Covid Markets Missive – Weekend Edition Sept. 20

Dear Valued Clients and Friends –

I hope everyone had a good weekend.  The weather turned in NYC quite quickly, from hot and humid as normal, to quite chilly but positively beautiful.

Today’s missive is full of good and new COVID information, and a pretty exhaustive update on the policy front and more …  Around the horn we go.

COVID Health Information

  • For the second week in a row, out of well over 3,000 daily tests, the NFL had zero positives, with every player and coach and staffer eligible to participate.  The sports re-opening / re-activation has gone better than anyone could have expected.
  • One of the things that has been useful to me about trying to study the data every day is that, over time, you get a better feel for what has been understood wrongly, what assumptions have proved to be accurate, and what information we simply still do not know.  I have generally not piled on the “experts” who were wrong about certain things, because I have been in the world of economic models (somewhat different than epidemiological ones, but the point still holds) for 20+ years, and I know that models are fallible just as the assumptions that go in them are fallible.  The dire forecasts around COVID that have proven to be lacking did not properly distinguish because a Case Fatality Rate and an Infection Fatality Rate, and no one could have predicted the latter would prove to be so much lower than feared.  The model assumptions about where herd immunity would take hold did not account for natural immunity (it now appears for that reason, and several others, assumptions were vastly over-stated).
  • Two of the leading vaccine candidates, Moderna and Pfizer, have said they will release their comprehensive trial documents when done, something apparently being done to persuade a lot of the new anti-vaccination crowd of the efficacy of their treatments.  This is highly unconventional, as obviously pharmaceutical companies are not generally prone to revealing competitive intelligence.  Their willingness to do so speaks to the uniqueness of this pandemic and surrounding conditions in the society, I suppose.
  • There is an increasing amount of legitimate and credible coverage of negative testing results not getting to the CDC (particularly with the mass testing now going on for students at colleges).  The story is only relevant to the extent that this keeps the positive rate stays artificially high.
  • Weekly update in hospital beds being used by COVID patients, state by state:

  • For those in areas where the virus has worked through some degree this updated chart may provide great encouragement.  Sweden’s deaths have really capped for some time now, and cases have simply not moved as they have where the strict lock-downs may have delayed herd immunity (here comparing European geographies).

  • It appears those worried about “second onset” of COVID can breathe a sigh of relief, as some of the confusing data is a by-product of post-recovery re-testing being done prematurely.  Viral clearance takes 36 days (median) even though the vast majority of COVID patients are past symptomatic / infectious within ten days.  This is a key study in understanding why true positives have been over-stated and why viral duration matters post-recovery.
  • The daily deaths are collapsing right now, with reported deaths offsetting the collapse effect to some degree by the past reported death catch-up.  When that backlog reporting has fully run its course, with current “date of” deaths now so low, I suspect that becomes another data advantage in driving further economic normalization.

*Wolf Ventures, Mari Kooi, Sept. 20, 2020

  • Today’s testing data shows over 897,000 tests done today, with a positivity rate of 4.1%.

* The COVID Tracking Project, Sept. 20, 2020

* Worldometers.Info, Sept. 20, 2020

Public Policy

I have no idea if the coming tensions around the Senate Judiciary efforts will have any relevance at all to a relief/stimulus bill (I suspect not), but here is where things stand from what I am able to pick up from both my sources and the media …

There is conversation that the Democrats may come down and Republicans may come up in relief to states ($300 billion of new money and $150 billion of re-purposed money from the CARES Act).   They also may move up and down (respectively) on the aid to schools.

In the meantime, if a bipartisan ask for a stand-alone PPP re-load happens, it will be a big optical problem for Speaker Pelosi.  It behooves her to have PPP support done within a grand plan so as to not lose some credit to Democrats for what happens with it.

But I think time is of the essence, and the first week of October is the latest I can see this getting done before all chance of it getting done goes away.  I doubt it will be Mnuchin or Meadows to get this done – it will take President Trump and Speaker Pelosi, and I imagine it could go either way at this point.

I would read my “Federal Reserve” section below for the most significant aspect of where this discussion may go from here.

Federal Reserve

Most people’s eyes may gloss over when I talk about the Fed, and the media may lack the understanding necessary to report on this, but I assure you that Mnuchin, Pelosi, Schumer, and McConnell do not fail to understand this … A lot of the so-called delta between what each side wants can be rolled into Section 13.3 facilities.  The Cares Act is already law, and a lot of what it did was fund certain facilities that the Fed could then leverage up under the emergency provisions of their stabilization facility.  A huge portion of those allotments have not been used, and it would not at all surprise me to see certain 13.3 allotments re-organized to “hide” costs of the new bill under those previous facility commitments, thereby not pushing up the price tag of the new bill.


Barrons reached out Saturday for comments on the impact of Justice Ginsburg’s passing on the market.  Their article where I am quote several times is here, but the gist of what I said is:

“Politically, her passing enhances an already toxic environment,” says David Bahnsen, a financial advisor in California, though he adds that it’s too soon to predict the market impact.   Bahnsen also says it’s too soon to predict the market impact. “I do not see an easy way for anyone to handicap this with high conviction,” he says.

Futures are up about a hundred points.

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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