States experiencing a delayed first wave of coronavirus cases in the U.S. are beginning to breathe a bit easier, as their rates of infection appear to have crested and begun to recede during the past month.

That can be seen in a tower chart showing the daily progression of COVID-19 infections in the United States from 10 March through 11 August 2020. This chart contrasts the continuing exponential growth of testing (the widening light blue pyramid), with the much more slowly widening number of new cases (the much narrower orange 'tower'), whose rate of growth is beginning to slow again as the delayed first wave of coronavirus cases in the south and in the western U.S. passes.

Concentrated in the sunbelt, these states are also experiencing far lower rates of coronavirus-related deaths than states in the northeastern United States, which went through their first wave of infections back in March and April 2020.

Overall, the fifth month of the coronavirus pandemic in the U.S. is showing a lot of developing positive trends, which is all the more remarkable because they have avoided repeating the kind of blanket lockdowns that shuttered businesses and sent the U.S. economy into deep recession in March 2020. In their place, they have generally substituted more limited, but also much more effective approaches to reducing the spread of SARS-CoV-2 coronavirus infection, such as requiring masks be worn in public places.

Most these states have also benefited from the end of widespread anti-police political protests. These protests were substantial contributors to the spread of coronavirus infections in many of states experiencing a delayed first wave of infections, which came soon after they lifted their own statewide lockdowns. The effect of the end of these protests has been to reduce the rate of spread of coronavirus infections.

The rankings of states in the skyline chart has changed substantially in the past month, reflecting the increased rates of coronavirus infections in the sunbelt states as compared to northeastern states. Louisiana now ranks at the top for percent of population with confirmed infections, followed by Arizona, Florida, and Mississippi.

You can see a clear difference in the shape of the skyline tower charts for the states that have experienced a delayed first wave of infections, which somewhat resemble the profile of the bellmouth of a trumpet, and those of states like New York that was the epicenter of early COVID-19 infections in the U.S., which look more like a sandcastle towers. You can also see that in the top ranked states, the rate of growth of new infections is beginning to slow, which confirms their wave of infections has crested and is beginning to recede.

There is also a dramatic difference in the width of the "black" tower representing each state's deaths attributed to coronavirus infections, which we'll emphasize in a chart showing each state's percentage ratio of deaths to its recorded number of confirmed COVID-19 cases.

The top ranked states in this chart are mostly concentrated in the northeastern U.S. Four of the states, New Jersey, Michigan, Pennsylvania, and New York, stand out because these states implemented ill-advised policies that greatly contributed to their higher deaths rates, such as forcing nursing homes to admit coronavirus infected patients. Nursing home deaths also play a significant role in elevating the relative percentage of deaths in other states with ratios of 4.6% or higher.

By contrast, the states with delayed first wave coronavirus cases have avoided similar death rates with respect to their total number of confirmed cases. That can be seen in the following chart comparing the progression of COVID-19 in two states we've been following closely, New York and Arizona, where each have had a similar share of their populations affected. Where they differ is in their relative death rates, where New York, with its ill-fated policy of forcing coronavirus patients into its nursing homes, experienced far higher rates of COVID-19 deaths.

By taking steps to prevent coronavirus exposures and infections in nursing homes, the delayed first wave states have largely succeeded in reducing the incidence of deaths resulting from coronavirus infections as compared to the states in the northeastern U.S. that did not. By implementing effective strategies to minimize coronavirus exposures, such as requiring masks be worn in public venues with high likelihoods of transmission, these states are now moving past their crests in number of cases and deaths without having to completely shutter their economies.

They could have done better. If they had taken more effective actions to temper the anti-police protests that ran for weeks after the death of George Floyd in Minneapolis, Minnesota, many of these states could have significantly reduced the size of their delayed first wave crests in cases to much more manageable levels while also reducing the number of deaths. Then again, the protest organizers could have done that too. Where should the liability for the excess cases and deaths these states experienced because of the protests lie?

Previously on Political Calculations

• A Delayed First Wave Crests in the U.S. and a Second COVID-19 Wave Arrives for Some States
• Three Months of the COVID-19 Pandemic In The U.S.
• Twelve Weeks of the Progression of COVID-19 in the United States
• United States Continues Trending Downward for Coronavirus
• U.S. Sees Widespread Improvements in Coronavirus Epidemic But Develops a New Regional Hotspot
• A Shifting Geography for Coronavirus Cases in the U.S.
• Most States Show Slowing Progression of Coronavirus in Week 8 of Epidemic
• Seven Weeks and One Million Coronavirus Cases Later...
• A Mixed Picture Emerges For Progression of COVID-19 in U.S.
• Signs Of Slowing COVID-19 Spread Among U.S. States
• Visualizing The First Four Weeks Of The Coronavirus Epidemic In The U.S.
• Visualizing the Progression of COVID-19 in the United States
• Introducing Skyline Charts for Tracking Coronavirus Cases in the U.S.

