The Russell 2000 & Apple’s Electric Car Efforts Created Value During This Holiday Shortened Trading Week

It was a COVID-19 stricken locked-down holiday-shortened trading week where the politicians once again could not agree on passing a much needed stimulus package to aid the US economy. Nevertheless, it was a mostly positive week across the indices as we saw records broke across the board. The many investors that I spoke to around the world were in generally jovial and opportunistic holiday spirits, except for the occasional “sky is falling” scrooge.  And yes, there is still hope that a stimulus package is put in place soon as the politicians meet again next week, but note that the republicans are currently balking against President Trump’s surprise curve ball pushing for the increasing of stimulus checks from $600 to $2000.

Specifically, on the Covid-19 front, a new faster spreading strain grabbed our attentions and fears as it presented itself in England. We also saw further rollbacks throughout the world as the coronavirus cases continued to surge and hospitalizations increased. On the positive side of our struggle, there was a the confirmation that Pfizer (PFE) (37.27, -.45%) & BioNTech (BNTX) ($96.96, -3.1%) had come to an agreement with the U.S. government to supply another 100M doses of their version of the COVID-19 vaccine, while over 1 million people have now received their first dose of the vaccine.  On a side note, it is interesting to point out that McKesson (MCK) ($170.78, +.42%) seems to be positioned to be a major winner in the coming months as they are managing the distribution of the US government’s Operation Warp Speed programmed it’s stocks up over 20% this year. 

RUSSELL RULES

With regard to the indices, the Russell 2000 had a stellar week as it soared to an all-time record high above the 2000 level for the first time ever ending at 2,003.95 (+1.7%) wk/wk and is now up 20.11% YTD. The tech-heavy Nasdaq Composite closed at 12,805 (+.4%) and is now eyeing the 13k level while being up a ridiculous 42.7% YTD.  The Dow ended the week at 30,200 (+.1%) wk/wk & is up 5.8% YTD. However, the S&P 500 pulled a little back and closed at 3,703 (-.2%) wk/wk and remains up 14.6% YTD. 

Highly weighted Apple (AAPL) moved up a sizable +4.2% this week to close at $131.97/share as it confirmed, to much fanfare, that it is planning to produce autonomous electric vehicles which will have their own “breakthrough battery technology” by 2024. What can’t Apple do?… Probably not much, as they are amazingly armed with a ridiculous balance sheet and a market cap of $2.24 Trillion. 

THE “MACRO”

The macroeconomic schedule produced a number of reports as follows: On Wedenesday, we received the Total retail sales dropped 1.1% month/month in November while excluding autos, it dropped .9%. The NAHB Housing Market Index dropped to 86 in December. Business inventories rose .7% in October. The preliminary IHS Markit Manufacturing PMI for December dropped to 56.5 in November as the Services PMI dropped to 55.3. in November. The weekly MBA Mortgage Applications Index rose 1.1%. On Thursday, the initial claims report for the week ending December 12 confirmed a rise by 23k to 885k while continuing claims for the week ending December 5 dropped by 273k to 5.508M, a level last seen in March of this year when all hit the sell button. The Housing starts report confirmed a rise by 1.2% month/month in November to a seasonally adjusted annual rate of 1.547M. The Building permits report confirmed a sizable rise by 6.2% month/month to 1.639M. The Philadelphia Fed Index fell again to 11.1 in December. On Friday, The Conference Board’s Leading Economic Index report showed a rise by .6% month/month in November. The current account deficit report for Q3came in at $178.5B.

TECH HIGHLIGHTS

The highly weighted FAANG’s ended down week-over-week, except for Apple and Alphabet, as follows: Facebook (FB) closed at $267.40/share, -.26% Thursday down from $276.40/share a week ago. Apple (AAPL) closed up .77% on Thursday at $131.97/share and up from $126.66/share a week ago. Amazon (AMZN) closed at $3,172.69/share, -.39% Thursday & down from $3,201.65/share a week ago, Netflix (NFLX) closed at $513.97/share, -.1% Thursday, down solidly from $534.45/share a week ago, & Alphabet (GOOG) closed at $1,738.85/share, +.37% on Thursday day & up from $1,731.01/share a week ago. 

Shares of Microsoft (MSFT) closed at $222.75/share up from last Friday’s close of $218.59/share as it has been trending positively lately. Microsoft recently announced that it will design its now chips for its Surface PC. Intel (INTC) closed at $47.07 up 1.07% this week but slightly down from last Friday’s $47.46/share close.

