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: Equities yesterday show “fire, ready, aim” still default reaction in pandemic
Global markets were roiled yesterday by the FDA’s announcement to “pause” the J&J vaccine, out of an abundance of caution stemming from a rare blood clot side effect detected in 6 women administered the J&J COVID-19 vaccine. This is a pretty serious blood clot called Cerebral Venous Sinus Thrombosis and is a type of stroke (Hopkins article on CVST).
– overall, the media and news coverage of yesterday’s events were very useful to me
But I was surprised that Street analyst commentary seemed to focus on explaining the mechanisms of how the drug might contribute to clotting, but provided little context whether these incidences are outside of normal chances, and also whether COVID-19 side effects itself were worse.
Source: https://www.nytimes.com/2021/04/13/health/blood-clots-johnson-vaccine.html
…Equities went full “stay at home” yesterday, selling Epicenter stocks again
Given the prospect for a delay in vaccine deployment, plus added fear by those “vaccine scared” and just general uncertainty around COVID-19, equity markets reacted sharply initially and even through the close:
– Nasdaq 100 rallied +1.2% as “stay at home” and Growth became “safe havens”
– Russell 2000 fell as much as 2.5% before closing flat, reflecting its status as an Epicenter proxy trade
In other words, financial markets viewed the FDA pause as a setback for the Epicenter/re-opening window. I have learned not to stay too long in a “fight with the tape” but to me, this strikes me as a massive over-reaction.
Source: Fundstrat and Bloomberg
…Some reasons to view the FDA pause as really a short-term pause
Why? There are 3 things I want to highlight. And if these prove to be correct, the J&J vaccine will likely be re-introduced to the market shortly. I am not a scientist, and I am clearly out of my area of expertise. But let me share some perspective that seemed to be overlooked yesterday:
1. According to Johns Hopkins, in any year, CVST is seen in 1 in 1 million adults and 3 in 300,000 individuals under age 18 (thanks NT for the heads up)
https://www.hopkinsmedicine.org/health/conditions-and-diseases/cerebral-venous-sinus-thrombosis
2. Pfizer CEO, Albert Bourla, yesterday announced PFE will deliver to USA 20 million additional doses by May and the full 300 million two weeks early, offsetting any “supply shock”
Source: also, https://twitter.com/albertbourla/status/1382064225229619202?s=21
3. COVID-19 disease side effects show even more severe risk of blood clots with 7.8% pulmonary embolism, 11.2% get deep-vein thrombosis and 1.6% have a stroke
Source: https://twitter.com/bopinion/status/1381944001826336768?s=20
In other words, it almost seems the risks identified with the J&J vaccine are far less than the disease itself. And perhaps more importantly, CVST is found in the US annually. I realize the pause yesterday is also an invitation for doctors to provide additional case information, so the actual incidence rate might be more than 6 of the 6.8 million vaccinated with J&J.
STRATEGY: Epicenter stocks significantly underperformed since mid-March, but EPS revisions = good and Technicals, while damaged, are still positive
For the past two to three weeks, Epicenter stocks, and the proxies IWM (Russell 2000 ETF) and XLE and OIH (Energy) have been struggling. Part of this is equity markets have become somewhat defensive, favoring “stay at home” and Growth stocks and yesterday’s “fire ready aim” to the J&J vaccine pause amplified this trend.
But in some ways, yesterday could be viewed as “maximum” negative pain for the Epicenter trend. While headlines could certainly get worse, a US vaccine getting paused is certainly “optically” as bad as one can imagine. And the 2.5% intraday crash of IWM is evident of this.
And despite the rough two to three weeks for small-caps (IWM), the technical picture is still solid. The IWM is sitting just underneath the 50D moving average and still solidly above the 200D. So the technical picture, while damaged, is not broken. And I am sort of ignoring the potential “head and shoulders” pattern, simply because this is a pretty obvious pattern.
Source: Fundstrat and Bloomberg
And the bigger more important milestone in the coming weeks is 1Q2021 EPS season. In some ways, investors view it as officially starting with banks, which report Wednesday. And this is the first real quarter we can see operating leverage at work.
