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Over the summer, the virus pandemic savaged the South and the West, and now it’s devastating the Midwest and Great Plains.
Many hospitals in the regions are rapidly filling to capacity. Cases and deaths from coronavirus are on the rise.
North Dakota reported more new cases per capita than any other state in the last week. Hospitalizations have soared so sharply that medical officials have had to send patients miles away for care, even across state lines to Montana and South Dakota.
In Wisconsin, the virus is out of control. Three of the four metropolitan areas in the U.S. with the most cases per capita last week were in northeastern Wisconsin. Hospital systems are becoming overwhelmed. Officials were forced to open a field hospital Wednesday in Milwaukee. Not a good sign.
So where did this spike in cases come from?
Most public health experts say it was driven by young adults and the reopening of colleges and K-12 schools. Thousands of cases have been linked to Midwestern universities as young adults infect the surrounding communities.
The scary part is that public health officials are having trouble convincing many people that the virus pandemic situation is urgent.
People are “fatigued” over wearing masks and social distancing. Regulations aimed at slowing the spread of the virus in the region have been met with resistance.
This really makes me shake my head.
Think of all the sacrifices Americans made during World War II. And yet, this generation of Americans can’t even wear a mask when in close contact with other people.
The Big News
Lilly Seeks OK for Its Covid Treatment
Eli Lilly has applied for an emergency use authorization (EUA) of its Covid-19 antibody treatment. It would be among the first treatments available for patients with mild to moderate cases of the disease. Lilly said that patients taking a combination of two of its antibodies were almost 85% less likely to be hospitalized than those taking a placebo. Lilly had already announced positive results for the single antibody treatment in September, which cut hospitalizations by 72%.
Researchers Study Covid Link to Diabetes
This past spring, diabetes experts began noticing something strange. People with Covid-19 and no history of diabetes were showing up in hospitals with abnormal blood sugar levels. Diabetes puts patients at risk for a worse case of Covid-19. Now it seems possible the virus could also trigger the onset of diabetes. A new international registry will allow doctors to upload data about Covid-19 patients to better understand the potential correlation between the two conditions.
AstraZeneca’s BS
AstraZeneca promised not to profit from its Covid-19 vaccine “during the pandemic. But it has the right to declare the pandemic “over” as soon as July 2021. This is according to an agreement with a manufacturer seen by the Financial Times. The document defines the “Pandemic Period” as ending on July 1, 2021. The period could be extended but only if “AstraZeneca acting in good faith considers that the SARS-COV-2 pandemic is not over.”
Pence and Harris Clash over Coronavirus
Mike Pence and Kamala Harris clashed over President Trump’s response to the virus pandemic during their vice-presidential debate Wednesday night. The Democrat challenger accused the President of “the greatest failure” in the history of the office. Senator Harris said, “The American people have witnessed what is the greatest failure of any president in the history of our country.” She accused the Trump administration of keeping the truth about coronavirus from the American people at the start of the year.
Virus Hit to Global Trade ‘Deeper, But Not as Long’
The virus pandemic has caused a “deeper but less prolonged decline in trade” than initially expected. This outlook came from the World Trade Organization (WTO) on Tuesday. The WTO reduced its estimate for the contraction of global trade in 2020. The WTO said global trade was now set to shrink by 9.2% this year. Growth of 7.2% is forecast for 2021. Global trade in goods recorded its sharpest-ever quarterly decline in the second quarter, falling 14.3%.
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The Coronavirus Numbers
Here are the numbers in the virus pandemic from Thursday at 8 a.m. ET from Johns Hopkins University:
- 36,212,651 Infected Worldwide
- 1,056,744 Deaths
- 7,551,428 Infected in the U.S.
- 211,844 Deaths in the U.S.
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What’s Next
For me, there are few stocks better than so-called GARP stocks. GARP stands for Growth at a Reasonable Price.
And right now – despite the pandemic – the healthcare sector is trading near a historical discount to the broader stock market.
The healthcare sector now trades at a 26% discount to the S&P 500 on a price-to-earnings basis. This is according data from Refinitiv Datastream. The sector’s 15.8 P/E ratio is well below the S&P 500’s 21.3 ratio. The S&P 500’s P/E ratio in September rose to its highest valuation since 2000.
That valuation gap is the widest in at least 25 years!
The S&P 500 healthcare sector is up just 7% since the end of April. The S&P 500 itself is up 17%.
Healthcare stocks are selling cheaply because of fears of what changes to the industry a Democrat sweep in November will bring.
This is a worry that pops up every election cycle. Yet, changes – if they even occur – are usually very incremental.
I suspect this cycle will be the same as previous ones. Conditions will not turn out to be as detrimental as feared.
Meanwhile, the companies will continue to benefit from relatively stable-to-rising earnings prospects and their medical innovations.
That has me looking at all healthcare-related stocks very closely, including those listing now through various forms of IPOs.
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Yours in Health & Wealth,
Tony Daltorio