Covid Markets Missive – Tuesday Sept. 15

Dear Valued Clients and Friends –

We have a short but sweet COVID & Markets today as I have been in Connecticut most of the day in client meetings.  The market was flat on the day (Dow) but up (S&P 500) and up even more (Nasdaq) …

Around the horn we go …

COVID Health Information

  • The seven-day average of 34.7k new daily cases is down 48.4% from the July 22 peak.
  • The BioNTech/Pfizer vaccine project has said they believe it is “likely” their vaccine will be distributable before the end of the year.  They obviously cannot predict what the FDA approval process will look like but there seems to be a lot of confidence in the direction of their vaccine trials.  They recently expanded their trial pool from 30,000 to 44,000.
  • Madrid’s hospitalizations through the so-called “second wave” of Spain are 1/7th (14%) that of what they were in the spring.  I hate being so redundant with you but often the news itself is redundant.  The cases are less severe, the people are healthier, the treatments are better, and so forth and so on.
  • New cases in Denmark have tripled, whereas in Sweden they have barely moved.  As for what could possibly be causing this dynamic, I guess I would refer you to:all the media reports covering this prior issues of COVID & Markets.

*Pantheon Macroeconomics, Sept. 14, 2020, p. 2

  • JP Morgan has determined that productivity does, indeed, fall for employees working from home.  In other news, I have determined that the sun is hot.
  • The University of Pittsburgh School of Medicine has a promising development you may want to read more about. Essentially, they have isolated the smallest molecule to date that neutralizes the virus, and the animal testing thus far has been highly successful.  More trials are underway but there is a therapeutic vision here, as well as potential vaccine antibody angle.

* Pantheon Macroeconomics, Sept. 14, 2020

  • Today’s testing data shows 680,000 tests done today, with a positivity rate of 5.1%.  Yesterday there were 743,000 tests with a 4% positivity rate.

* The COVID Tracking Project, Sept. 15, 2020

Key States to Follow

  • Florida
    • Hospitalizations are down 73% from the peak.  ICU patients are down 65%.  Almost 30% of hospital beds are empty.  Lowest hospital admissions for COVID since June 11.  Statewide positives are below 4%, and in Broward and Miami-Dade County they are lower than that.
  • California
    • The testing positive percentage today was 1.8%.  I will repeat, statewide, they had a 1.8% positive ratio.

*State of California, Dept. of Public Health, Sept. 15, 2020

  • Ohio
    • They reported 80 deaths today.  But just one caveat – only three were from today.  And only sixteen were from the past three days in total.  So, 64 deaths from past dates, but all reported as of today.  The surveillance/back-tracking persists …

* Worldometers.Info, Sept. 15, 2020

Stock Market Today

This tells a pretty big story in the S&P 500’s action year-to-date.

*Strategas Research, Investment Strategy Report, Sept. 11, 2020, p. 2

  • The S&P 500 saw its biggest breadth yesterday (82% advance/decline) in over two months
  • Copper at new highs …
  • … Dollar at new lows

Public Policy

There are now junior Congressmen and women on both sides of the aisle pushing for some form of relief bill that takes all the elements everyone has said they agree with and adds in watered down versions of what they don’t.  I am skeptical Speaker Pelosi or the GOP Senate will give it a listen but we will see if it has legs.  The state relief money the Democrats want (over $1 trillion) is the deal-breaker, and they have little room to give with the demand the unions have placed on this.

The bipartisan Congressional group trying to get a deal done proposed a $1.5 trillion package today, and the White House said they could get behind this as a framework.  If this starts to get traction, with bipartisan support, it could put Speaker Pelosi in a very difficult position.

Oil and Energy

The International Energy Agency cut the Q4 demand forecast to 600,000 barrels per day, following OPEC’s consumption outlook cut for 2021 (down to 1.1 million BPD).  Oil prices traded up ~+1% this morning and closed back to $38.28.  Why would oil go up on news like this?  Over-supply relative to soft demand is not news to the market.  This dynamic is real, and known.

Federal Reserve

I have new read two reports from serious policy analysts I respect and follow closely suggesting that the Fed can and should create a facility to lend directly to consumers (in the wake of a failure to launch a new relief program).  You may be wondering how this is legal, and the answer is that Congress already has funds granted to it in the CARES Act it could “re-direct” from its discretionary stated purposes.  Now, money the Fed lent to consumers in whatever vehicle it chose to do so would have to be paid back (the Fed cannot legally absorb losses), so I am not sure how stimulative such a move would really be.  But I imagine it is being considered if my sources are writing about it, especially with the sensitivity the Fed has to not be seen as a bailout machine for larger entities.


This morning’s appearance on Maria Bartiromo/Fox Business is here.

Futures are about flat into the evening …

Be well, be safe, be free.

With regards,

David L. Bahnsen
Chief Investment Officer, Managing Partner

The Bahnsen Group

This week’s Dividend Cafe features research from S&P, Baird, Barclays, Goldman Sachs, and the IRN research platform of FactSet.


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About the Author

David L. Bahnsen


David is a frequent guest on CNBC, Bloomberg, and Fox Business and is a regular contributor to National Review and Forbes. David serves on the Board of Directors for the National Review Institute and is a founding Trustee for Pacifica Christian High School of Orange County.

He is the author of the books, Crisis of Responsibility: Our Cultural Addiction to Blame and How You Can Cure It (Post Hill Press), The Case for Dividend Growth: Investing in a Post-Crisis World (Post Hill Press) and his latest, Elizabeth Warren: How Her Presidency Would Destroy the Middle Class and the American Dream (2020).


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