How much of the U.S. stock market is owned by foreigners in 2020?

According to the U.S. Treasury department, foreigners owned $8.63 trillion worth of U.S. equities through the end of the second quarter of 2019, which is the equivalent of 35.3% of the total market capitalization of the S&P 500 (Index: SPX) at that time. Our rough preliminary estimate of foreign holdings of U.S. equities at the end of the second quarter of 2020 is $9.19 trillion, which is the equivalent of 34.2% of the S&P 500's reported $26.79 trillion market cap.

The following interactive chart shows the history of foreign holdings of U.S. equities and the market cap of the S&P for each year from 2002 through 2020. If you're accessing this article on a site that republishes our RSS news feed, you may want to click through to our site to see the interactive chart in its full size glory!

In 2002, foreigners owned just $1.4 trillion, or the equivalent of 15% of the S&P 500's market cap at that time. In between, the share of U.S. equities held by foreigners rose steadily to peak at 36.5% in 2015, but has declined in recent years. Preliminary data through April 2020 suggests the share of U.S. stocks held by foreigners has dipped during the coronavirus recession, where our estimate is based on the Treasury Department's estimate of foreign holdings and the market cap of the S&P 500 through the end of April 2020.

References

Standard and Poor. S&P 500 Earnings and Estimate Report. [Excel Spreadsheet]. Accessed 30 June 2020.

U.S. Department of the Treasury and Federal Reserve Bank of New York. Foreign Portfolio Holdings of U.S. Securities, as of June 30, 2008. [PDF Document]. 18 November 2009.

U.S. Department of the Treasury and Federal Reserve Bank of New York. Foreign Portfolio Holdings of U.S. Securities, as of June 30, 2012. [PDF Document]. April 2013.

U.S. Department of the Treasury and Federal Reserve Bank of New York. Foreign Portfolio Holdings of U.S. Securities, as of June 28, 2019. [PDF Document]. 30 April 2020.

The S&P 500 (Index: SPX) continued to track upward in the first week of August 2020, closing the week at 3,351.28. That's less than 35 points from the index' record high of 3,386.15 recorded back on 19 February 2020, just before the market melted down with the arrival of the coronavirus pandemic in the United States.

That outcome is also largely as expected according to the redzone forecast indicated in the following chart, which assumes that investors are largely focusing on 2020-Q4 and that the Federal Reserve will maintain an expansionary monetary policy into the indefinite future....

Sharp eyed readers will note that the upward slope of the redzone forecast has steepened over the last two weeks. We believe that's primarily attributable to the Fed's commitment to continue providing support for the economy, which has slowed since mid-June with the delayed first wave of coronavirus cases in many states that had previously avoided significant numbers of cases. Several Fed officials indicated their concern over that developing situation during the past week, where they also indicated they expect to continue the measures they've launched well into 2021. For investors, their statements are setting the expectation the Fed will continue their expansionary policies throughout the reasonably foreseeable future.

For the S&P 500, that support is benefiting a limited number of firms whose businesses are relatively well positioned to grow in the current economic climate in the environment created by the Fed's policies. In today's environment, that's enough to put the index onto a trajectory that will send the S&P 500 tracking toward record territory in the near future.

Not that there won't be any bumps on the road ahead, but that's something that will be determined by the random onset of new information. Speaking of which, here are the market-moving headlines that caught our attention during the week that was.

