It was a quiet weekend, and with better weather, more Americans are venturing out…
It has been just over 100 days (101, first case 1/22/20200 since COVID-19 first reached the US. As of yesterday, US cases totaled 1.2 million and reported deaths >60,000. Based on the 6 serology studies conducted in the US (>1,000 patients each), the real figure could be closer to 15X-85X higher, or as many as 18 million to 96 million Americans. Looking back at the past 100 days, the US has seen greater prevalence of COVID-19 (compared to Europe) with 3,500 cases per 1mm residents vs 3,500 Italy, 2,749 for UK, 2,600 France and 1,980 for Germany. But COVID-19 related deaths are actually much lower in USA at 188 per 1mm vs 478 for Italy, 419 for UK, 381 for France, 82 for Germany.
Policy makers are torn between the obvious trade off between containing a healthcare crisis and the mounting economic carnage. The good news, no state seems to be reporting any rise in COVID-19 growth, and even California, which had that very big spike of new cases on 4/30/2020 at 2,417 has since fallen back to the prior levels of sub-1,500 per day (same range since mid-April). Europe has begun loosening restrictions and cases continue to fall, even Germany has seen cases fall even as economy is opening.
J.Crew is expected to be the first major consumer casualty of COVID-19. A crisis makes weaker companies weaker and stronger companies better positioned (on the recovery).
We were actually surprised to hear Warren Buffet had completely liquidated his airline holdings. Mr Buffett is a long-term investor, so his decision to sell reflects his belief that airline industry is facing future challenges that fundamentally change the value-capture of that business. The reason this surprises us, is that the decision implicitly is based on the idea that the threat of COVID-19 is never eradicated.
I am adding small pieces of Fundstrat ideas, clearly some of the best analysis on Wall Street. Note that Mr Lee has worked in New York finance for 25 years, advising some of the titans in New York, Tokyo, London, Chicago (and others).