COVID-19 is everywhere

It took time but the pandemic has ultimately spread evenly across the country

It’s hard to fathom that when I first wrote about this pandemic in January it would still be the main driving story for the world nine months later. Those daily newsletters now serve as an interesting time capsule with my thoughts and reactions to things as they were happening at the time.

In particular, I was recently thinking about a post I made on March 22, where I analyzed the number of COVID-19 infections for each state to highlight just how hard some areas had been hit:

At the time, my thinking was that some states would see more economic impact from COVID than other states. While this is obviously going to be true for any event since each state has a different economic profile, at the time, I believed that some states (like New York) would be hit harder than others due to the sheer number of cases versus other states.

Unfortunately, the coronavirus didn’t stay isolated to a few hard-hit states. It is now everywhere:

The first thing to point out here is that the scale has changed by three orders of magnitude. In the first chart, I used infections per million residents. Now, we are talking about infections per thousand residents.

And, even though New York cases were far beyond any other state back in March, COVID has spread surprisingly evenly throughout the entire country. The economic impact will still vary between each state for an endless number of reasons but the disparity in coronavirus infections is not one of them.

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U.S. cases continue to climb but deaths are thankfully lower than the March peak

Cases worldwide are climbing relentlessly but deaths are relatively flat

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Bitcoin's relative strength index pushes into overbought territory

That's actually not incongruous with the "sustainable" rally

Yesterday, I wrote about how Bitcoin’s recent rally looks relatively reasonable in comparison to the broader market. And yet, the relative strength index (“RSI”), which is used as an indicator to signal “overbought” or “oversold” for a given investment, is showing Bitcoin to be overbought (i.e. over 70):

Now, this may seem contradictory. Is the rally sustainable or stretching into overbought territory? Well, although the RSI is used as a trading indicator, it’s not exactly a perfect science. It’s kind of like reading the tea leaves - similar to how I made a claim about the forward sustainability of the Bitcoin / S&P 500 ratio based on my opinion of a chart.

In fact, the RSI for Bitcoin tends to work opposite how one might expect based on the typical naming convention. Bitcoin is often influenced by momentum and actually tends to outperform in periods following the RSI entering an overbought range. So, if it’s reading overbought, it probably means there are more gains to come.

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Initial claims ticked back down

Real estate and technology are the big losers so far this week

Industrials and financials are doing really well through October

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This Bitcoin rally looks more sustainable

A slower more consistent climb

Bitcoin is making its rounds in the news again lately, off new highs last hit over a year ago. That development isn’t nearly as interesting / astounding as what took place in 2017 however:

I adjusted this Bitcoin chart by dividing its price by the S&P 500, to benchmark it against the general gains in the market. When you do that, you still see a recent rally but it’s rather linear (though still outperforming stocks). So, while it’s true that Bitcoin is doing well, is that really a surprise when stocks (and basically every other investment category) have been doing good as well?

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Economic uncertainty continues its downtrend, despite ongoing stimulus negotiations

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This is not a housing crisis

It’s actually a bright spot in the economy

Although it’s easy to complain about the lack of affordable housing, the current recession is not another housing crisis:

Housing starts, after a brief dip, are back on their pre-COVID uptrend. Clearly, the drop is nothing compared to what we saw prior to 2008. In fact, the dip is nothing like we’ve seen in almost any other recession either - housing has been a strength for the economy.

That being said, it’s safe to wonder if the drop from the Financial Crisis ever really ended. One could argue we are still on the road to recovery from that recession well over a decade ago. And, if you are still thinking about affordability, just think about all the extra homes we could have had if we had been at long-term levels since then.

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Housing permits are showing even more strength than housing starts

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Despite the money printing, inflation isn’t doing much

At least not yet

In an extreme scenario, if enough money was printed to give every American one million dollars, you’d expect the prices of goods to rise to adjust to everyone’s new-found wealth. That’s why, with the recent unprecedented stimulus, people argue that inflation should tick up a bit. But, in the last few months, we haven’t seen any definitive signs of that outside of the usual volatility apparent in most macroeconomic time series as a result of the pandemic shock:

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The year-over-year picture for inflation looks even more benign

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