US COVID cases continue to rise sharply. Testing has also risen, but an increase to 10% positive test rates show that this is not simply about more testing. While there’s been a slow down in the percentage growth of confirmed positives that could be a leading indicator of a peak in daily new cases, Thursday’s numbers put a wrench in what had been a promising trend. A peak for daily new cases in the wake of Thanksgiving is still possible, but in the meantime millions of new cases will emerge. At a lag, hospitalizations will follow. Adjusted for the population of states reporting hospitalizations, hospitalization rates have reached new records. Like clockwork, deaths are following. Almost 2,000 Americans died yesterday, and at a lag to cases and then hospitalizations, the trend is accelerating. We update these charts and the analysis that goes with them every morning in our pre-market report The Morning Lineup.  Click here to start a free trial to Bespoke Institutional and receive our daily Morning Lineup for the next two weeks, featuring more commentary and data on macro markets.

Switching to a granular look at states, below we show a table of state deaths, cases, tests, and positive test rate. We adjust for population on the right side of the table to make comparisons across states like-for-like. One note on positive test rates and test counts: some states under-report the actual number of tests run, so not all of these numbers can be taken at strictly face value. This table is still quite useful in seeing where testing, cases, positive test rate, and deaths sit across the country for the period ending on November 19th.

Another way to look at state performance is to compare tests over time. In the table below we show state 7 day average daily positive tests indexed to their peak (which in most cases is the current level). This allows a view of where the pandemic is currently worst versus the last six months. This helps to illustrate the national breadth of this massive increase in new cases currently underway.

We have a similar chart for hospitalization rates. Hospitalization rates are not subject to vagaries of test counts, and while they tend to lag new positive tests as an indicator of COVID’s spread, they are closer to real-time than deaths, which lag hospitalization rates. As shown, a number of states have over 400 people hospitalized per million population, and in all but a very few cases, hospitalization is rising, mostly quite quickly. Anything under a few hundred hospitalizations per million population isn’t a sign of stress on health care systems, but above 300-400 hospitalizations per million, states generally start running out of beds. Surging resources can help, but there are practical limits on how many people can be hospitalized at once. With new cases continuing to accelerate, this is a bad sign, because hospitalizations tend to lag new case counts.

Below we show charts of new cases relative to population for a variety of regions and countries across the world at large. European cases spiked just ahead of the US. That includes Sweden, which introduced restrictions for the first time this fall amidst rising hospitalizations. We update these charts and the analysis that goes with them every morning in our pre-market report The Morning Lineup.  Click here to start a free trial to Bespoke Institutional and receive our daily Morning Lineup for the next two weeks, featuring more commentary and data on macro markets.

Below we update weekly economic growth trackers that we produce internally as well as the New York Fed’s Weekly Economic Index which is updated on a regular basis. Over the last five weeks, our index has reported negative YoY growth in output in four weeks, including a modest drop for the most recent week of data. For its part, the Weekly Economic Index has continued to rebound from the April lows and is at its highest levels since the March economic data collapse. That index still shows output down almost 3% YoY, but its ongoing rebound is suggesting a much stronger Q4 than what our index is tracking. Our data suggests output will be up a modest 3.8% QoQ SAAR in Q4, versus more than 10% QoQ SAAR forecasted by the WEI data. For context, Atlanta Fed GDPNow data suggests something more in-between, with their data tracking 5.6% QoQ SAAR.  This analysis is published regularly in our post-market daily note The Closer.  Click here to start a free trial to Bespoke Institutional and receive our daily Closer report for the next two weeks, featuring more commentary and data on macro markets.

The housing market continues to blow the doors off, with total annualized existing home sales coming in at a rate of 6.85mm in October, including 6.12mm single family units. Those numbers are only 5.7% and 3.5% respectively below the record levels from the housing bubble of the mid-2000s.  Check out the enormous numbers recently in the chart below:

Unlike during the prior housing bubble, inventories are extremely low now both on an absolute basis (down 20% YoY for all homes and 23% YoY for single family) and relative to demand; both total existing and single family home inventories are below 2.4 months of demand. Inventories relative to demand are half of what they were at the last housing market peak on a months’ supply basis.