– topline revenues are forecast to rise 6.5% YoY, the first real increase in revenues since the pandemic started
– Granted, 1Q2020 is an “easy comp” because there were only two months of business during that quarter, and March 2020 was a lost month
But companies will also talk about visibility and re-opening plans. So there will be a lot of useful information coming over the next few weeks.
Source: Fundstrat and Bloomberg
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 5.73% , VNO 3.44%
13 Additions:
AZO 0.63% , HOG 2.04% , GRMN 2.68% , MGM 3.60% , WH 1.98% , GPS, LB 4.66% , VIRT 2.26% , AGCO 1.91% , OC 1.43% , UBER 4.19% . EXP 2.74% , NUE 2.55%
35 “Power Trifecta” Stocks Ideas:
Consumer Discretionary:
AZO 0.63% , HOG 2.04% , GRMN 2.68% , RL 3.62% , MGM 3.60% , NCLH 7.00% , RCL 4.16% , WH 1.98% , GPS, LB 4.66%
Financials:
NYCB, VIRT 2.26%
Industrials:
AGCO 1.91% , OC 1.43% , DAL 6.51% , KEX 4.92% , UBER 4.19%
Energy:
XOM 0.35% , HPQ 0.98% , NOV 3.20% , SLB 3.05% , COP 0.84% , EOG -0.73% , MRO, MUR 3.17% , HFC, PSX 3.58%
Materials:
EXP 2.74% , NUE 2.55%
Real Estate:
BXP 1.20% , HIW 1.81% , JBGS 4.34% , UDR 2.84% , KIM 0.81% , 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 72,417, +16,547 vs 7D ago…
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Current Trends — COVID-19 cases:
– Daily cases 72,417 vs 55,870 7D ago, up +16,547
– 7D positivity rate 5.4% vs 4.7% 7D ago
– Hospitalized patients 40,902 up +5.1% vs 7D ago
– Daily deaths 726, down -4.1% vs 7D ago
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– The latest COVID-19 daily cases came in at 72,417, up +16,547 vs 7D ago.
– 7D delta in daily cases has been fluctuated in the past few days. And yesterday this figure jumped to 16,547, the highest level since January. Looking at the state level data, Michigan is still the biggest contributor of the 7D delta jump. Michigan reported near 8,867 new cases yesterday, nearly 4,000 more than 7 days ago. Other than Michigan, Florida also reported large amount of new cases yesterday. However, the surge of daily cases in Florida is primarily due to the low number of tests reported yesterday. Hence, yesterday’s surge in Florida is just a “true-up”.
– 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…
– 7D delta in daily cases has been fluctuated in the past few days. And yesterday this figure jumped to 16,547, the highest level since January.
– Looking at the state level data, Michigan is still the biggest contributor of the 7D delta jump. Michigan reported near 8,867 new cases yesterday, nearly 4,000 more than 7 days ago.
– Other than Michigan, Florida also reported large amount of new cases yesterday. However, the surge of daily cases in Florida is primarily due to the low number of tests reported 2 days ago. Hence, yesterday’s surge in Florida is just a “true-up”.
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…
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Current Trends — Vaccinations:
Vaccinations ramping steadily
– avg 3.4 million this past week vs 3.0 million last week
– overall, 22.5% fully vaccinated, 36.6% 1-dose+ received
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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, 66% of US states (based on state population) have seen combined infection and vaccination >70% and 14.0% 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 2,580,028 doses administered on Tuesday, up from 7D ago. Overall, the pace is steadily rising, as evidenced by the 7D moving average (see blue line). In fact, the vaccination path (measured by 7D average to eliminate seasonality) has reached its all time high, on average, ~3,370,000 doses were administered on each day in the past 7 days.
Source: CDC and Fundstrat
~68.6% of the US has seen 1-dose penetration >35%…
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, 89.5% 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 20.1%. And currently only Alaska has seen 30% of its residents fully vaccinated.
– While 95.2% of US states have seen vaccine penetration >30%, 68.6% of them have seen 1 dose penetration >35% and only 12.0% of them have seen 1 dose penetration > 40%.
– 89.5% of the US has at least 20% of its residents fully vaccinated, However, only 20.1% 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 121 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
