure” why Texas doesn’t have a COVID-19 uptick
I am not disagreeing with Dr. Fauci and his advice. He has been offering sage advice. However, I am not very comfortable with the idea that US policy makers’ solution to an outbreak is “shut things down” again — ala Europe. That has caused fits and starts in Europe, lots of protests and ultimately, a mixed outcome in terms of the disease.
Source:
https://www.eatthis.com/news-fauci-texas-covid-surge-trigger/
https://nypost.com/2021/04/10/fauci-not-sure-why-texas-doesnt-have-covid-uptick-after-nixing-masks/
Globally, COVID-19 looks to be approaching an all-time high in cases again…
US has managed to stem the surge in cases, via vaccinations. While cases are not down to “zero” in the US, the mitigation has been enough for the US to pursue largely opening the economy by mid-June. Asia has been largely able to contain COVID-19, using their restrictive measures. Similarly, Australia.
– this chart shows US is among the highest globally in terms of % of adults vaccinated (>1 dose)
– Israel, Chile and UK are higher
But as the global case count below shows, COVID-19 is still spreading wildly and prolifically across the World. In fact, the 7-day avg cases of 670,000 (and rising rapidly) is not that far from the all-time high of 728,000 seen in December 2020.
– the difference is Latin America and India+Pakistan are accounting for this recent surge
As shown below, India is now #2 in the world for daily cases. And just edging out Latin America. Both places are reporting >150,000 cases per day. This is about 3X the US average.
STRATEGY: Energy has been down 8 of the last 10 days, something only seen 3.5% of trading sessions in past 20 years
Energy has fallen in 8 of the last 10 trading sessions as shown below. The total decline has been 4.5% but the streak of 8 of 10 days is notable.
Overall, Energy has been acting “heavy” and the sector still does not have broad acceptance by institutional investors, despite being the best performing sector YTD and the sector with the strongest EPS revisions YTD (see note from yesterday). Multiple headwinds can be cited by investors from:
– oil has stalled
– COVID-19 outbreak could resurge, hurting re-opening
– EV and ESG is going to eliminate the sector
– Oil companies are bad businesses
– stocks are too small to be part of the benchmark
Energy (ETF XLE) is hovering near the 50-day moving average at $47.81 vs $48.07, so we are at this important decision point for XLE.
– The last such decision point was in late January, and at that time, XLE then surged 40%
We might be able to discern a clue to Energy’s next move, based upon the fact it is down 8 of last 10 days.
Looking at the last 20 years, whenever XLE is down 8 of last 10 days, or more, the forward returns for XLE are quite strong:
– down 8 of last 10 days, 3M forward 2.7% (3.5% instances)
– down 9 of last 10 days, 3M forward 7.1% (0.5% instances)
– down 10 of last 10 days, 3M forward 10.8% (only 2 times in 20 years)
So you can see, we are reaching a point where Energy is extremely oversold. And this, coupled:
– with positive EPS revisions
– positive fundamental upside (demand)
– supply constraints
– negative sentiment
And we think Energy is worth enduring, despite the recent material decline in the stocks.
Source: Fundstrat and Bloomberg
The bigger picture, in our view, remains supportive of Energy. As we discussed in our 2021 outlook, Energy has a favorable alignment of supply and demand taking place. Supply is constrained both by the White House (favors renewables) and capital markets (few projects funded) while demand could surprise later this year as the economy re-opens and jet travel resumes.
– Energy (XLE) is touching its 50D moving average
– This touch happened in late-Jan, and as we noted above, was followed by a strong rally
– We think this touch will also play out in a similar way
Source: Fundstrat and Bloomberg
…Earnings season starts this week and Energy is by far the sector with the best EPS revisions
Earnings season will kick off this week and we expanded the EPS trends to show all sectors below. This chart is calendar 2021 EPS and the revisions since the start of the year:
– S&P 500 EPS estimates are up 6%
– Energy is up 83%
– Basic Materials is up 14%
No other sector is even close.
STRATEGY: Updating our Power Trifecta, adding net 10 stocks, now Power Trifecta 35 (*)
We are updating our Power Trifecta list. In this rebalance, 3 stocks are deleted and 13 stocks are added. Thus, the total number of stocks has risen by 10 to 35. This makes sense given the recent pullback in the Epicenter names (more stocks are attractive).