Salesforce (CRM) closed at $225.78, -.73% and down from $227.43 last Friday. Recently, Salesforce (CRM) confirmed that they have acquired Slack Technologies (WORK) for a $27.7B cash and stock deal which many believe may present a major challenge to the momentum that Microsoft (MSFT) and Azure have enjoyed but for the time being shareholders seem to be digesting the transaction.

Peter Thiel co-founded software firm Palantir Technologies (PLTR) closed at $27.75/share, -3.28% but bouncing back from the $25.97/share close last Friday. 

Elon Musk’s EV company Tesla (TSLA) shares closed at $661.77/share, +2.44% on Thursday but pulling back from the $695/share close last Friday as it entered the S&P 500 index this week.

ACROSS THE DOW 30

Johnson & Johnson (JNJ) closed at $152.47/share,+.35% down from last week’s close of $154.51 & pharmaceutical giant Merck (MRK) closed at $80.14/share,+.48% up from last Friday’s close of $79.53/share.

Shares of Coca-Cola (KO) closed at $53.44/share basically even with last Friday’s close of $53.74/share. Shares of Disney (DIS) closed at $173.73/share edging higher from last Friday’s at $172.89/share. Shares of Nike (NKE) closed at $141.60/share up from last Friday’s close at $137.28/share. Walmart (WMT) closed at $143.50/share,+.2+ but down again from last Friday’s close of $145.95/share as the US government is suing them over their alleged role in the the opioid crisis. 

Shares of Deere (DE) closed at $269.21/share,+.47% & up slightly from last week’s close of $270.70/share & Caterpillar (CAT) closed at $179.56/share,+.64% slightly down from last Friday’s close of $180.96/share.  

Boeing (BA) closed $217.15 down again from last Friday’s close of $219.75/share after recently bouncing back up as the 737 had been getting the green light from some officials and orders from others.

FINANCIALS

The financials sector had a good week moving up +1.9% as the Fed blessed the future repurchase of shares by large banks in Q1 2021 with income limitations. Within the sector saw the shares of Goldman Sachs (GS) close trading at $256.16/share nicely up from last Friday’s close of $242.13/share, American Express (AXP) closed at $117.35/share end basically even with the $117.53/share close last Friday, Visa (V) closed trading at $208.70/share down from the $211.31/share close last Friday & shares of Morgan Stanley (MS) closed at $68.09/share up from last Friday’s close of $64.18/share. JPMorgan Chase (JPM) closed at $124.52 up from the $119.08/share close last Friday & Citigroup (C) $60.57/share edging up again from the close of $59.06/share last week. PayPal Holdings (PYPL) closed at $238.64/share added ~$2 up from last Friday’s close of $236.45/share and Square (SQ) closed at $228.28 pulled back after the recent run & from last week’s close of $235.45/share.

GOLD & SILVER MARKETS

Gold prices closed at $1878 down from the $1,884/oz. close last week. This Friday silver prices closed at $25.91/oz. down a penny from the $25.93/oz. close last Friday. Barrick Gold Corp. (GOLD) closed trading at $22.90 down from last Friday’s close of $23.27/share after recently confirming that it had increased its operating cash flow by 80% Q/Q to $1.9B.  North American silver and gold producer Hecla Mining Company (HL) ended the week at $6.24/share down from last Friday’s close of $6.10/share. Hecla recently announced Q3 2020 financial and operating results. Phillips S. Baker, Jr., Hecla’s President and CEO stated, “Because of our strong operating performance and higher prices, Hecla had record adjusted EBITDA, generated the most free cash flow in a decade and repaid our revolver in full. These accomplishments were achieved because of our workforces’ resiliency and our commitment to health and safety. With the Lucky Friday ramp-up ahead of schedule, the expected improvements at Casa Berardi, and our modest planned capital expenditures, we are well positioned to further strengthen our balance sheet, increase exploration activities, and pay our enhanced dividend.” 

MONEY UPDATE

The U.S. Dollar Index strengthened to end the week at 90.36 marginally down from 90.01 last Friday.

The 2-yr Treasury yield closed up 1 basis point at .121% this week, the 10-yr yield moved down 2 basis points ending at .933% while the 30-yr yield ended at 1.662% down from 1.693% last Friday.

TRADING NEXT WEEK

We will have a shortened trading week again as the markets will close early on Friday, January 1, 2021. 

