THREAD: A couple of weeks ago, the markets were telling us that the spiraling load of coronavirus cases, hospitalizations and deaths in Europe was serious. Markets sold off in a big way, with little in the way of downside protection from bonds to mitigate the losses. /1

But with the US election last week and positive vaccine news this weeks, markets have moved up substantially, with bonds also selling off. And there's been a rotation out of the 'stay at home' theme companies to beaten down names /2

In a narrow view, it tells us that the lifestyles we're experiencing now are completely unsustainable culturally and nowhere near what post-pandemic daily life will be like. So, I expect the rotation to have some legs. /3

Still we have to get through this second and third wave first. And there may be lasting economic repercussions once this wave is finished. The 14-day change in deaths is 36%. If that death rate increase remains in place, we will reach 2,000 deaths a day by Thanksgiving. /4

2,000 deaths a day is a level representative of healthcare system overload. And that means shutdowns. Europe has started shutdowns. In the US, wide-scale local and state shutdowns are likely. That's my expectation. And that's negative for growth. /5

The Upper Midwest is the first place to look for signs as that is where the epidemic is most severe in the US. Asymptomatic nurses are being permitted to work in North Dakota. That tells you we are at healthcare system overload there. https://www.msn.com/en-us/news/us/asymptomatic-covid-19-nurses-allowed-to-stay-on-job-in-north-dakota-amid-staff-shortage/ar-BB1aSxPW /6

I believe it will get much worse both healthcare-wise and economically. My view continues to be that you cannot benefit the economy by resisting the virus and staying open. This simply leads to viral contagion, system overload and shutdown. /7

Since I expect shutdowns across the US in due course, I think it may be too early to pile into the 'vaccine trade'. This fall and winter will be horrific. And markets are likely to reflect that.

Write-up here https://pro.creditwritedowns.com/p/rotation-toward-value-covid-19-spikes