Click HERE to access the FSInsight COVID-19 Daily Chartbook.
We are shifting to a 4-day a week publication schedule:
- Monday
- Tuesday
- Wednesday
- SKIP THURSDAY
- Friday
STRATEGY: Energy stocks undervalued relative to oil
The latest data from Clalit, Israel’s largest healthcare provider, is showing the remarkable effectiveness of the Pfizer vaccine. Of the 600,000 vaccinated recipients, there is a 94% drop in reported infections and is shown to be 92% less likely to get infected. These are absolutely stunning results.
Source: https://www.wsj.com/articles/israeli-data-shows-94-drop-in-symptomatic-covid-19-cases-with-pfizer-vaccine-11613401510?mod=e2tw
Broadly, COVID-19 news continues to be positive as cases globally recede. Israel in recent days has reported a sharp drop in COVID-19 cases. This nation has the highest vaccination penetration globally and while cases were only initially drifting lower initially, you can see that this trend has accelerated to the downside in recent days.
Source: Worldometers
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US COVID-19 case trends:
– Daily cases 52,767 vs 78,866 7D ago, down -26,099
– 7D positivity rate 6.4% vs 7.9% 7D ago
– Hospitalized patients 65,455, down -18% vs 7D ago
– Daily deaths 2,420, down 15% vs 7D ago
Vaccinations ramping steadily
– avg 1.6 million this past week vs 1.4 million last week
– overall, 4.0% have 2-doses, 10.9% 1-dose
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Wow… US tracking for sub-50,000 cases this week
The latest COVID-19 daily cases came in at 52,767, down -26,099 vs 7D ago.
– US cases could fall to 50,000 this week and set to fall further
– COVID-19 cases have declined (vs 7D ago) for 31 consecutive days
Source: COVID-19 Tracking Project and Fundstrat
STRATEGY: The bubble seems to be growing in those “calling this market a bubble”
As stocks remain healthy in 2021, we are finding a growing chorus of investment professionals deeming current markets a “speculative bubble” — the tweet below is from a University associate professor. There are signs of speculative excess in equities today, but the chorus of bubble callers and “top callers,” in my view, is even louder.
There are a few reasons we think stocks are rising for the right reasons:
#1 — as we have written about multiple times in the past few months, the prodigious gains seem to suggest a vigorous economic recovery is underway. This strong economic backdrop is becoming more evident with each passing month.
#2 — there remains a substantial positive perception gap between COVID-19 trends, as evidenced by data, versus the policymaker/public perception. This is a positive “true-up” for stocks
#3 — equities are seeing positive inflows in 2021 for literally the first time in 12 years. Yup. Since 2008, 96% of the $3T in household savings went into bonds. So stocks are finally beginning to see inflows = rising prices
#4 — Fed and fiscal policy are supportive
The list goes on and on… so we are not in the “bubble camp.” Our roadmap remains for stocks to rise to S&P 500 3,900-4,050 near term.
Source: twitter.com
STRATEGY: Energy’s 17% rise in 2021 is mostly being met by indifference by institutional investors…
Below is the YTD returns of the 11 major economic sectors (GICS level 1) in the S&P 500.
– Energy is outperforming the rest of the S&P 500 by a country mile, with 17% gains YTD.
– The next closest is Communication Services with a 7% gain
Despite the sizable Energy gains, we barely, literally barely, have any of our institutional clients talking about Energy stocks. Rather, we are finding our clients have one of 3 responses to Energy’s surge this year:
– indifference –> Energy is too small to matter
– contempt –> Oil is dead
– scorn –> Only “momentum” and “pencil and ruler” traders are buying this lousy sector
Source: Bloomberg and Fundstrat
So, you can see, Energy stocks are rising without any institutional support. Oil, in the meantime, continues to stage impressive gains. And oil and Energy stocks are loosely linked. For the past 24 months:
– oil is essentially flat
– Energy stocks (XLE) are down 32%
– Oilfield services (OIH) are down 46%
– Oil and stocks are closely linked, but there has been upside and downside slippage
Source: Bloomberg and Fundstrat
Looking at the relationship of Oil vs Energy stocks since 2010 — XLE and OIH have +42% and +193% upside…
We want to again look at the comparative relationship between oil and energy stocks, using the scatter below (Bloomberg regression function).
– at $60 oil
– XLE should be $64 vs $45, or +42% upside
– OIH should be $530 vs $181, or +193% upside
And the upside is even greater, if one thinks oil prices can actually rise further. If oil’s price across the curve moves to $80 (from $60), then:
– XLE should be $75 or +66% upside
– OIH should be $720 or +297% upside
So the interesting takeaway is that Energy stocks still seem to have comparative upside given the sizable move in crude oil prices.