Monday, 3 August 2020

• Daily signs and portents for the U.S. economy:
• https://www.reuters.com/article/us-global-oil/oil-rises-more-than-1-on-hopes-for-economic-recovery-idUSKBN24Z00V
• U.S. manufacturing activity near 1-1/2-year high, factory job losses persist
• U.S. auto sales pandemic recovery continues as Toyota decline slows
• Construction spending falls to one-year low in June
• Bigger stimulus changing structure in China, under negotiation in U.S.:
• China will make monetary policy more flexible, targeted in second half: central bank
• Congressional Democrats, White House still at impasse over coronavirus bill
• Bigger stimulus takes hold in Eurozone, what could possibly go wrong?:
• Euro zone factory activity bounced back to growth in July: PMI
• Italy enjoys oversized ECB support as debt balloons
• Spanish factory activity grows in July after long lockdown, car sales up
• Fed minions want more fiscal aid, more lockdowns:
• Fed policymakers call for fiscal support to save U.S. economy
• U.S. economic recovery appears to have slowed in July, Fed's Bullard says
• Fed's Kashkari suggests 4-6 week shutdown; says U.S. Congress can spend big on coronavirus relief
• Bigger trouble developing in Indonesia, South Korea, but light seen at end of tunnel:
• Indonesia second quarter GDP seen shrinking 4.61% year-on-year, weakest since 1999: Reuters poll
• South Korea's factory activity shrinks for seventh month but recovery in sight - PMI
• Nasdaq hits record high close as traders eye M&A and stimulus

Tuesday, 4 August 2020

• Daily signs and portents for the U.S. economy:
• Oil edges up to highest since March on hopes for U.S. stimulus
• Motor vehicles power U.S. factory orders in June
• Bigger trouble developing as China shirks living up to 'Phase 1' trade deal commitments:
• China only fulfils 5% of Sino-U.S. energy trade deal in first half of 2020
• Eurozone starts showing signs of post-coronavirus economic recovery:
• Strain on global manufacturing eases as euro zone returns to growth
• Germany's car industry shows initial signs of recovery: Ifo
• Spain logs first fall in unemployment since February
• ECB minions pledge to do more stimulus, Fed minions look to Congress to do more stimulus:
• ECB committed to stimulus with outlook `highly uncertain', Lane says
• Fed policymakers call for fiscal support to save U.S. economy
• S&P 500 ends higher as investors eye stimulus
• Gold soars past $2,000, gold up on stimulus hopes

Wednesday, 5 August 2020

• Daily signs and portents for the U.S. economy:
• Oil prices at five-month high on big drop in U.S. crude stocks
• U.S. trade deficit shrinks in June
• Trump says he may suspend payroll tax himself: Fox News interview
• U.S. job market recovery appears to be slowing, services sector powering ahead
• U.S. services sector activity hits 16-month high in July
• Bigger trouble developing in China, Indonesia, South Africa:
• China's July exports seen falling on global virus surge; import growth cools: Reuters poll
• China's services sector expands at slower pace in July: Caixin PMI
• Indonesian economy shrinks for first time since 1999 in second quarter
• South Africa's sharp economic downturn extends into July: PMI
• Positive signs of post-coronavirus recovery developing in the Eurozone and in Sweden:
• Euro zone business activity returned to modest growth in July: PMI
• Euro zone retail sales return to pre-pandemic levels
• Record drop in Swedish GDP is still better than most of Europe
• Fed minions see slow post-coronavirus recession recovery:
• Fed's Clarida says economy could reach pre-pandemic levels by end of 2021
• Fed policymakers say pickup in infections slowing U.S. economic recovery
• Fed's Kaplan: Resurgence of virus is muting economic recovery, more aid needed
• Wonderful world of Disney boosts Wall Street

Thursday, 6 August 2020

• Daily signs and portents for the U.S. economy:
• Oil settles below 5-month highs amid fuel demand worries
• More signs point to U.S. economic recovery losing momentum
• Job cuts announced by U.S. companies jump 54% in July: report
• U.S. household debt falls amid COVID-19 spending cutbacks
• Fed minions realize small businesses need more relief, also prepping for zero-delay banking transactions:
• Fed's Kaplan says small businesses need more financial help
• Fed's Brainard lays out central bank's instant payment framework
• Wall Street gains as markets look to aid package, Nasdaq closes above 11,000

Friday, 7 August 2020

• Daily signs and portents for the U.S. economy:
• Oil slips below $45/bbl on demand concerns but posts weekly rise
• Payrolls increase by nearly 1.8 million, topping expectations despite coronavirus resurgence
• U.S. earnings recovery may be faster than in previous crises
• Trump vows to suspend U.S. payroll tax after coronavirus aid talks with Congress break down
• Explainer: Trump wants to bypass U.S. coronavirus aid talks with executive order. Can he?
• Post-coronavirus rebounds starting to take hold?
• Taiwan's July exports unexpectedly rise, but outlook uncertain
• China demand fuels German export, production rebound
• China's July export surge may point to more sustainable recovery
• Instant View: China commodity imports surge in July from a year earlier
• Fed minion has high hopes for "Main Street" loan program:
• More businesses will tap Fed loan program if economy worsens, Rosengren says
• Fed's Rosengren says 509 financial institutions have registered with Main Street Lending Program
• Slowing job growth, stimulus worries weigh on Nasdaq
• Job report gives Fed time to prepare more bazookas to help the economy

Looking for more news? Barry Ritholtz' list of positives and negatives he found in the week's economics and markets news is available over at The Big Picture.

