The Dividend Cafe - Daily Covid and Markets - Wednesday July 29

Episode Date: July 29, 2020

COVID Health Information In the “F.A.C.T.” section below, you will see what I believe is the most important data point this summer around the Arizona/New York case data … Yesterday’s new cases vs. the Tuesday of last week declined 4.5%, making it the third day in a row of week-to-week decline, something that Pantheon pointed out to me this morning has not happened since late May. The 7-day moving average of new cases is down 4% since its peak. The California and Texas hospitalization reporting is totally screwed up, and so national trends are distorted when two of the largest states can’t get their reporting straight. Where states had a hospitalization issue and are not struggling with reporting, the trend is very clear that hospitalizations are declining, ICU’s are declining (though not as much as hospital admissions), discharges are increasing, and stay time in hospitals has been cut in half from what it was in April. I want to provide all data, good and bad, so I have been including each day the facts around case growth in some states like Oklahoma, Alaska, Rhode Island, etc. And while the empirical fact of case growth, not case decline, has been pointed out there, I think it adds to the honesty of the presentation to mention that the “case growth” there has come off of very, very low bases. A fascinating look at Sweden’s situation with some quotes from the “Anthony Fauci of Sweden” (Anders Tegnell) throughout. I read a fascinating study this morning from the Mayo Clinic concluding that there have been substantially lower COVID infection rates for those who have received vaccines in the last five years for non-COVID related diseases such as polio, Hepatitis, geriatric flu, and others … Happy to send to those interested (a heavy read). Sometimes the thing to do when forecasts are off is not be critical, but be grateful. And also, to learn for the future … 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 and Markets podcast brought to you by the Dividend Cafe of the Bonson Group and today's Wednesday the 29th and we have another day behind us and kind of an interesting day. The market, the Dow was up about 160 points. The S&P and the NASDAQ were both up about double, a little more than double on a percentage basis. And I'm totally fine to say that the market went up today after Fed comments, as long as someone could explain to me what the Fed said today that everyone in the world didn't already know. There wasn't anything

new, no surprises, nothing that could be really thought of as market boosting out of the Fed commentary today. So I do think it's one of those days where in all humility, it's better just to say the market went up because it went up. But there was some good earnings news today. You know, the Fed is always nice to hear them stand and say they're there to back up every risk asset on the planet and things of that nature. I also suspect there could be some leakage around some of tomorrow's earnings announcements. But again, those kinds of things are always very hard to prove. So where we are is that the market is in a trading range and it's positively biased. And today there was some upside around that.

As far as some of the COVID-related announcements, I'm recording a little too early today to give you a total snapshot on today. But some of the earlier reporting states are continuing in their trend. And I definitely want to focus a little attention on Florida. It is the fourth day in a row that Florida's case growth has come in well below 10,000. And before that, it was 14 days in a row that they had been most, I think 11 or 12 of those 14 days, they were well over 10,000. They had averaged about 12,000 a day for 14 days. And so that's come down roughly 25%. And I think that's a big deal. Now the mortality released today is pretty high, 216 reported deaths. But then you look at the data, and it's just very difficult to decipher because of those 216 deaths, only 13 of them were from either yesterday or today. on average about 60 percent of the mortalities being reported are from 10 to 20 days ago and so we don't know how the data changes when it's this rolling lag that is very frustrating

but it appears that the date of death peak as opposed to the reported as opposed to the reported date peak, was July 16th, so about two weeks ago. But again, I kind of need more reporting data out of that embedded lag over the next week and maybe a little longer than a week to verify that. So Florida on case growth dropping, hospitalizations looking just fine, mortality, and when I say just fine, I mean relatively speaking. It hasn't worsened. It's modestly got better. There's still a lot of people in the hospital that would love to get out of the hospital, and I hope you understand. I know that. I'm just speaking more numerically here, and so I asked for your grace and how you hear it. But in

terms of some of the bigger picture things on COVID today, I'm going to first start with what I think is one of the most important data points that I've gone into this whole summer. And that has to do with Arizona, which was the leader of the fact states in early June, coming out of the economic reopening of a surge of new cases. And on a per capita basis, yesterday surpassed the state of New York for new COVID cases. And yet, at the same time, their deaths per capita are a quarter of what New York's are, and their total deaths are about a tenth of what New York's are. And the total deaths being only 10% of New York's is somewhat immaterial because you have to really measure these things per capita, or you're just comparing apples to carburetors. But when you look at the per capita difference, when Arizona has 101% of the cases, but 25% of the mortality,

both adjusted for population size, I have to say that that is as stunning of a reinforcement of the entire thesis that I've had all summer long as I can come up with, which is that cases cannot be the primary data point. They're not irrelevant, but they're by no means not even close to the primary data point at being able to measure economic potential, economic ramification, strain on medical resources, education, strain on medical resources, hospitalizations, and of course the societal impact of the tragedy of mortality. So I think that the fact that Arizona has reached New York's level per capita is not only not the whole story, it actually is the first part of what is a much more positive story, which is the validation of a healthier and younger demographic testing positive for coronavirus and the improved treatments in the summer versus the spring. When I say improved treatments, you can apply that to

both therapeutics and to medical expertise on site, and then the potential of a more mild strand of the virus that's making its way around. That third one, I can't make any argument for. I have no way of knowing that. It's totally outside of my area, but it is certainly a listed possibility. And then obviously the other two seem to be much more empirically verifiable.

