The Dividend Cafe - Daily Covid and Markets - Wednesday August 12

Episode Date: August 12, 2020

Market futures were up another 250 points at 3:45am this morning and I immediately thought, “Oh, does Iran have a working vaccine now?” (If you are missing my joke, see yesterday’s missive on Russia). But in all seriousness, markets continue to be trading with very positive sentiment, and with no regard for a stimulus deal (more on that below). The markets ended up today nearly 300 points, and the S&P and Nasdaq each did even better. I simply do not believe the market cares (right now) about a stimulus deal, and the markets digestion (all summer) of the COVID reality has been remarkable. Links mentioned in this episode: DividendCafe.com TheBahnsenGroup.com

Welcome to the Dividend Cafe, weekly market commentary focused on dividends in your portfolio and dividends in your understanding of economic life. Hello and welcome to today's COVID in Markets podcast brought to you by Dividend Cafe, the Bonson Group. It is Wednesday, August the 12th. Market was up another 300 points today. The futures were up 250 in the morning and it kind of just held throughout the day. And so the broadening of that market rally, I think, is becoming an even bigger story.

Let me do this. I'm actually going to jump right into the health data and then come back to some market stuff. But bottom line, S&P and NASDAQ up even more. Dow up very close to 300 points. So what is it now? Eight out of nine days, getting close to 2000 points up in August. And so we'll cover some of that here in a moment. are around the same level today, yesterday, with a very high backlog reporting. And the number of COVID-like illness visits to the emergency room nationally hit the 50% mark today of how far it is down across the country, 50% from its high level, which was about two weeks ago. And so hospitalizations and deaths are most assuredly about to show decline based on the precedent of COVID-like illnesses in emergency

room leading the way all through the data points that we've been following all summer long. You see a real, real encouraging, not just drop or decrease, but a collapse in COVID-like illnesses going into the emergency centers of hospitals and so forth. Culturally, let me just quickly address the Pac-12 and Big Ten. Both have canceled their football seasons for 2020. So far, the SEC, the ACC, and the Big 12 have said they're going to stay the course and play through. If this were to continue, it would mean we'd end up with some colleges playing this fall and some not. If not, they are stating that they want to play the Big 10 and Pac-12 in January. Maybe they'll play in Michigan and Ohio in the month of January.

I don't know. But either way, very disappointing, very surprising. And it will be interesting to see if some of the other conferences in the South and Midwest are willing to buck the trend and go forward. I have an interesting data point I wanted to share. I think it is worth sharing because it is a tragedy for our seniors and also because it is just important information. It's informationally relevant. 267,000 cases of coronavirus have been attributed to nursing homes and long-term care facilities. And that is 11.7% of our total positive cases, but 51,000 deaths in nursing homes and long-term care facilities, which is 42% of our total national mortalities.

And of course, from a population standpoint, long-term care facilities are around 1% of the population. facilities are around 1% of the population. So I think you still have this highly disproportionate case of mortality, severity, lethality, and the more vulnerable spots of where our seniors are. And I also think that that has provided one of the blueprints that led to much less death in the summer than we were experiencing in the spring, as we were able to target our treatment and our national policy response to the most vulnerable, as opposed to something that made a little bit less sense. Moderna, one of the leading vaccine makers, closed a deal with the federal government. Based on the progress in their late-stage trials right now, the federal government has committed $1.5 billion for up to 100 million doses of manufacturing distribution

of their vaccine treatment. I'm going to just quickly tell you Orange County, California, is now seeing a 9.4% negative growth rate in hospitalizations. Texas's positivity rate has been reduced by half over the last month and both California and Texas after today's data appear to have gotten through this backlog of just mind-numbing weirdness of cases that had not been previously reported and and here we are data looking very good in those important categories, relatively speaking. Now, in terms of within Florida, the basic narrative here, okay, Florida really was the talk of the nation for its population size in March, April, May for how little exposure, a little infection rate it experienced and most certainly little severity it experienced out of the minor infections, very few infections it had.

And then the summer became the talk of the nation for the other reason is it led the nation in new cases both on absolute basis and per capita. new cases both on absolute basis and per capita. And yet I have put together a sequence of charts today at covidomarkets.com to show to you that through the entire time this summer, their in-bed hospital capacity, the inpatient beds, stayed somewhere between 74 and 77 percent on average, right around 75 percent, which is their average year over year in hospital occupancy. That right now the number has stayed kind of level. And very significantly, coronavirus positive patients never exceeded at any point about, let's call it 12%. Let me see here. Excuse me, 20% of hospitalizations and now are 12%. Okay, not quite.

It hasn't been reduced by half, but very close. Okay, not quite. It hasn't been reduced by half, but very close. Roughly 9,500 cases were the average near the peak level at mid to late July. It's now down to 6,500. Okay, a 33% reduction in hospitalizations in the state of Florida. the fact that hospital resources were never really even close to penetrated in Florida this summer, and the fact that these hospitalization reductions have been so dramatic and encouraging and exciting in Florida, I honestly have seen no coverage of that in the national press at all. And yet, I think it is very important. The chart that I provided today at COVID markets that I think is most relevant that I really hope a lot of you will go look at shows the case fatality rate by age group and by each month. So we already know that the case fatality rate is higher for those that are age 86 to 99 than it is for those in their 70s and early 80s. And then that's higher than those

in their 60s. And that's higher than those in their 50s. And they have virtually no mortality at all people under the age of 40. But what you also will see in this chart I put is that even within the age group of 86 to 99, we had a 40% case fatality rate in March, and you have a 17% or 18% case fatality rate now, even within that more vulnerable group. So what I think you have seen is two things here. that the case positives in Florida were indeed restricted to a much healthier and much younger part of the population, that we were doing a better job at protecting the seniors and more vulnerable, but then the better treatment options that even those more vulnerable saw their own mortality rates dramatically decline, more lives saved. And ultimately, through all the talk about Florida and for all the case growth they experienced this summer, they now, on the downward trend of their curve,

never got worse than 17th in the country in cases per capita. Stunning development there in Florida as they head towards Arizona's level of improvement. I unfortunately have to cut us off a little early. I'm going to leave it there because I do have an appointment right now. And there is some stuff on the Fed, on oil, and on the market. But you'll have to get it at covidandmarkets.com today. We'll come back to you tomorrow with another podcast and hopefully more encouraging data. It does seem to me that some of these case reporting issues and data hiccups that some states are experiencing, we're starting to get worked through so we can get a

little bit better view of things. And when we're getting the better view, like in Arizona, it's all to the positive. North Carolina had to remove 200,000 cases that were wrongly reported. You have just all kinds of stuff like that. But let's just clean it up. Let's get it cleared up. Let's get accurate data. We'll make decisions from there. It seems to me to make sense.

The market's been doing it all summer. Maybe the rest of the society can as well. Thank you for listening to COVID and Markets. The Bonson Group is a group of investment professionals registered with Hightower Securities LLC, member FINRA and SIPC, Thank you. to buy or sell securities. No investment process is free of risk. There is no guarantee that the investment process or investment opportunities referenced herein will be profitable. Past performance is not indicative of current or future performance and is not a guarantee.

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