3 Deletions:
PBCT, NVT 3.09% , VNO 0.98%
13 Additions:
AZO 0.74% , HOG 1.96% , GRMN 1.25% , MGM 1.46% , WH -0.55% , GPS, LB, VIRT 0.46% , AGCO -0.28% , OC 3.90% , UBER -1.48% . EXP 1.87% , NUE 0.61%
35 “Power Trifecta” Stocks Ideas:
Consumer Discretionary:
AZO 0.74% , HOG 1.96% , GRMN 1.25% , RL 2.09% , MGM 1.46% , NCLH -0.13% , RCL 0.56% , WH -0.55% , GPS, LB
Financials:
NYCB 1.36% , VIRT 0.46%
Industrials:
AGCO -0.28% , OC 3.90% , DAL 3.45% , KEX -1.02% , UBER -1.48%
Energy:
XOM -0.49% , HPQ 1.16% , NOV -1.28% , SLB -0.58% , COP -0.92% , EOG -0.74% , MRO -1.14% , MUR -1.17% , HFC, PSX -0.68%
Materials:
EXP 1.87% , NUE 0.61%
Real Estate:
BXP 1.71% , HIW 1.84% , JBGS 0.69% , UDR 0.50% , KIM 0.99% , WRI
Source: Fundstrat, Bloomberg
(*) the 35 “Power Epicenter Trifecta” stock ideas are the subset of the original 108 “Epicenter Trifecta” stock list. For the full list of our original “Epicenter Trifecta” stock list, please click the link below. 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.
For the full list of the 108 “Epicenter Trifecta” stock ideas, please click here
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), Technicals
– Violence in USA –> companies that are involved in some aspect of home or personal security. We are not “recommending” these stocks, but rather, bringing these stocks to your attention.
Granny Shots:
Full stock list here –> Click here
Tickers: AAPL, CSCO, INTC, MXIM, NVDA, EBAY, KLAC, GRMN, GOOG, MNST, MSFT, AMZN, QCOM, TSLA, PYPL, AXP, BF/B, PM, XLNX, TGT, PG, XOM, VLO, GL, RF, ATVI, BBY, GE, AMAT, LRCX, MU, HPQ
Trifecta Epicenter (*):
Full stock list here –> Click here
Tickers: AAP, AN, AZO, F, GM, HOG, BBY, GRMN, GPC, LEG, TPX, PHM, NWL, MAT, PII, RL, MGM, HLT, MAR, NCLH, RCL, WH, TNL, SIX, FL, GPS, KSS, LB, VFC, WTFC, ASB, FNB, PB, TFC, WBS, PACW, NYCB, MTG, EVR, IBKR, VIRT, BK, STT, BHF, AGCO, OC, ACM, WAB, GNRC, CSL, GE, GGG, IEX, PNR, CFX, DOV, MIDD, SNA, XYL, FLS, EAF, ITT, ALK, DAL, JBLU, LUV, MIC, KEX, JBHT, R, UBER, UHAL, MAN, XOM, HP, BKR, HAL, NOV, SLB, COP, EOG, FANG, HES, MRO, MUR, PXD, XEC, HFC, MPC, PSX, EXP, CF, NEU, NUE, RS, SON, IP, ARE, BXP, HIW, JBGS, ESS, UDR, KIM, NNN, O, WRI, PSA
Violence in USA:
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: Daily COVID-19 cases 61,389, -4,794 vs 7D ago…Easter is throwing off the 7D delta…case trends still stable
_____________________________
Current Trends — COVID-19 cases:
– Daily cases 61,389 vs 66,183 7D ago, down -4,794
– 7D positivity rate 5.2% vs 4.7% 7D ago
– Hospitalized patients 39,726 up +7.1% vs 7D ago
– Daily deaths 717, down -5.9% vs 7D ago
_____________________________
– The latest COVID-19 daily cases came in at 61,389, down -4,794 vs 7D ago.
– 7D delta in daily cases has been fluctuated in the past few days. This was primarily due to the data distortion 7D ago (in observance of the holidays). That said, the overall case trend is still stable. The positivity rate has been flat-lined, at ~5%, since the start of March. The number of currently hospitalized people has been up slightly, while the number of daily deaths continues to trend downward.
– At this stage of pandemic, vaccinations might matter more than daily case trends. As long as vaccinations work, eventually the rollout of the vaccines will lead to a decline in the pervasiveness of the COVID pandemic.
Source: Fundstrat and state health departments
7D delta in daily cases have been fluctuated in the past few days- primarily due to the data distortion last week…
However, the overall case trend is still stable. The positivity rate has been flat-lined, at ~5%, since the start of March. The number of currently hospitalized people has been up slightly, while the number of daily deaths continues to trend downward.
Source: Fundstrat and state health departments
US hospitalization still rolling over … and even US deaths seem to be rolling over…
Below we show the aggregate patients who are currently hospitalized due to COVID. It has fallen significantly from the wave 3 peak.
