Moving up

Weekly Market Update, 2020-05-11. Moving up, much to the dismay of the financial news channels. Yes, equity markets continued their upward move higher last week. Investors generally ignored hourly reports on “historically bad economic data” and some negative U.S. and China trade chatter. The rule remains: “Don’t fight the Fed.”

The S&P 500 rose 3.5%, led by cyclical sectors, energy and technology, leaving the index down in single digits on the year (“just” 9.3%). As expected, long-term interest rates on Treasury rose throughout the week helping support equities. Slowly trending higher long-term Treasury rates help equities. They portend either higher inflation, higher growth or both.

Stock market still down a bit, but moving upmoving up

The S&P 500 is still down about 15% from all-time highs reached in mid-February. The tech-heavy Nasdaq jumped 6.0% and is now up 1.7% on the year. Think Microsoft, Netflix, Amazon, Google, Facebook and Nvidia. It is up nearly 15% from year-ago levels, highlighting how areas of big tech and online consumer services are picking up the slack from “traditional industrial and financial sectors.”

As we highlighted before the recent February 19–23 rally, in “healing signs emerge”, volatility as measured by the Vix Index has been halved. That is, the index is now back down to near the 30 level. While that is still up from its normal low level of 12–14, however readers might recall that it was about seven weeks ago that the reached 80, topping levels seen during the financial crisis.

Besides earning releases and conference calls, the investment team at OHFG to watch this week include: 1) Dr. Fauci’s Senate testimony, 2) mid-May payday money flows, and 3) Fridays equity options expiration.

Covid statistics

Some amazing statistics on virus infections and deaths based on research conducted by FundStrat Global Advisors are as follows:

The healthcare tragedy of COVID-19 is concentrated in two epicenters. First is New York and tristate area with about 38% cases and 45% of the deaths. And the second is nursing homes with about 17% cases and 42% of the deaths. (We expanded analysis to 19 states, or 66% of US population.)

Thus, outside of the New York tri-state and outside of nursing homes: total US COVID-19 deaths are 19,483 vs 73,569 total. In other words, dramatically lower.

Total testing moving up

Total testing in the US continues to track higher and there have been more than 300,000 tests in three of the last four days. Therefore, it is encouraging that reported cases are not moving up. Actually, reported cases are generally declining despite those high levels of testing.

Covid and nursing homes, moving up

Surprise: nursing homes contribute 42% of US COVID-19 deaths, and New York state data seems under-reported. Last week, we discussed the tragic disproportionate contribution of nursing homes to COVID-19 deaths. We have compiled data from 10 states (about 50% of US). Our data scientist team, led by tireless Ken, expanded this to 19 states (about 66% of US). And the data remains consistent: nursing homes are 42% of COVID-19 deaths.

– the largest is CT with 79% of deaths from nursing homes, followed closely by PA (70%)
– the lowest figures are from NY (26%), South Carolina (30%) and Florida (32%)

New York is under-reporting “nursing home” deaths, it appears. Also, New York does not list nursing home residents who were transferred to a hospital and subsequently died from COVID-19, it appears. Under-reporting and omitting deaths artificially lowers the death count.

Based on 19 states. Nursing homes residents 0.4% of population, 17% of cases and 42% of deaths… incredible
The aggregated data for 19 states is shocking. Of the 220 million residents in the 19 states:

  • Nursing home residents are 940,361, or 0.4% of the total population.
  • Cases in nursing homes are 17% of the total cases (but Michigan and Texas do not breakout their case numbers).
  • Nursing home deaths are 20,581 of the total 53,302 deaths reported in those 19 states, or 42% of total deaths.

COVID-19 exploded through nursing homes in every state — leading to tragic surges in deaths and hospitalizations.

Covid tally

Total US COVID-19 deaths drop to 25,350 ex-nursing homes and ex-NY tri-state…
There are many implications of the fact that nursing homes are the second epi-center of COVID-19. The first by far is NY state and the tri-state area, including New Jersey and Connecticut. But nursing home residents are retired and generally not large consumers of the US service economy (they are big consumers of healthcare). And as such, if the disproportionate deaths and hospitalizations from COVID-19 are from nursing homes, this does change what should be the economic framework for opening states.

Perhaps the easiest way to see this is to look at the compositions of US COVID-19 deaths:

– of the 73,569 reported COVID-19 deaths;
– NY tristate comprises 32,979 or 45% of the total;
– Nursing homes (ex-NY) are 27,462 or 37%;
– ex-Nursing and ex-NY, total deaths are 19,483

Think of it this way: COVID-19 deaths of 19,000 are pretty low compared to the other causes of death in the US, and compared to other flu seasons.


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