Source: Bloomberg and Fundstrat
Source: Bloomberg and Fundstrat
STRATEGY: Epicenter Trifecta List 121 stocks
The case for being Cyclically-tilted is strengthening:
– Vaccine rollout set to accelerate
– US cases collapsing
– US economy set to re-open
– US corporates reset cost structures = strong operating leverage
– US credit markets strong = cost of capital falling
Below is our updated “Trifecta” epicenter stock list. These are the stocks which were hit the hardest by the pandemic and have the greatest operating leverage to a re-opening. And we like the earnings upside in these stocks, because of the massive cost reset. The stocks are based on positive views coming from the trifecta of: (i) Quant (tireless Ken), (ii) Global Portfolio Strategy (Brian Rauscher, aka Rocky) and (iii) Technicals.
Consumer Discretionary:
AN, GM, F, GRMN, LEG, TPX, TOL, NWL, MAT, PII, RL, MGM, HLT, MAR, NCLH, RCL, WH, WYND, SIX, DRI, SBUX, FL, GPS, KSS, LB, VFC
Financials:
FITB, WTFC, ASB, BOH, FHN, FNB, PB, PBCT, RF, STL, TFC, WBS, PNFP, PACW, SBNY, NYCB, MTG, EVR, GS, IBKR, VIRT, BK, STT, SYF, BHF
Industrials:
AGCO, OC, ACM, WAB, EMR, GNRC, NVT, CSL, GE, IEX, PNR, CFX, DOV, MIDD, SNA, XYL, FLS, EAF, TTC, ITT, ALK, DAL, JBLU, LUV, MIC, KEX, UNP, JBHT, R, UBER, UHAL, LSTR, MAN
Energy:
XOM, HP, BKR, HAL, NOV, SLB, COP, EOG, FANG, HES, MRO, MUR, PXD, XEC, HFC, MPC, PSX
Basic Materials:
LYB, EXP, MLM, CF, MOS, ESI, NEU, NUE, RS, SON, IP
Real Estate:
BXP, HIW, UDR, KIM, NNN, WRI, VNO, JBGS, RYN
Source: Fundstrat, Bloomberg
(*) Please note that the stocks rated OW on this list meet the requirements of our investment theme as of the publication date. We do not monitor this list day by day. A stock taken off this list means it no longer meets our investment criteria, but not necessarily that it is neutral rated or should be sold. Please consult your financial advisor to discuss your risk tolerance and other factors that characterize your unique investment profile.
ADDENDUM: We are attaching the stock lists for our 3 portfolios:
We get several requests to give the updated list for our stock portfolios. We are including the links here:
– Granny Shots –> core stocks, based on 6 thematic/tactical portfolios
– Trifecta epicenter –> based on the convergence of Quant (tireless Ken), Rauscher (Global strategy), Technicals
– Violence in USA –> companies that are involved in some aspect of home or personal security. We are not “recommending” these stocks, but rather, bringing these stocks to your attention.
Granny Shots:
Full stock list here –> Click here
Tickers: AAPL, CSCO, INTC, MXIM, NVDA, EBAY, KLAC, GRMN, GOOG, MNST, MSFT, AMZN, QCOM, TSLA, PYPL, AXP, BF/B, PM, XLNX, TGT, PG, XOM, VLO, GL, RF, ATVI, BBY, GE, AMAT, LRCX, MU, HPQ
Trifecta Epicenter (*):
Full stock list here –> Click here
Tickers: AN, GM, F, GRMN, LEG, TPX, TOL, NWL, MAT, PII, RL, MGM, HLT, MAR, NCLH, RCL, WH, WYND, SIX, DRI, SBUX, FL, GPS, KSS, LB, VFC, FITB, WTFC, ASB, BOH, FHN, FNB, PB, PBCT, RF, STL, TFC, WBS, PNFP, PACW, SBNY, NYCB, MTG, EVR, GS, IBKR, VIRT, BK, STT, SYF, BHF, AGCO, OC, ACM, WAB, EMR, GNRC, NVT, CSL, GE, IEX, PNR, CFX, DOV, MIDD, SNA, XYL, FLS, EAF, TTC, ITT, ALK, DAL, JBLU, LUV, MIC, KEX, UNP, JBHT, R, UBER, UHAL, LSTR, MAN, XOM, HP, BKR, HAL, NOV, SLB, COP, EOG, FANG, HES, MRO, MUR, PXD, XEC, HFC, MPC, PSX, LYB, EXP, MLM, CF, MOS, ESI, NEU, NUE, RS, SON, IP, BXP, HIW, UDR, KIM, NNN, WRI, VNO, JBGS, RYN
Violence in USA:
Full stock list here –> Click here
(*) Please note that the stocks rated OW on this list meet the requirements of our investment theme as of the publication date. We do not monitor this list day by day. A stock taken off this list means it no longer meets our investment criteria, but not necessarily that it is neutral rated or should be sold. Please consult your financial advisor to discuss your risk tolerance and other factors that characterize your unique investment profile.
