“Stimulus & Japanese Flu Drug Surface, Murky Markets Persist, Amazon, Walmart Rise While Bioamerica Skyrockets” Vista Partners Daily – March 18, 2020

We had another ugly day in the markets as it continued to exhibit its yoyo & volatile nature. There continued to be next to no safe havens as indiscriminate selling persisted in the markets as views of where the economy is headed remained at best murky. However, our suggested bet (TVIX) from yesterday’s daily was a big mover today. The Velocity Shares Daily 2x VIX Short-Term ETN (TVIX), a leveraged “bet” against the market rising, hit $1000/share and then closed at $806 up +39.51%. Not bad for a day’s work. The TVIX’s recent low was $38/share.  

We continued to see further stimulus actions surface or be spoken about including a proposed $1 trillion package as we found out that we still have to file our taxes by April 15th, but if we have to make payments then they can be delayed up to 90 days without penalty.  This will be helpful but the waters are still murky, to say the least as to how all of this will be working for us if essentially many of the businesses continue to shut down, layoff workers or go out of business if the current containment measures persist. A positive turn in the fight to find answers to coronavirus did come from a story in the NY Post today, which highlighted a Japanese flu drug, Avigan, which was developed by the Fujifilm Toyama Chemical (FUJIY, $56.16/sh, +17.24%) & has apparently proven to be effective in treating the coronavirus in early trials. Additionally, “Medical authorities in China said they tested the antiviral drug favipiravir on 340 patients and found it reduces recovery time and improves lung condition of patients,” according to the Guardian. Fingers crossed that this drug can be at least an answer in this fight.

At the close of trading the S&P 500 dropped by -5.18%, the Dow dropped by -6.3% while Walmart (WMT) hits new all-time high at $128.08/sh before closing at $122.58/share by +2.78% today, the Nasdaq dropped by -4.7% & the Russell lost -10.42%. The FAANG stocks lost ground today except for Amazon (AMZN) which closed at $1,830/share, +1.23% and which would seem to be benefiting from the containment process as many are using to online ordering to a greater extent and not leaving homes. Facebook (FB) closed at $146.96/share, -1.65%, Alphabet (GOOG) closed at $1,096.80/share, -2.05%.  Apple (AAPL) closed at $246.67/share down by -2.45%  & Netflix (NFLX) closed at $315.47/share, down -1.34%. We did see a recovery in the markets in the last part of the day after the markets had slid down north of the double-digit territory. 

Oil closed at $22.39/bbl down another -16.92%. Gold dropped down -2.5% to end at $1487.70/oz & silver dropped -4.12% closing at $11.98/oz. U.S. Treasury yields moved higher today. The 2-yr yield moved up by 7.9 basis points to .54% & the 10-yr yield moved higher by 27 basis points to 1.27% for the second day in a row. The U.S. Dollar Index jumped another +1.4% to 100.97.

A couple of economic reports surfaced as the Housing starts report confirmed were greater than expected February as it came in at a seasonally adjusted annual rate of 1.599M, however, building permits cam in lower than expected at 1.464M. The weekly MBA Mortgage Applications Index Report showed a drop of -8.4%.