NEXT WEEK’S KEY MACROECONOMIC DATA

The macroeconomic schedule will deliver the pending home sales report & the Chicago PMI.

STOCKS IN VIEW NEXT WEEK

• Shares of Fate Therapeutics (FATE) closed at $99.50/share up from $93.27 last Friday but not before establishing a new all-time high of $103.66 recently. Fate is enjoying nearly a $8.68 Billion market value. We started with this one folks over 3 years ago when it was in the $3 range. \

• • Fate is a clinical-stage biopharmaceutical company dedicated to the development of programmed cellular immunotherapies for cancer and immune disorders.

• • Recently, Fate presented a patient case study from the Company’s Phase 1 clinical trial of FT596, its universal, off-the-shelf, CD19-targeted chimeric antigen receptor (CAR) natural killer (NK) cell product candidate, at the 62nd Annual Society of Hematology Annual Meeting and Exposition and the street loved it. NK cells are the body’s first line of defense against viral infections and cancerous cells with an innate ability to rapidly seek and destroy transformed cells. NK cell therapy has the potential to 1) target multiple pathogenic antigens with measurably more efficient cytotoxicity, 2) be better controlled to reduce risk of cytokine storms and 3) be produced from a variety of sources without relying on patient-specific immune cells. Dr. Wayne Chu, Senior Vice President, Clinical Development of Fate Therapeutics stated, “The safety, pharmacokinetics and clinical activity observed following both the first and second single-dose treatment cycles of FT596 are compelling, especially when considering that the administered cell dose was significantly lower than the recommended cell dose of FDA-approved autologous CD19-targeted CAR T-cell therapies and that the heavily pre-treated patient was refractory to last prior therapy. We are excited the CAR component of FT596 has shown clinical activity at this low dose level, and we continue to enroll patients in dose escalation with FT596 as a monotherapy and in combination with rituximab. Our recent Phase 1 clinical data with FT516 in combination with rituximab, which demonstrate the potential of our novel hnCD16 Fc receptor to potentiate ADCC and drive complete responses, support our belief that the multi-antigen targeting functionality of FT596 may offer best-in-class potential for patients with B-cell malignancies.” 

• • We have made another investment in a private company called Cytovia Therapeutics that owns its own NK cell platform that some investors are calling “FATE 2.0”. They are seeking to go next year in Q2/Q3 as there is room in the markets for another NK cell company. Their website is www.cytoviatx.com.

• Shares of Atossa Therapeutics, Inc. (Nasdaq: ATOS) closed at $.884/share up from $.8496/share last week after recently announcing two equity financings that totaled $37M.

• • Atossa Therapeutics is a clinical-stage biopharmaceutical company seeking to discover and develop innovative medicines in areas of significant unmet medical need with a current focus on breast cancer and COVID-19.

  • Atossa recently announced blinded preliminary results from its Phase 1 clinical study using Atossa’s proprietary drug candidate AT-301 administered by nasal spray. AT-301 was found to be safe and well tolerated in this study at two different dose levels in both single and multiple dose forms over 14 days. AT-301 is being developed for at home use for patients recently diagnosed with COVID-19. There are currently no FDA-approved therapies to treat COVID-19 at home. Learn more now.

• Shares of INVO Bioscience (NASDAQ: INVO) closed at $3.07/share.

INVO Bioscience, Inc. (INVO) is a medical device company focused on creating alternative treatments for patients diagnosed with infertility and developers of INVOcell®, the world’s only in vivo Intravaginal Culture System. Industry forecasts suggest that only 1% to 2% of the estimated 150 million infertile couples worldwide are currently being treated. INVO’s mission is to increase access to care and expand infertility treatment across the globe with a goal of improving patient affordability and industry capacity. Since January 2019, INVO Bioscience has signed commercialization agreements in the United States, India, as well as parts of Africa and Eurasia and Mexico for the INVOcell device.

• • Recently, INVO filed an 8k highlighting three new partners that they have established to distribute or develop invocell only clinics in Malaysia and North Macedonia. 

• • Colliers International Securities analyst Kyle Bauser, Ph.D. recently initiated coverage on INVO with a BUY rating and a $5 Target Price. His report is titled “A More Affordable Option Than Traditional In-Vitro Fertilization.” You can contact him at kyle.bauser@colliers.com.

• • We expect that Roth Capital will roll out analyst coverage prior to year end or early in 2021 as they are well past the 30-day mark of the equity raise of $13M that they led for INVO.

