Financial Insights

April 27, 2020 COVID-19 UPDATE

Quick Summary

United States
• Case count grew yesterday at a rate of 2.8% from 3.8% and 4.4% the prior two days. Deaths were only about 1,100. The US CFR% held flat to 5.59%.
• New cases averaged well over 30,000 per day this weekend. But that is likely due to a sharp increase in testing, not an actual increase in actual cases.
• Evidence is mounting that we’re past peak despite what case count data suggests.
• The slowing trend continues, although the slowdown has been more at a rate closer to Italy than China in the past week. 25 states out of 51 territories showing a slower rate of growth in the past 4 days vs. the prior 4 days. Only 2 states had a growth rate of over 10% (NE, IA) in the prior 4 days. Case growth, while slowing, is not slowing very quickly. Case counts have come in higher than anticipated but are more likely reflecting an increase in testing.
• There was a surge in cases on Friday due to revisions, not an actual surge. More below. Prior numbers were also revised to reflected updated data.
• Testing appears to finally be surging higher and it is broad based. There were 300,000 tests done on Saturday of which 13.6% tested positive.
• The increase in testing is leading to an increase in confirmed cases but a flattening of the case fatality rate (CFR%).

United State Forecast Summary
• Cases in the US have remained elevated but this is now likely due to increased testing rather than continued increases in actual cases. The forecast change will increase case count but decrease the case fatality rate as a result.
• The total case count forecast in the US has increased to between 1,400,000-1,600,000 but this change is reflective of the sharp increase in testing that’s diagnosing cases. But this is not impacting the forecast in deaths which remains between 95,000 and 105,000. The case fatality rate (CFR%) peak decreased from nearly 7.5% to under 7% due to the increase in testing.
• When might we be under 1,000 cases nationally per day? This estimate continues to be pushed back as the US tracks more closely to Italy (which has had one of the slowest recoveries) and also because of individual state policies to open their economies. Based on the early opening of economies in multiple states already and additional states anticipated openings there is no longer a forecast for under 1,000 cases in May and June is increasingly questionable as well. This is not to say that conditions won’t continue to improve, but a lot of states are beginning to open to various degrees. More discussion below.
• Case count growth continues to slow. Globally case count grew 75,000 yesterday and grew 2.6% down from 3.2% and 4.1% the two days prior. The number of new cases remained around 75,000 down from a peak of over 100,000 on April 4th. However cases spiked on Friday to over 110,000 cases. More on this below but this number was due to “catch up,” rather than actual cases on that date. Deaths slowed sharply on Sunday and the CFR% globally has been holding steady around 7% for the past week.
• Nearly all countries in the world are seeing a slowdown, but the rate of improvement in the vast majority of countries is not close to what China achieved.
• There was a surge in cases on Friday due to revisions, not an actual surge. More below.

At Home Testing Coming
The first at home test saliva was approved by the FDA. The test is called Pixel and is made by LabCorp and will initially be offered to healthcare workers and first responders who may have been exposed to the virus. Results are available 1-2 days after being returned to the lab. LabCorp is a very large public company that is very capable of scaling this kind of test. The test is done using a simple Q-tip like device that is much easier to administer than prior tests. A study led by the UnitedHealth Group suggests that results from these self-collected tests are similar in accuracy (more than 90% accurate) to provider-collected testing. The test costs $119.

Surge in Cases?
Several places including the US saw a surge in cases on Friday. This included the US and Ecuador (whose cases doubled). But a lot of these surges are catch ups from prior testing. In the US Quest Diagnostics, one of the two big diagnostic testing companies (the other being LabCorp) provided a testing correction from errors and delays over the past 2 weeks. This created a false surge in several states including MA, among others. But this was really historical data that wasn’t properly previously counted. Ecuador too received a lot of results from prior tests. Of the 105,000 cases globally 20,000 alone was explained by these one-day corrections in just those 2 countries alone so the true results were in line with the more recent prior days.

Testing: More Testing Countrywide Finally! And Positives Are Falling
After a long period of delays it appears that testing is finally beginning to increase more sharply again across the country. New York has doubled its testing results over the past couple of days from 20,000 to 40,000. Over half of other states have increased their testing recently, although some have increased from very low levels. New Jersey, the state with the highest positive testing rate has actually remained flat in testing around 7,000 daily, although on Sunday they did about 9,500 –perhaps a sign that they too are moving higher. Nonetheless, country wide testing has doubled from the past week and this is now leading to a positive percentage that is now dropping. On Saturday positives fell to 13.6% and on Sunday it fell to 10.7%. NJ, which has led the country with the highest percentage of positive tests (around 50%), finally fell to 37%. Hospital data from NJ and NY also show a further slowing.

This increase in testing may also increase the forecasted number of diagnosed C-19 cases in the country but not necessarily an increase in the number of deaths because we may simply be capturing more of the cases. As a result the confirmed case count forecast has increased but the number of deaths has not.


Ease in Restrictions
There are multiple states that are now easing restrictions. Iowa is allowing elective surgeries and farmers markets to reopen this week. Tennessee restaurants can open with 50% of capacity and retail stores can do the same. Texas is allowing curbside sales from retail stores. Michigan is allowing certain stores to open as long as social distancing guidelines are followed. Alaska is also allowing salons and restaurants to open with 25% of prior capacity. Georgia is opening somewhat aggressively especially considering they have the 12th most cases in the country. But they are allowing barber shops, hair salons, gyms, tattoo parlors, and bowling alleys to open. In Oklahoma spas, barbershops, pet groomers, among others are opening.

All of this may or may not have wide ranging ramifications. On the surface it seems incredibly foolish to be opening segments of the economy against the recommendations of most epidemiologists and medical experts. But I also am doubtful that most people will suddenly go out and participate in most activities. Restaurants may operate at 100% of capacity but if nobody goes it doesn’t matter.

I expect that most people will continue to hunker down and practice social distancing. Restaurants will continue to suffer whether or not they are open. Most people have been sufficiently concerned that they have been choosing to socially distance and this seems likely to continue. So I do not anticipate state openings to lead to a spike in cases.
Still these various state openings increase the chances that cases will spread more easily at a time when cases haven’t yet fallen all that low. Sweden is a good example of another country whose economy remains fully open. Cases have slowly and steadily grown, but not uncontrollably and they’ve been able to keep the economy somewhat functional along the way. At a minimum states opening will also give us good information about how much and how far we can push, although no doubt it would be preferable to have more adequate and rapid testing in place first.

Second Wave
Evidence for a second wave in Europe, the US, and Asia is likely to take weeks and possibly longer. If a closed economy slowly opens by 20% in the first week of reopening then that impact will be relatively small and may not be evident for a few weeks because of the incubation period, time to develop material symptoms, and time to receive results from testing. Even more of a factor will be individual behavior which won’t return to normal just because stores open. This should help keep chances for any second wave lower.

United States
A couple of US states have opened their economies starting the week of April 20th. We’ll track those to see if their cases increase. Evidence should take at least a week and probably longer.

Risks of a Second Wave: Asia – No Evidence of a Second Wave Emerging
There have been rumors of cases breaking out in China, especially in the northern part of the country but these are not showing up in any official statistics. Nonetheless things are stable in other countries.


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