Source: Fundstrat and state health departments
Source: Fundstrat and state health departments
Source: Fundstrat and state health departments
Source: Fundstrat and state health departments
POINT 2: VACCINE: 48 states near ~60% infected + vaccinated…
_____________________________
Current Trends — Vaccinations:
Vaccinations ramping steadily
– avg 3.2 million this past week vs 3.0 million last week
– overall, 22.2% fully vaccinated, 36.1% 1-dose+ received
_____________________________
Vaccination frontier update –> 48 states now near or above 60% combined penetration (vaccines + infections)
Below we sorted the states by the combined penetration (vaccinations + infections). As we commented in the past, the key figure is the combined value >60%, which is presumably near herd immunity. That is, the combined value of infections + vaccinations as % population > 60%.
– Currently, 48 states (see below) are basically all at this level
– SD, ND and RI are now above 90% combined penetration (vaccines + infections)
– So slowly, the US is getting to that threshold of presumable herd immunity
Source: CDC and Fundstrat
Collectively, these 48 states represent about 94.8% of the US population. In fact, 64.5% of US states (based on state population) have seen combined infection and vaccination >70% and 9.5% of US states have seen combined infection and vaccination >80%. As the chart below highlights, the US is seeing steady forward progress and this figure continues to rise steadily.
Source: CDC and Fundstrat
There were a total of 2,634,400 doses administered on Monday, up 24% from 7D ago. Overall, the pace is steadily rising, as evidenced by the 7D moving average (see blue line).
Source: CDC and Fundstrat
~92.0% of the US has seen 1-dose penetration >30%…
To better illustrate the actual footprint of the US vaccination effort, we have a time series showing the percent of the US with at least 20%/25%/30% of its residents fully vaccinated, displayed as the orange line on the chart. Currently, 80.5% of US states have seen 20% of their residents fully vaccinated. However, when looking at the percentage of the US with at least 25% of its residents fully vaccinated, this figure is 18.8%. And currently no states have seen 30% of its residents fully vaccinated.
– While all US states have seen vaccine penetration >25%, 92.0% of them have seen 1 dose penetration >30% and only 62.1% of them have seen 1 dose penetration > 35%.
– 80.5% of the US has at least 20% of its residents fully vaccinated, However, only 18.8% of US has fully vaccinated >25%
– This is still a small figure but this figure is rising sharply now. This figure could rise even more rapidly after the JNJ’s 1-dose vaccines roll out.
Source: CDC and Fundstrat
This is the state by state data below, showing information for states with one dose and for those with two doses.
Source: CDC and Fundstrat
The ratio of vaccinations/ daily confirmed cases is generally trending higher (red line is 7D moving avg) and this is the most encouraging statistic.
– the 7D moving average is about ~50 for the past few days
– this means 50 vaccines dosed for every 1 confirmed case
This figure is rising nicely and likely surges in the coming weeks
Source: CD and Fundstrat
In total, about 120 million Americans have received at least 1 dose of a vaccine. This is a good pace and as we noted previously, implies 50% of the population by May.
Source: CDC and Fundstrat
POINT 3:Tracking “un-restricted” and “restriction-lifted” states
We are changing Point #3 to focus primarily on tracking the lifting of restrictions, as states begin to ease various mandates. Keep in mind, easing/lifting restrictions can take multiple forms:
– easing indoor capacity
– opening theaters, gyms, salons, saloons
– eliminating capacity restrictions
– eliminating mask mandates
So there is a spectrum of approaches. Our team is listing 3 tiers of states and these are shown below.
– states that eased in 2020: AK, OK, MO, FL, TN
– states that eased start 2021 to now: SD, ND, NB, ID, MT, IA, NC, MS, SC, AZ, TX, MD
– states that announced future easing dates: GA, NY, WI, AR, CA, AL, CT
GROUP 1: States that eased restrictions in 2020…
The daily case trends in these states is impressive and it is difficult to say that lifting restrictions has actually caused a new wave of cases. Rather, the case trends in these states look like other states.
GROUP 2: States that eased restrictions in 2021 to now…
Similar to the list of states above, the daily case trends in these states are impressive and it is difficult to say that lifting restrictions has actually caused a new wave of cases.
– we have previously written about how ND and SD, in particular, have seen an utter obliteration of COVID-19 cases in those states
– that seems to be a function of vaccine penetration + infection penetration, leading to something akin to “herd immunity”
GROUP 3: States that announced plans ease restrictions in 2021…
These states have upcoming dates to ease restrictions. The dates are indicated on each chart. The cases trends in these states have been mostly positive, with perhaps the exception of NY state:
– NY state case levels seem awfully stubborn at these high levels
– weather is improving in NY area, so if weather has any effect on virus transmission, it should slow cases