Irvines’s Biomerica Inc. (NASDAQ: BMRA) was an amazingly bright spot in the markets today skyrocketing +340.17% and closing at $10.30/share as they announced that it had commenced shipping initial samples of its COVID-19 IgG/IgM Rapid Test (a finger prick blood test with results in 10 minutes, that can be performed by trained professionals anywhere, e.g. airports, schools, work, pharmacies, and doctors’ offices) to countries outside the US. Evaluation test kits have been requested by Ministries of Health in multiple countries through the Company’s distribution partners who are working with their government agencies to assess the tests and forecast demand. This disposable point-of-care serology test is different than the current polymerase chain reaction (PCR) tests in that initial studies indicate that serology tests can identify if someone has been exposed to the COVID-19 virus, and can further detect if a person was recently infected with the disease even if they have never shown or are no longer showing symptoms. This can help health agencies focus on prior contacts of persons previously infected. Existing PCR tests generally only show positive if a person is currently infected and the virus is still present. Furthermore, PCR tests require patient samples to be sent to a lab, thus increasing the cost of the test and reducing the speed to obtain a result. Biomerica’s test could also be used in conjunction with the PCR test by rapidly pre-screening larger groups of individuals, who if tested positive could be further tested using a PCR test for verification. Biomerica is positioned to begin filling large international orders of these disposable one-use tests within weeks, assuming international product shipping channels remain open and active. In addition, Biomerica has begun the application process with the FDA under the COVID-19 Emergency Use Authorization (EUA), aimed at the possible clearance and eventual use of the test in the US. At this time, the product is not available for sale or use in the US. Biomerica is also announcing that it has filed a provisional patent application with broad claims around technology that can be used to identify several Coronaviruses including SARS-CoV-2, SARS, MERS and potential future mutations or strains of these viruses. Biomerica expects to sell these disposable, single-use devices for less than $10 per test.

Economic Reports

On Monday, the New York Fed’s Empire State Manufacturing Survey was confirmed to have dropped to -21.5 in March.

On Tuesday, the total retail sales report showed a drop by -.5% month/month while retail sales, excluding autos,  moved lower by -.4% month/month. Industrial production report confirmed a move higher by +.6% month/month in February while total capacity utilization was 77%. The NAHB Housing Market Index for March dropped to 72. The January Job Openings and Labor Turnover Survey confirmed that job openings rose to 6.963M while business inventories dropped -.1% in January.

On Wednesday, the Housing starts report confirmed were greater than expected February as it came in at a seasonally adjusted annual rate of 1.599M, however, building permits cam in lower than expected at 1.464M. The weekly MBA Mortgage Applications Index Report showed a drop of -8.4%.

Investing & Inspiration

“The riskiest thing we can do is just maintain the status quo.
I get up at 4:30 in the morning, seven days a week, no matter where I am in the world.
I think it is important for people who are given leadership roles to assume that role immediately.
What I’ve really learned over time is that optimism is a very, very important part of leadership.” Bob Iger, Ceo of Disney

“There are old traders and there are bold traders, but there are very few old, bold traders.”-Ed Seykota

“Let this scenario play out on its own, in its own fashion. As you watch it unfold, you will soon be grateful that you choose the peaceful path. Remember — those who live by the sword, die by the sword.”

“As long as you enjoy investing, you’ll be willing to do the homework and stay in the game.” -Jim Cramer

“I rarely think the market is right. I believe non-dividend stocks aren’t much more than baseball cards. They are worth what you can convince someone to pay for it.” -Mark Cuban

“Michael Marcus taught me one other thing that is absolutely critical: You have to be willing to make mistakes regularly; there is nothing wrong with it. Michael taught me about making your best judgment, being wrong, making your next best judgment, being wrong, making your third best judgment, and then doubling your money.” -Bruce Kovner

“The policy of being too cautious is the greatest risk of all.” -Jawaharlal Nehru

“The only true test of whether a stock is “cheap” or “high” is not its current price in relation to some former price, no matter how accustomed we may have become to that former price, but whether the company’s fundamentals are significantly more or less favorable than the current financial-community appraisal of that stock.” -Philip Fisher

“I learned to avoid trying to catch up or double up to recoup losses. I also learned that a certain amount of loss will affect your judgment, so you have to put some time between that loss and the next trade.” -Richard Dennis

“The four most dangerous words in investing are: ‘this time it’s different.” -Sir John Templeton

“Money doesn’t make you happy. I now have $50 million but I was just as happy when I had $48 million.” -Arnold Schwarzenegger

Tomorrow

Tomorrow’s significant economic data report schedule will include the following:

• Weekly Initial Claims and Continuing Claims report
• Q4 Current Account Balance
• The Philadelphia Fed Index for March