Over the past several weeks, two of the more significant trends have been the collapse in crude oil prices and the outperformance of momentum names that we have made note of multiple times in the past week (see The Closer from last night and last Thursday). One area that there is some cross over of these two trends is with renewable energy stocks. These stocks related to oil alternatives have certainly had momentum behind them recently. Since its March 23rd low, the Solar ETF (TAN) has been in a steady uptrend gaining 47.16%. Meanwhile in the land of fossil fuels, the crude oil ETF (USO) is down nearly the same amount since March 23rd (-46%) even though at the moment it is around 25% off its lows on April 28th. With USO still beaten down and TAN continuing to rally, the ratio between the two has gone vertical (second chart below) meaning TAN has been outperforming USO by its widest margin since it first began trading in 2008.

Also notable today is TAN’s largest holding: Enphase Energy (ENPH). Last week, ENPH reported a solid quarter in which the company beat EPS and sales estimates, but lowered guidance. Despite that lowered guidance, snapping a streak of four straight Triple Plays, the stock popped 18.73% and it has continued to rally through today. Between yesterday and today’s gains, the stock is breaking out from its February highs. Start a two-week free trial to Bespoke Institutional to access our Chart Scanner, Earnings, Explorer, and much more.

Keeping track of the improvement – and in some cases, deterioration – of COVID numbers across the US is a big job.  Every day in The Morning Lineup we update the table below to identify where COVID-19 case counts are rising or falling, and where they stand relative to the recent history of that state’s outbreak.  We also include a second table, which shows the improvement or deterioration in testing in each state.

The best-case scenario for a state is for case counts to be dropping while the positive test rate falls. That implies that spread has slowed even as more cases in the community are detected.  Some of the states with falling case counts and falling positive test rates that are the farthest from their peaks include Florida, Michigan, Wyoming, New York, Louisiana, Alaska, Vermont, Hawaii, and Montana.  Georgia is another state with falling case counts and falling positive test rates even though its re-open measures began two weeks ago.

At the opposite end of the spectrum is a state like Minnesota, which is dealing with accelerating numbers of cases even as positive test counts are rising, implying more rapid spread of the virus.

To summarize, most states are reporting slower case count growth, which is a good sign, and relatively few are reporting increases in positive test rates.  As more states re-open, it will be helpful to monitor these numbers along with hospitalization rates.  A rise in case counts is to be expected with more activity.  Start a two-week free trial to Bespoke Institutional to access our Chart Scanner, custom screens, and much more.

To assess the overall breadth of successful virus containment, in the chart below we show the number of states that have rising cases and rising positive rates. For both series, declines are “good” because they indicate increased testing penetration and lower case counts across the country. As shown, less than 15 states are seeing positive test rates rise, while only slightly more (the lowest of the outbreak) are seeing the number of cases pick up.

With numbers like we saw in last Friday’s employment report, the current downturn no doubt ranks as one of, if not, the steepest downturns in US history.  What started in March still hasn’t been officially designated a recession, but unlike prior downturns when investors and economists usually couldn’t even initially agree on whether the economy was in a recession or not, the only question this time around is how long and deep it will be.  Because the drop-off in economic activity was so sharp and sudden, by some measures we may have already seen the depths of the contraction.  If that ends up being the case, though, one could even argue that whatever it is we’ve been going through the last several weeks doesn’t even meet the criteria for a recession.

Huh? According to the NBER, which is the organization in charge of classifying recessions, they are characterized as “a significant decline in economic activity spread across the economy, lasting more than a few months, normally visible in real GDP, real income, employment, industrial production, and wholesale-retail sales.”  Economic activity essentially peaked in February to early March before the lockdowns started, and from there, the economy came to an absolute standstill.  With parts of the economy already starting to open up, though, if that trend continues, the trough of the contraction would have occurred in April.  At that rate, the entire contraction would have spanned a period of two months at most.  While the definition of a ‘few’ isn’t a specific number, if a couple is two, then a few would be three or more.

Whether the length of the economic contraction ultimately meets the criteria for an official recession is irrelevant.  The fact is that never before have we seen such a large number of Americans lose their jobs in such a short period of time, and if businesses aren’t able to get back up and running soon, the dislocations it causes will take years to repair.  So how long does a pandemic induced recession typically last?  Unfortunately, there aren’t a lot of examples on that front.  The chart below shows the length of US economic recessions going back to 1900, and while the recession brought on by the Spanish Flu back in 1918 wasn’t the shortest recession of the last 120 years, at just seven months, it was the second shortest and wasn’t even long enough to result in a bear market for the Dow.  As crazy as the market’s rebound off the lows has been in the last six weeks, can you imagine if Twitter was around in 1918 when in the midst of that pandemic the DJIA never even saw a peak to trough decline of 11%?  Start a two-week free trial to Bespoke Institutional to access our full library of research and interactive tools.