Italy: All Better?

First, let me address the comments in the news this morning that Italy has turned the corner on COVID-19. The number of new cases and deaths has fallen the last two days, which is to be expected with the tightening of quarantining standards.

While this is encouraging, it’s important to note that we’ve seen daily dips before – both in total cases and deaths. From our COVID-19 post, pinned at the front page of this website.

It’s also important to note that Italy is far ahead of the US in terms of outcomes – with closed cases representing 21% of the totals and deaths 44% of closed cases.

In the US, closed cases are only 2% of the total, and 3/4 of those resulted in death.

And, Italy’s mortality rate continues to tick higher. It recently topped 9% of total cases and should reach 10% by the end of today.Even if Italy has turned the corner, it remains at least 10-14 days ahead of the US – possibly much more. It it way too early to talk about the US doing the same, especially since still have no ability to test those who should be tested. It is therefore much to early to talk about ending social isolation. Things are going to continue to get much worse.

The daily rate of growth in deaths fell from 39% on Sunday to 32% on Monday. But, this is one single data point — not a trend. The 10-day moving average is nearly 28% and rising – up from 18% a week ago.

At 39%, we’d reach 1,000 deaths tomorrow, 10,000 on April 1, and 100,000 on April 8. At 32%, we’d reach 1,000 deaths on Thursday, 10,000 on April 3, and 100,000 on April 11. Neither is exactly good news and neither argues for removing the quarantining which is our best chance for flattening the curve.

Meanwhile, we’ve had another algo-driven overnight ramp to the same trend line which has marked previous bounce tops for the past several weeks.This one was aided by the Italy comments as well as a well-timed hammering of VIX as futures backed off their limit.

The primary goal remains to get DJIA back above 18,974 – the 1.618 Fib the Dow broke through post the 2016 election. As we discussed last week, this remains the score card that matters the most.