• Shares of NeuBase Therapeutics (NBSE) closed trading at $7.64 down from last Friday’s close of $8.43 as continues to be seemingly caught in a trading band between the $7.50’s and the $8.50’s.

• • NeuBase is developing the next generation of gene silencing therapies with its flexible, highly specific synthetic antisense oligonucleotides. The proprietary NeuBase peptide-nucleic acid (PNA) antisense oligonucleotide (PATrOL™) platform allows for the rapid development of targeted drugs, increasing the treatment opportunities for the hundreds of millions of people affected by rare genetic diseases, including those that can only be treated through accessing of secondary RNA structures. Using PATrOL technology, NeuBase aims to first tackle rare, genetic neurological disorders.

• • Recently, NeuBase announced positive in vitro and in vivo preclinical data for its PATrOL™-enabled anti-gene therapies for the treatment of myotonic dystrophy type 1 (DM1). These new data show that PATrOL-enabled Compound A can rapidly resolve mis-splicing without negatively impacting DMPK protein levels. They also support the potential of NeuBase’s anti-gene approach to comprehensively treat the underlying cause of DM1. Curt Bradshaw, Ph.D., Chief Scientific Officer of NeuBase stated “Despite the fact that the genetic basis of DM1 is well understood today, there is still an urgent need to find the first genetically-targeted, disease-modifying treatment option for affected patients. DM1 is caused by a genetic mutation in the DMPK gene leading to mis-splicing of a broad spectrum of genes and DMPK protein insufficiency. A treatment option that addresses mis-splicing while retaining functional DMPK protein levels may be key to treating all aspects of DM1.”

  • This week, I hosted a FREE Presentation & Q&A Event for our sister organization Tribe Public with the CEO & Founder of NeuBase Therapeutics (NASDAQ: NBSE) ($7.80/share), Dietrich Stephan, Ph.D., an industry veteran who is considered one of the fathers of the field of precision medicine. The presentation is titled “Accelerating the Genetic Revolution with a New Class of Synthetic Medicines.” You can view the recording at the Tribe Public Channel. 

  • We and they company expect to successfully negotiate a corporate licensing deal of some king prior to their one-year anniversary of their April, 2020 equity financing. 

• We continue to like clean hydrogen solution provider Plug Power (PLUG) which closed at $35.58 up from $31.63 last Friday after hitting a new all-time high of $37.11 this week. It has been a nice ride this fall from the $10.50 rage when we identified it. 

• • Recently, PLUG announced that is expanding is relationship with Walmart (WMT).

• • Recently, PLUG confirmed that they had sold 38M shares priced at $22.25/shares raising a whopping $845.5M which represented about 9.1% of the shares outstanding and brings their capital to the $1.7B range.

QUOTE OF WEEK

“If there is one common theme to the vast range of the world’s financial crises, it is that excessive debt accumulation, whether by the government, banks, corporations, or consumers, often poses greater systemic risks than it seems during a boom.” — Carmen Reinhart

Thanks again for your attention this week. Please continue to share your thoughts, questions, & ideas as we move forward. 

In the meantime, please enjoy the balance of the weekly newsletter’s videos, quotes, updates. 

Economic Reports

The macroeconomic schedule produced a number of reports as follows: On Tuesday, the Existing home sales report confirmed a drop by 2.5% month/month in November to a seasonally adjusted annual rate of 6.69M as the supply of existing homes is currently at an all-time historical low. The Conference Board’s Consumer Confidence Index report confirmed that it fell to 88.6 in December. The third estimate for Q3 GDP moved up to 33.4% while the GDP Price Deflator moved down to 3.5%. On Wednesday, the Personal income report confirmed a drop by 1.1% month/month in November while personal spending dropped .4%. The PCE Price Index report came in even while the Core PCE Price Index was felt too. The Initial claims report for the week ending December 19 shoed a drop by 89k to 803k while continuing claims for the week ending December 12 fell by 170k to 5.337M. New home sales dropped a sizable 11% month/month to 841k in November while on a year/year basis, new home sales is up 20.8%. New orders for durable goods rose .9% month/month in November and when excluding transportation it rose .4%. The final reading for the December University of Michigan Index of Consumer Sentiment was moved down to 80.7 as consumer sentiment improved from November. The FHFA Housing Price Index report for December confirmed a rise 1.5%. The weekly MBA Mortgage Applications Index moved by .8%.

