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Well over the last 24 hours the market has certainly become much more concerned about a second wave of coronavirus, with yesterday being the worst day for equities since March as Down Jones and the S&P 500 closed down -6.90% and -5.89% respectively. Some states in the US shows worrying signs, particularly California, Texas, Florida and Arizona which could dampen economic activity, per Deutsche Bank.

Key quotes

“The states that look most problematic currently are California, Texas, Florida and Arizona. The first three are the largest states in terms of population in the US and all have seen growing cases rates in the last 2 weeks. While Arizona is a somewhat smaller state, it has the fastest growth rate in the last week. While these states have not seen the sort of case numbers that New York has, the total case per million for each of those states is between 2,700-4,100. This is similar to the numbers out of Italy and France and just below the UK even if fatalities in these states are so far relatively low.” 

“California enacted shutdowns relatively early but has not been able to bend its curve sufficiently with daily case growth between 1.5-3% for the last 33 days. Texas and Florida both were among the first to open, and have consequently not seen the same drop in case rates as other regions that remained closed. Florida in particular seems to have seen a ‘second wave’ of sorts over the past 2 weeks. Daily cases have risen by 1.9% on average over the past 14 days, while the 14 days prior to that was 1.5% on average. Texan cases have grown by 2.3% over the last 7 days, higher than the daily case rate 2 weeks back of 2.0%. To give an idea of how things have turned in Texas, Houston may need to reopen an emergency hospital that was set up in a stadium to accommodate possible hospital overflow. Arizona is one of the most worrisome states currently, with cases rising an average of 4.6% over the last 7 days, which is considerably higher than the daily rate 2 weeks back at 3.3%.”

“Using the rtlive effective transmission rates (Rt), Florida, Texas and Arizona all have R-values over 1, indicating the virus is still actively spreading. California’s Rt is estimated at 0.97, but the confidence intervals extends north of 1, meaning the virus could still be spreading rather dwindling. An additional concern from this recent spike, or in some cases a lack of plateau, is what it might mean for the seasonality argument. These are some of the warmest states in the US, and if the virus is continuing to spread there it means the northern hemisphere has to perhaps tread more carefully this summer.”

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