POINT 1: Daily COVID-19 cases 52,727, -26,099 vs 7D ago… tracking sub-50,000 this week
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Current Trends — COVID-19 cases:
– Daily cases 52,767 vs 78,866 7D ago, down -26,099
– 7D positivity rate 6.4% vs 7.9% 7D ago
– Hospitalized patients 65,455, down -18% vs 7D ago
– Daily deaths 2,420, down 15.1% vs 7D ago
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The latest COVID-19 daily cases came in at 52,767, down -26,099 vs 7D ago.
– US cases could fall to 50,000 this week and set to fall further
– COVID-19 cases have declined (vs 7D ago) for 35 consecutive days
Source: COVID-19 Tracking Project and Fundstrat
Daily cases are falling by ~25,000 vs 7D ago (7D delta, see below)… Wow
The 7D delta has turned negative for the past 35 days consecutively. This is impressive and the rate of change is accelerating to the downside.
– this is contributing to the sense that this receding of cases is a much faster retreat than seen in the past few months
Source: COVID-19 Tracking and Fundstrat
US hospitalization still rolling over … and even US deaths seem to be rolling over…
Below we show the aggregate patients who are currently hospitalized due to COVID. It certainly seems to be rolling over = good sign.
Source: COVID Tracking Project and Fundstrat
Source: COVID Tracking Project and Fundstrat
Source: COVID-19 Tracking and Fundstrat
Source: COVID-19 Tracking and Fundstrat
POINT 2: VACCINE: Only 4.0% of US 2-doses of the vaccine. ~11% 1-dose
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Current Trends — Vaccinations:
Vaccinations ramping steadily
– avg 1.6 million this past week vs 1.4 million last week
– overall, 4.0% have 2-doses, 10.9% 1-dose
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After plunging below 1 million doses administered per day, the daily vaccinations managed to climb back to ~2.1 million yesterday up from 2,043,677 a week ago. The pace overall is steadily rising, as evidenced by the 7D moving average (see blue line).
Source: CDC, COVID-19 Tracking Project and Fundstrat
About 90% of the US has seen 1-dose penetration >10%… still not wide geography
To better illustrate the actual footprint of the US vaccination effort, we have a time series showing the percent of the US with 2-doses covering at least 5% of its residents, displayed as the orange line on the chart. This figure is 14% (orange line).
– 87% of the US has seen vaccine penetration >10%.
– Now 14% of the US has at least 5% of its residents with the full 2 doses
– This is still a small figure (5% of residents with 2 doses) but this figure is rising sharply now
– the takeaway is the vaccination efforts are unlikely to be having much of an effect on case figures, currently
Source: CDC, COVID-19 Tracking Project and Fundstrat
Vaccination frontier update –> only ND + SD > 60% combined penetration (vaccines + infections)
Below we sorted the states by the combined penetration (vaccinations + infections). As we commented in the past, the key figure is the combined value >60%, which is presumably near herd immunity. That is, the combined value of infections + vaccinations as % population > 60%.
– Currently, only ND + SD are at this level
– many states are approaching this such as UT, RI, AZ, TN, OK at >50%
– So slowly, the US is getting to that threshold of presumable herd immunity
Source: CDC, COVID Tracking Project and Fundstrat
This is the state by state data below, showing information for states with one dose and for those with two doses.
Source: CDC, COVID-19 Tracking Project and Fundstrat
The ratio of vaccinations/ daily confirmed cases is generally trending higher (red line is 7D moving avg) and this is the most encouraging statistic.
– the 7D moving average is about ~25X for the past few days
– this means 25 vaccines dosed for every 1 confirmed case
This figure is rising nicely and likely surges in the coming weeks
Source: CDC, COVID-19 Tracking Project and Fundstrat
In total, about 3.6 million Americans have received at least 1 dose of a vaccine. This is a good pace and as we noted previously, implies 30% of the population by April.
Source: CDC and Fundstrat
POINT 3: Israel –> 94% drop in infections for those vaccinated…wut??
Broadly, COVID-19 news continues to be positive as cases globally recede. Israel in recent days has reported a sharp drop in COVID-19 cases. This nation has the highest vaccination penetration globally and while cases were only initially drifting lower initially, you can see that this trend has accelerated to the downside in recent days.
Source: Worldometers
The latest data from Clalit, Israel’s largest healthcare provider, is showing the remarkable effectiveness of the Pfizer vaccine. Of the 600,000 vaccinated recipients, there is a 94% drop in reported infections and is shown to be 92% less likely to get infected. These are absolutely stunning results.
