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Daily Update 11/12 – The Dark Covid Winter Ahead

Loveless Lockdown 2.0: New York governor and the national voice on coronavirus, Andrew Cuomo, has announced new measures directed toward slowing the spread of the virus. The positivity rate in New York has increased to 2.93%, compared to only 1.16% on Oct 23rd, signifying real community spread, not an increase in cases due to increased testing capacity. The governor of Ohio also enacted mask rules and may close bars and restaurants. We can expect more measures as we undoubtedly continue to break records in cases in the coming weeks.

Hospitalizations: Another sign of real Covid community spread is hospitalizations, and we have hit a new record with 61,964 Americans hospitalized as of 11/10. Luckily, and perhaps crucially, the hospitals in the current hotspot region, the Midwest, especially the upper Midwest states such as ND, SD, and MN, don’t seem to be nearing a statewide breaking point. Wisconsin however is worrying, according to the state’s figures.

Source: https://covidtracking.com/
With 1,136 available beds, signifying a 90% occupancy rate state-wide, if Wisconsin continues a hospitalization rate of increase similar to that of last week’s, the entire state’s hospital system will be a breaking point in 3 and a half weeks.
Source: https://www.dhs.wisconsin.gov/covid-19/hosp-data.htm

Economic effects of virus resurgence: This blog is about markets, so let’s talk economic effects of the virus. According to Goldman Sachs “The virus resurgence poses a key risk to the growth outlook. Overall consumer activity has held up remarkably well thus far, with high-frequency indicators of consumer spending suggesting continued recovery through October”

During the summer Covid wave overall consumer activity decelerated and states with more virus spread, largely southern states, had correspondingly lower consumer spending growth. However, Goldman “find[s] a much smaller response of consumer spending to statewide virus spread in the recent resurgence … [and] find[s] a much smaller virus impact on continuing [unemployment] claims in the recent resurgence.” Will this relatively more muted impact from the virus on the economy continue as cases and hospitalizations accelerate?

American Tech Manufacturing: Taiwan Semiconductor Manufacturing Company ($TSM), a global tech powerhouse that manufactures the most cutting edge chips in the world today, approved investment of $15 bn for expanding production, plant construction, and R&D in Arizona. This announcement follows after TSMC announced a new semiconductor fabrication facility to be opened in Arizona earlier this year. Wccftech.com writes “This fab (fabrication plant) came after concerns were raised by the American government about the integrity of the country’s semiconductor supply chain. The bulk of TSMC’s chip fabrication is in Taiwan, and global, pandemic-induced supply chain disruption this year and the island’s proximity to the People’s Republic of China caused policymakers in Washington to press the company to set up a facility inside homeland U.S.” – (link)

Apple and ARM sitting in a tree: M-A-K-I-N-G Macs. Anandtech says in their analysis, “Whilst in the past 5 years Intel has managed to increase their best single-thread performance by about 28%, Apple has managed to improve their designs by 198%, or 2.98x (let’s call it 3x) the performance of the Apple A9 of late 2015. Anybody looking at the absurdness of that graph will realise that there simply was no other choice but for Apple to ditch Intel and x86 in favour of their own in-house microarchitecture – staying par for the course would have meant stagnation and worse consumer products.(link) Apple microprocessors are estimated to be roughly 5.8% of Intel’s ($INTC) total revenue according to Morgan Stanley. Add another nail in the proverbial coffin that is Intel. And who does the manufacturing of these new and increasingly powerful chips you ask? TSMC of course.

AnandTech charts A-series chips versus Intel chips

Tweets and graphs we like:

China remains by far the largest electric vehicle market, with more than half of electric cars sold globally in 2019, followed by Europe with 560,000 and the United States with roughly 330,000 electric passenger cars sold last year.
Source: https://www.statista.com/chart/17178/global-electric-car-ownership/
Unironically have to agree here. Remember, the key to long term gains is to avoid panic selling.
In the words of the acclaimed investor Meek Mill, “it’s levels to this, young boy”
Uncertainty for small businesses continues to increase with 40% of businesses not sure that they will survive in the future.
Lower your carbon emissions, save the Great tits!
Avert your eyes unless you’re ready for pain, millenials.

That’s your millennialmkts daily update for today, November 11th. Thanks for reading and good luck!

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