Mobility And COVID-19 Cases Are Correlating With Equities

Summary:

• Deaths reach 1 million, placing COVID-19 among the top 20 deadliest pandemics
• Average daily deaths are now higher than most leading causes of mortality
• UK and EU second waves appear more severe than the first, but this is probably false
• Mobility and COVID-19 caseloads are correlating with equities in a direction we would expect

Market Implications:

• Short-term; Negative; EU equity – mobility is correlating positively with equity performance and, if cases continue to rise across Europe, mobility will likely fall.

Deaths Reach 1 Million

The world registered its official millionth death on 28 September 2020. This grim statistic comes 252 days after China registered the first confirmed death in January. The first 100,000 deaths took 79 days to reach, while the last 100,000 came in just 19 days. The weekly rate of change, however, has remained relatively constant since July (Chart 1A).

The number of COVID-19-related deaths is of global significance. WHO’s latest detailed figures on annual cause-specific mortality for 2016 show that, if the pandemic had struck four years ago, its average daily deaths would have been the second leading cause of mortality (Chart 1B). Also, the current death figure represents 0.01305% of the world’s population, placing it 20^th on the list of the world’s deadliest pandemics (Chart 1C).

Finally, nine countries make up almost 70% of the total number of deaths globally. The US has recorded over 200,000 deaths and has been adding, on average, 1,000 new deaths to the total every day since April. Over September, India recorded the highest average number of daily deaths (1,070).

Cases and Testing

Over the last seven days, cases worldwide breached the 2mn mark for a second week – 2.08mn to be specific, a WoW rise of 9% – which increased the total to 33.6mn (Chart 2).

In Europe, Slovakia, Hungary and the Czech Republic are recording high infection rates. Chart 3 presents the 10d moving averages for a number of European countries.

The rise in cases has followed a rise in testing (Chart 4A). At the start of the pandemic, European countries and the UK had much smaller testing capacities. The latest data (w/c 21 September) shows that 1.5% of people tested positive in the UK and 5% in the EU4. At the height of the pandemic, almost 25% tested positive in the UK. With an equivalent testing capacity, cases during the first wave could have been far higher, especially in the UK (Chart 4B, 4C). As it stands, recorded cases are higher during this second wave (Chart 4D).

In the US, cases have started to rise for a third time (Chart 5). Over the last seven days, the country recorded 294,350 cases, a 1% WoW rise.

Mobility

We produce a weekly COVID Macro Risk Scorecard that pulls together all our COVID-related data from cases/deaths to mobility and stringency policies. Our overall score combines these values. The higher the score, the worse the combination. This week it is telling us that, in countries where the COVID situation has worsened and cases have risen, equity performance has dropped (Chart 6A).

A helpful high-frequency measure of economic activity is mobility. Interestingly, the correlations between equity markets and Apple/Google mobility are positive (Chart 6B). Intuitively, this means that in countries with lower levels of mobility, equity performance has been worse; in those with higher, it has been better.

Below, we present the most recent Apple mobility data (28 September) across DM and EM countries. For a second consecutive week, mobility has fallen in most developed economies, with the exception of Sweden, Finland, Australia and New Zealand. The largest declines were in the Netherlands, Austria, Iceland and Ireland.

Most emerging economies suffered the same fate, with Israel and the Czech Republic experiencing the largest falls. Broadly speaking, Asian and LATAM countries have persisted with tighter restrictions in recent months. A by-product of this is lower mobility than in most European countries. Chile, the Philippines and South Korea have the lowest Apple mobility scores.