And what else do I want to cover before I move on here? Yesterday's new cases versus Tuesday of last week. So just again, going on apples to apples, week over week, day by day comparison had declined about four and a half percent. So this is the third day in a row of a week to week decline. And that's something that has not happened since late May. Okay. So if it seems some days like I'm straining for positive data, you tell me how this could not be interpreted positively. Three days in a row, declining week over week case growth for the first time in a couple months. The seven-day moving average of new cases nationwide is now down 4% since its peak. I'd love to give you a bunch of information on California and Texas hospitalizations, but there continues to be a significant amount of data distortions and issues as both states have had a lot of difficulty converting to a change in their reporting system.

And I just really want to be able to give a better and more reliable number. However, even that reporting data would really more impact classified COVID patients in both, not bed count, okay? And bed count numbers, particularly in Houston, which is where it had been tightest in the state of Texas, appear to be significantly improved. The states, by the way, where you are seeing an escalation of case growth not not the opposite that we're seeing most places oklahoma alaska rhode island some smaller states but nevertheless important areas and and you're seeing some case growth in those states but if i'm going to be objective on both sides a i want to tell you that the cases are growing there. And B, it's coming off of a very, very low base of numbers. So

the percentages can be misleading. I can't encourage you enough to go to the link I provided at covidandmarkets.com today with a brief interview with Anders Tegnell. And for the Swedes listening, I apologize if I'm pronouncing the name wrong. Since I myself am Scandinavian by heritage, you would think I'd know how to pronounce the Swedish name, but I actually don't. He's sort of the Anthony Fauci of Sweden, heavily quoted in this article I provided at covidamarkets.com. I found it illuminating. Another piece you can get from me if you're interested, a study that I read this morning, and it was a difficult read for me, but I find it intriguing, published by the highly reputable Mayo Clinic, concluding

that there is a substantially lower COVID infection rate for those who have received a vaccine in the last five years for various non-COVID related diseases. And they cite polio, hepatitis, geriatric flu, a number of others that I can't even pronounce. So where vaccination to peripheral supplemental diseases, some of which are viral and some of which are not, that may be helping avoid infection to the COVID is, I think, very interesting. So reach out if you're interested in that paper from the Mayo Clinic, COVID at thebonsongroup.com. And finally, there's some charts at covidmarkets.com today that show the models that the state of Minnesota put out to forecast where they were going to go with infections, where they were

going to go with total mortalities, where they were going to go with hospitalizations and ICU needs, and where they are in all four cases. And I show you these charts out of gratitude, not to be critical of their forecasting, but to express gratitude that things stayed so incredibly benign in the great state of Minnesota. So wrapping up COVID, cases falling, deaths we really hope will be peaking by the middle of August at the latest, hopefully even sooner. hopefully even sooner. There is still some noisy data in the hospitalization side, but absolutely positive trends. By positive, I mean negative, meaning declining trends, which is a positive in hospitalizations. And we continue following all the other cases. And we'll leave that there. Stock market today, something I put a chart up today, just kind of showing the trend of what generally happens through these kind of summer months. And then what generally happens during election years in particular, and why some just ongoing

flattishness, some ups, some downs, but kind of bouncing around here in a little range is exactly what we've been forecasting because of COVID conditions, because of economic uncertainties, and then providing a chart to kind of reiterate that it's very common historically in election years anyways. Don't really get me started on where we are with Congress on the stimulus bill. Pelosi and Schumer both came out to just say it was a disaster. They're so far apart. We're not close. Then they're meeting and they're eating and they're dining and they're talking and they're not, you know, all the things that are supposed to happen. It appears to me that Pelosi and Schumer are both trying to see how serious Senator McConnell is about liability protection

being a non-negotiable. All indications are that he's serious about that. There's no doubt a lot that various parties are going to end up bending on, but I don't think he's going to bend on that one. And that appears to me to be what they're looking at. As mentioned, the Fed didn't change interest rates today. They reiterated their pledge to use their full range of tools to support the economy as long as it takes to recover. The really kind of next time I could see something substantive coming from the Fed would be in September at their next scheduled meeting where they may opt for some form of yield curve control. They certainly are widely expected to provide more intentional forward guidance. In the meantime, it's pretty status quo. So there wasn't much they said today and we weren't expecting there to be much they'd say today.

Other than that, I really hope you'll go to covidandmarkets.com. There is a lot of good material there. I did provide a link to my new piece on what I wish would be in the stimulus bill, what I wish would not be in the stimulus bill. I don't often do that in a lot of my investment writing. Generally, I'm trying to be more descriptive, but I just provided the link to kind of a prescriptive piece as far as my own policy views, take them for what they are worth. And with that, thank you as always for listening to COVID and Markets. We will be back with you tomorrow, Thursday, as we get ready, get closer to not only the end of this week, but the end of another exciting month of July. Reach out with any questions.

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