Daily COVID Markets Missive – Weekend Edition July 26

Dear Valued Clients and Friends –

I hope you all have had a good weekend.  As I have been doing lately, the “weekend version” is essentially dedicated to the health information side and we will add our normal Markets, Housing, Policy, and Fed sections back in tomorrow’s missive …

I will remind everyone that our national video call (done every other Monday at 11am PT/2pm ET) is tomorrow,the 27th.  Click here for info and registration – it will not be one you want to miss!

COVID Health Information

  • Ultimately, all the hand-wringing over the post-opening, post-protests increase in positive cases of the last 6-8 weeks will come down to how this chart holds.  I do understand there is a growing chorus of people who have said, “wait two more weeks,” and “wait four more weeks,” and have been saying that for about eight weeks.  It puts analysts who see the case growth totally disproportionate from the utilization of hospital resources and mortalities in an impossible position, because you can never prove what will happen “next week” and “the week after,” etc.  If what we are to be concerned by is always another week away, there is no end to the concern and it really does change the way one analyzes things (let alone how one imagines policymakers are to react).  That said, some trends and data points do, at some point, become impossible to argue with, so the hope and prayer for all must be that the case growth flat-lines and declines, with the feared surge in mortalities and exhaustion of hospital resources never coming, and we can all end up more informed (and hopefully more grateful).  Everyone is learning as we go, and because coronavirus will not be leaving society any time soon, it will be society’s ability to understand it and know what risks and trade-offs are actually embedded in daily living that must soon trump media narratives.  This will be the key matter for markets, for the economy, and for the health of society.  Understanding those risks and trade-offs is a daily evolution.

  • New York state and New York city recorded their lowest hospitalizations since mid-March this weekend.  The positive ratio on testing is 1%.  There were a grand total of four hospitalizations in New York City on Friday.
  • I thought many of you would be interested in Dr. Harvey Risch’s take on hydroxychloroquine.  Dr. Risch is the professor of epidemiology at the Yale School of Public Health.  What is needed is a scientific assessment, a medically objective one, devoid of political biases and tribal instincts.
  • It is true that I believe it to be poisonous for the data to have a mortality considered “by COVID” when one dies from a car accident, suicide, homicide, or fall” and I have been concerned by the substantial data confusion in hospitalizations failing to distingish “with COVID” from “for COVID.”  That said, the number of COVID deaths the CDC has identified as being marked as a COVID death but involving a car accident, fall, or other such event that clearly had nothing to do with COVID is only 3,721 of the roughly 140,000 deaths so far.  As a percentage, this is not substantial, even though it is unfortunate to lack purer and more accurate data.  It is the hospitalization level that appears to be more distorted.
  • I think the protection of our most vulnerable ought to be the centerpiece of future policy endeavors around mitigation and safety.  The data on this is staggering.

  • Today’s testing data shows nearly 856,000 tests done, with a positivity rate of just 7.2% (lowest in quite some time).  We averaged over 861,000 tests per day this weekend (massive), and 7.49% positivity for the weekend.

* The COVID Tracking Project, July 26, 2020

F.A.C.T. (Florida, Arizona, California, Texas)

The four states are, to some degree, not monolithic any more, at all (I am not really of the opinion that they ever were).  There were always different trends, different challenges, and different outcomes in each state, but the one common thread was case growth, and that allowed for a media narrative to take hold.  The narrative has not proven accurate, and in the meantime the correlation between the four states is diminishing.

* Pantheon Macroeconomics, July 26, 2020

  • Florida
    • They reported lowest positive cases today in two weeks, but as always questions persist about weekend reporting issues (though their weekend numbers last weekend were plenty high).
    • ICU beds available remain around 20% and total hospital beds available remain around 25%
    • Discharges have been higher than admissions six days in a row
  • Arizona
    • If this doesn’t look encouraging to you, I can’t really help (lowest inpatient hospitalizations in exactly one month – since June 26).  A 25% drop in 12 days.

* Arizona Department of Health, July 26, 2020

  • California
    • Case growth seems to have dropped a lot today but it may be a reporting delay.  Hospitalization data in LA County has not been reported for two days.  In Orange County, hospitalizations are decreasing again and positivity rate is dropping.
  • Texas
    • The hospitalizations are not rising – and in Houston are declining.  I am encouraged by the flat-lining statewide, and by the effective management of ICU and bed capacity in some of the more troubled counties.  But until those metrics show more measurable drops, it is too early to get overly encouraged.
    • That said, what is collapsing is the most natural precursor to collapsing hospitalizations, and that is the positivity rate of their daily testing.

* Texas Health & Human Services, July 25, 2020


* Worldometers.Info, July 26, 2020

***********
Futures are down a tad …

My Structured Credit update will be done by 5am ET tomorrow, for those who have requested.

Be well, be safe, be free.

With regards,

David L. Bahnsen
Chief Investment Officer, Managing Partner
dbahnsen@thebahnsengroup.com

The Bahnsen Group
www.thebahnsengroup.com

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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The Bahnsen Group is registered with HighTower Securities, LLC, member FINRA and SIPC, and with HighTower Advisors, LLC, a registered investment advisor with the SEC. Securities are offered through HighTower Securities, LLC; advisory services are offered through HighTower Advisors, LLC.

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About the Author

David L. Bahnsen

FOUNDER, MANAGING PARTNER, AND CHIEF INVESTMENT OFFICER

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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