In the past week, US daily coronavirus (COVID-19) cases surged to record highs, 500,000 per week, yet stocks are holding up. In early June, daily US caseload was about 18,000 but it is about to surpass 70,000, a nearly 4X increase. This surge has caused states to pause and even rollback easing of the economy. If you are confused, I can think of a few reasons why equities have managed to rise in the face of this:

– Markets are distinguishing between infection rates and “confirmed cases” and the surge reported in the past month is due to better detection (testing).

– Markets are focusing on severe outcomes, deaths and hospitalizations, and these have largely diverged from cases;

– Markets are focusing on the rapid progress of vaccines/ cures and believe these surges now do not represent a new baseline;

–Markets saw how NYC/ NY tristate experienced its outbreak and sees the new epicenter, FL, CA, AZ, TX, or F-CAT, following this path.

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Nevertheless, the US has dropped the ball on COVID-19. Instead of a glide path of declining cases and contained outbreaks, COVID-19 is spreading in the US at an uncontained rate.

As I see it, the root causes (listed below) are not really due to “economic opening.” Instead, I ...

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