There are a lot of different ways to measure how deeply you might be in debt. You could count up all the individual credit accounts you have, such as your mortgage, your student loans, your car loan, and all your credit cards. You can also add up all the liabilities you've racked up on each of these.

But that doesn't necessarily tell you how much your personal cost of debt is. For that, you'll need to know how much you've borrowed for each of your credit accounts and the interest rate you are paying to have already borrowed what you have.

With that information, you can find what your personal cost of having debt is, taking into account how it is weighted among your different credit accounts. We've built the following tool to do that math for up to as many as six different credit accounts you might have open. If you're accessing this article on a site that republishes our RSS news feed, please click through to our site to access a working version of the tool.

In the tool above, if you have more debt accounts you would like to include in the calculation, take the results from the first six accounts, enter the total and weighted personal cost of debt interest rate in under "Credit Account #1", then continue to add the information for up to five more of your additional debt accounts. Repeat this process as necessary, until you're done. If it seems burdensome to do this, you may want to seriously consider reducing the number of credit accounts you have open.

Once you are done though, what can you do with this information?

Millionaire Mob describes it as one of the most important decision tools for making personal finance decisions you have available to you:

Personal cost of debt is so important. I cannot stress this enough. This is a line in the sand that helps you understand if you should pay down debt or invest. This is the best metric for debt prepayment....

For your personal cost of debt, you want to do anything in your ability to pay down the highest interest rate debt first. Lower your personal cost of debt to 4.5% or lower. At that point, you can invest everything you have.

The long-term average of the stock market is approximately 6-7% per year. With taxes, this is basically an annual return of about 4.5%. Thus, for every dollar you put into the stock market you should exceed your personal cost of debt. Keep in mind interest rates could increase or decrease, so this is somewhat relative.

If your final result for your personal cost of debt was above 4.5%, then taking steps to pay down your loans makes sense, where your biggest bang for the buck will come in paying down the credit that carries the highest interest rate.

We'll also note that Millionaire Mob is taking inflation into account in looking at the long term rate of return for an investment in the stock market. Over its history, the long term average rate of return for the S&P 500 is 9.4%, with the long term rate of inflation averaging about 3.3%, though the Federal Reserve has targeted a 2.0% inflation rate in recent years, which is how you get down to an investment return of 6% to 7% before you might pay taxes on your investment returns, which then drops to Millionaire Mob's threshold of 4.5% after taxes.

If you have the ability to invest with tax-free returns however, such as through a Roth IRA or a Roth 401(k), the weighted average personal cost of debt threshold for choosing between long term investing and paying down debt would rise to 6.0%, where you should choose to invest over paying down debt with any "extra" money you might have if your personal cost of debt is below that higher threshold.

Image Credit: Photo by Avery Evans on Unsplash.

Eight firms have consistently ranked in the Top 10 by market capitalization within the S&P 500 (Index: SPX) during 2020, growing from representing one-fifth of the index' total market cap to nearly one quarter during the first seven months of 2020.

The eight firms are Apple (NASDAQ: AAPL), Microsoft (NASDAQ: MSFT), Amazon (NASDAQ: AMZN), Facebook (NASDAQ: FB), Berkshire Hathaway (NYSE: BRK.B), Alphabet (Class A) (NASDAQ: GOOGL), Alphabet (Class C) (NASDAQ: GOOG), and Johnson & Johnson (NYSE: JNJ).

We've developed an interactive chart to show how they've grown at roughly three month intervals, spanning from early January 2020 through the end of July 2020.

At these snapshots, the overall market capitalization of the entire S&P 500 index has gone from $27.5 trillion in January 2020, down to $22.8 trillion in mid-April 2020, before rebounding to nearly $26.8 trillion at the end of July 2020. Firms in July whose component weighting within the S&P 500 index is greater than 3.7% are trillion dollar companies.

That exclusive club includes just three firms: Apple, Microsoft, and Amazon. Even adding the value of Alphabet's Class A and Class C shares together isn't quite enough to pull the company that is still better known as Google into the trillion dollar valuation club.

That may just be a matter of time. Welcome to the age of the megacaps!

References

Slickcharts. S&P 500 Companies by Weight. [Online Data]. Snapshots: 8 January 2020, 17 April 2020, 31 July 2020.