With so much demand for homes and so little supply, prices have exploded higher in the past few months. After adjusting for seasonality, prices are up a staggering 15% since the May lows, driven by both strong demand and a shift in mix towards higher-priced homes.  This analysis was initially published in our post-market daily note The Closer.  Click here to start a free trial to Bespoke Institutional and receive our Closer report and much more for the next two weeks, featuring more commentary and data on macro markets.

The second regional Fed release this morning came from the Kansas City Fed.  Whereas the Philly Fed handily beat expectations, the 10th District’s headline reading matched expectations with a 2 point decline to 11.  Similar to the Philly Fed report, expectations for six months in the future were also slightly lower this month.

Breadth across categories was on the weak side with more than half of the categories falling from October to November. While many of these indices fell from last month, they are still consistent with growth, just at a slower rate than October. The indices for expectations were also broadly lower across categories.

One of the most dramatic declines of the various categories of the report concerns shipments.  While still consistent with overall growth in shipments, the November reading did mark a significant deceleration as the index fell 19 points to 3.  That decline was in the 6th percentile of all monthly changes, and the new level is in the bottom third of the historic range after sitting in the top decile last month. Despite that weakness in shipments, production and new orders have held up much better, albeit they also fell this month. Not all new orders have held up though. New orders for exports were notably weak as the index showed a contractionary reading in the bottom decline of all readings.

There is some evidence that supply chain issues could have played a role in that decline in shipments. The index for supplier delivery times gauges how long it takes for products to be delivered. Higher readings indicate longer lead times and vice versa.  The current conditions index experienced a sizeable increase of 8 points to a reading of 15 this month. That is the highest reading since the huge spike higher in the spring, and the month over month increase was in the top decile of all monthly moves for the index.  An even more notable move came from the index for expectations.  This index nearly doubled coming in at a record high of 30. Only June of 2006 has seen a larger one month increase—18 points versus 14 today—in this index. In other words, while current lead times were in fact longer, reporting firms seem to see bigger issues on the horizon and could be related to the number of rising COVID cases in the region.

Whereas employment metrics were a bright spot for the Philadelphia Fed, in Kansas City’s district hiring decelerated to a barely expansionary reading of 1.  Expectations for future hiring were also lower.  The index for average workweek did provide a bit of a silver lining though as it rose to its highest reading since September of last year. Click here to view Bespoke’s premium membership options for our best research available.

In the big slug of economic data released today were two regional Federal Reserve bank readings on their districts’ manufacturing sector. The first and perhaps stronger of the two came out of Philadelphia. The headline number fell to 26.3 from 32.3, but that was better than a more aggressive downside forecast for a drop down to 22.5. While the headline index declines, it is still indicative of further growth to business conditions in the third district.

In addition to the headline number, every other category of the report pointed to expansionary activity in November with some currently in the top percentile of all readings throughout the history of the report going back to May of 1968. Breadth was a bit mixed, though, as four of the ten current condition indices fell from last month.  In terms of future expectations, breadth was even weaker as seven of the eleven indices declined.  For the headline index, the 18.4 point decline in expectations was in the bottom 3% of all readings. Overall, despite some deceleration in certain areas and a generally weaker outlook, the report pointed to further improvements in the district’s manufacturing sector.

Beginning with demand, the current conditions indicator for new orders remained positive around some of the strongest levels of the past several decades even after a 4.7 point decline.  This means that fewer companies reported increases in orders in the month of November but nonetheless, a large share are still seeing growth in orders. Unfilled orders have also surged as that index climbed 13.9 points to 22.2.  That is the highest level since March of 1973 and the month over month gain is in the top 5% of all monthly moves.

As unfilled orders have climbed dramatically, shipments have declined dramatically.  This index fell 21.6 points this month which was the largest month-over-month decline since March and April.  Outside of those declines, April of 2016 was the last time shipments had fallen by as much or more.  Despite that decline, the index remains at healthy levels at the top end of the past few year’s range.

One of the most welcome changes in the report this month was employment-related. The index for the number of employees climbed to 27.2 this month.  That is the highest level since July of last year and the increase this month was in the 98th percentile of all months.  Meanwhile, the average workweek also picked up, rising to its highest level since May of 2018.

With demand strong and people returning to work, both prices paid and received have continued to accelerate.  Prices Paid rose to the highest level in two years while prices received reached the highest level since February of last year. Click here to view Bespoke’s premium membership options for our best research available.