Getting more Constructive

It is starting to look like hospital admissions in Gauteng/Johannesburg are peaking at about 1/3 of what they were with Delta:

Meanwhile the ICU numbers in Gauteng are still creeping up (because it lags) but they are clearly not going to get to anywhere near where they were with Delta:

Meanwhile the most important piece of data, cases, continues to plummet.  Yesterday Gauteng cases were down 63% week-over-week.  Today they dropped 58% week-over-week.

While I can understand that the sudden rise and fall of cases in Gauteng should belay some skepticism (I saw one epidemiologist admit that it is the strangest thing he has seen), I don’t believe you can write-off a week over week drop of 63% or 58%, or the longer term trend that is becoming more clear each day, to mistakes or lack of testing.

The simplest explanation is probably the right one: omicron extremely, extremely contagious and not terribly dangerous and because of that combination it managed to make its way through Johannesburg in about 20 days with the majority of people not even knowing they had it.

Here (in Canada), we are going to test everyone and because of that we are going to see stupid, and I mean STUPID, high cases over the next couple weeks.  I bet Alberta blows through its previous case high shortly, with the only mitigating factor maybe being that we gave out rapid tests so some people can test positive at home and not be reported.  I plan to tune that out.

But I also think that relatively shortly, the voices pointing out anecdotally that very few are getting really sick are going to get loud.   Someone is going to point to outbreaks that we all have read about, like the Calgary Flames, and say 30 guys got it, including coaches, and no one was sick for more than 36 hours?  What’s that about?  We’re already seeing that in some countries.

The problem is that by the time we have enough data to scientifically prove its mild, we are all already going to know its mild by common sense.

With a more optimistic tilt, it was also hard for me not to notice that parts of the market seem to be bottoming. Biotech for example – all those crummy little biotechs I follow, they are going up and down like crazy in a volatile way but they aren’t really going down any more. At least for the last week. They just kind of test and retest and retest and they don’t really give up the ghost. I bought a few back.

I also bought back bank positions and added a few others. While I can’t say 100% how omicron plays out, I feel reasonably confident that it is not going to be a big enough deal to derail the loan books of banks. So I bought back the banks I sold (like CUBI and BCBP) and some others (like PKBK) I bought anew. I also added BMTX, which I will talk about in a later post.

The market still feels to me like its on tilt overall. And that makes me not want to take too many chances. So I’ll just wade back in here in a few spots that look to be warming up. We’ll see how that goes before I dive in any deeper.