Investing & Inspiration

“If there is one common theme to the vast range of the world’s financial crises, it is that excessive debt accumulation, whether by the government, banks, corporations, or consumers, often poses greater systemic risks than it seems during a boom.” — Carmen Reinhart

“It amazes me how people are often more willing to act based on little or no data than to use data that is a challenge to assemble.” ― Robert Shiller

“A bull market is like sex. It feels best just before it ends.” — Barton Biggs

“The investor’s chief problem — even his worst enemy — is likely to be himself.” — Benjamin Graham

“No profession requires more hard work, intelligence, patience, and mental discipline than successful speculation.” – Robert Rhea

“The most contrarian thing of all is not to oppose the crowd but to think for yourself.” — Peter Thiel

“Money is like a sixth sense – and you can’t make use of the other five without it.” – William Somerset Maugham

“Compound interest is the eighth wonder of the world. He who understands it, earns it. He who doesn’t, pays it.” — Albert Einstein

“The stock market is a device for transferring money from the impatient to the patient.” – Warren Buffett

“Thousands of experts study overbought indicators, head-and-shoulder patterns, put-call ratios, the Fed’s policy on money supply…and they can’t predict markets with any useful consistency, any more than the gizzard squeezers could tell the Roman emperors when the Huns would attack.” – Peter Lynch

“Investing puts money to work. The only reason to save money is to invest it.” – Grant Cardone

“Formal education will make you a living; self-education will make you a fortune.” – Jim Rohn

“You cannot save time for your future use however you can invest time for your future.” – John F. Heerdink, Jr. 

“We always live in an uncertain world. What is certain is that the United States will go forward over time.” – Warren Buffett

“Never test the depth of the river with both of your feet.” – Warren Buffet

“Know what you own, and know why you own it.” – Peter Lynch

“Liquidity is only there when you don’t need it.” -Old Proverb

“There is no such thing as no risk. There’s only this choice of what to risk, and when to risk it.” – Nick Murray

“If you want to be a millionaire, start with a billion dollars and launch a new airline.” – Richard Branson

“Fear incites human action far more urgently than does the impressive weight of historical evidence.” – Jeremy Siegel

“In investing, what is comfortable is rarely profitable.” – Robert Arnott

“Spend each day trying to be a little wiser than you were when you woke up.” – Charlie Munger

“The entrance strategy is actually more important than the exit strategy.” – Edward Lampert

“The rivers don’t drink their own water; Trees don’t eat their own fruits. The sun does not shine for itself, And flowers do not spread their fragrance For themselves. Living for others is a rule of nature” – PopeFrancis

“It is impossible to produce superior performance unless you do something different from the majority.” – John Templeton

“Inaction and patience are almost always the wisest options for investors in the stock market.” – Guy Spier

“Remember that the stock market is a manic depressive.”  – Warren Buffett

“An investment in knowledge pays the best interest.” – Benjamin Franklin

“I believe the returns on investment in the poor are just as exciting as successes achieved in the business arena, and they are even more meaningful!” -Bill Gates

“Every portfolio benefits from bonds; they provide a cushion when the stock market hits a rough patch. But avoiding stocks completely could mean your investment won’t grow any faster than the rate of inflation.” – Suze Orman

“The tax on capital gains directly affects investment decisions, the mobility and flow of risk capital… the ease or difficulty experienced by new ventures in obtaining capital, and thereby the strength and potential for growth in the economy.” – John F. Kennedy

“If all the economists were laid end to end, they’d never reach a conclusion.
-George Bernard Shaw

“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, Former Ceo of Disney

“In the short run, the market is a voting machine. But in the long run, it is a weighing machine.” – Ben Graham

“In investing, what is comfortable is rarely profitable.” -Robert Arnott

“The fundamental law of investing is the uncertainty of the future.” -Peter Bernstein

“How many millionaires do you know who have become wealthy by investing in savings accounts?” -Robert G Allen

“Greed is all right, by the way. I think greed is healthy. You can be greedy and still feel good about yourself.”-Ivan Boesky

“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

“I talk about macro themes a lot because they are fun to talk about, but it is the risk management that is the most important thing. The risk control is all bottom-up. I structured the business right from the get-go so that we would have lots of diversification.” -Michael Platt

“Blaming speculators as a response to financial crisis goes back at least to the Greeks. It’s almost always the wrong response.” -Larry Summers