“Coronavirus, Job Claims, Oil, Markets & Four Healthcare Stocks in Focus” – Vista’s Weekly For April 3, 2020

This week, we saw the number of worldwide coronavirus cases grow to more than 1 million while the number of worldwide deaths jumped to 54,000. The number of people that have recovered from coronavirus is up to 218,000. In the US we now have over 266,000 cases up from 86,012 last Friday and 7000 US citizens have now past away due to COVID-19. In response, as we all well know, we in the US continue to rollout social distancing, lockdown and shutdown initiatives to contain and hopefully win against the coronavirus, but for some reason, we still do not have a federal mandate ordering all states to shut down for any period of time and a number of states’ governors have not taken the responsibility to shut down their respective states so we continue to see a worsening situation. These actions have resulted in an abrupt halt to a significant portion of our economy which was again evidenced in the surge of US jobless claims that was reported to have jumped by over 3 million again to 6.648 million. On the positive side, the newly instated Paycheck Protection Program, part of the $2.2 trillion coronavirus relief package, began rolling out on Friday and is due to provide up to ~$350 billion of loans to small business owners and will help many. More importantly, I hope that we begin to make traction towards flattening the curve soon as more states jump on the bandwagon and that we also make significant progress towards finding one or more treatments for this deadly virus.

With all of this in mind and in a review of the markets, we experienced losses across the board when looking at the results week over week.  The Dow ended the week at 21,052.53, down by -2.7% and is now down -26.2% YTD. The S&P 500 ended the week at 2,488.65, representing a -2.1% weekly loss and is now down -23% YTD. The Nasdaq Composite closed at 7,373.08 on Friday, representing a weekly -1.7% downward move and is now down -17.8% YTD. The Russell 2000 moved sharply lower closing at 1,052.05 representing a weekly -7.1% decline and is now down a whopping -36.9% YTD. 

One of the bright spots of the week came from the energy sector which was up +5.4% as oil prices surged to end at $26.85/bbl up significantly from last week’s close of $21.65/bbl. Oil prices reacted to talks of a truce from Saudi Arabia, Russia, & U.S. negotiations that may result in a cut of oil production by ~10 million barrels per day. Chevron (CVX) & Exxon (XOM) moved up significantly this week to close respectively at $75.11, representing a dividend +6.78% and $39.21, representing a dividend +8.61%. 

The FAANG stocks results ended in a range of flat to down this week across the board.  Facebook (FB) closed at $154.18/share, -2.53% Friday, ($156.79/share a week ago), Amazon (AMZN) closed at $1,906.59/share, -.64% Friday, ($1,900.10/share a week ago), Apple, Inc. (AAPL) closed at $241.41/share, -1.44% Friday, ($247.74/share a week ago), Netflix (NFLX) closed at $361.76/share, -2.25% Friday, ($357.12/share a week ago) & Alphabet (GOOG) closed at $1,097.88/share, -2.05%, ($1,110.71/share a week ago.)

Gold prices closed at $1,628/0z. slightly down from $1,643/oz & silver prices closed higher at $14.48/oz slightly down from $14.61/oz last Friday. 

The U.S. Dollar Index strengthened to end the week at 100.61 up from 98.36 last week.  US Treasury yields were down week over week. The 2-yr Treasury yield closed at .225% down from .23%, the 10-yr yield closed at .596% down from .75%, & the 30-yr yield ended at 1.217% down from 1.244%. 

Here’s a summary of this week’s economic reports: On Monday, we received the Pending Home Sales report surfaced and it confirmed a rise by +2.4% in February. On Tuesday, we received the Conference Board’s Consumer Confidence Index Report for March which confirmed a decrease to 120, while the Chicago PMI decreased to 47.8 in March & the S&P Case-Shiller Home Price Index Report for January confirmed a rise by +3.1%. On Wednesday, we received the ISM Manufacturing Index Report for March which clocked in a reading of 49.1% slightly below the Mendoza line for expansion. The Total construction spending report confirmed a drop by -1.3% month/month in February while the Residential spending report confirmed a decrease by -.6% month/month & nonresidential spending dropped by -1.6% month/month. The ADP Employment Change report confirmed a net loss of 27k nonfarm payrolls in March. The weekly MBA Mortgage Applications Index surged+15.3%. On Thursday, we received a couple of economic reports. For the week ending March 28, the initial claims report confirmed a jump to a seasonally adjusted 6.648 million while continuing claims for the week ending March 21 jumped to 3.029 million. However, the trade deficit narrowed to $45.3 billion in January. Factory orders were flat month/month in February & shipments decreased -.2% month/month in February. On Friday, we received the March nonfarm payrolls report which confirmed a decrease by 701k while March private sector payrolls decreased by 713k. The March unemployment rate was 4.4%. March’s average hourly earnings rose by +.4%. The ISM Non-Manufacturing Index for March came in at 52.5% still above the expansion line.

I believe that we will continue to see abnormally high and a significant amount of volatility in the markets next week that will continue to produce opportunities. With this point of view in mind, I will continue to seek to use measured and periodic “bets” by investing in the Velocity Shares Daily 2x VIX Short-Term ETN (TVIX), a leveraged bet against the market, to hedge and/or increase the returns of my portfolio when the markets significantly rebound or swing in the 6-10% range. I will also seek to use the ProShares UltraPro QQQ (TQQQ), an ETF whose objective is to o deliver triple the daily returns of Nasdaq-100, when the markets have dropped in the 6-10% range to play at least a bounce in the opposite direction. Because of the significant volatility of these instruments and the fact that I do not have a crystal ball, I typically seek to invest over a course of four allotments to get to what I would am prepared to invest or trade when I go into each of these investment vehicles. I am happy to discuss this approach if you have time next week.

Also, keep an eye on our healthcare plays next week as breast cancer-focused Atossa Therapeutics (ATOS), Fate Therapeutics (FATE),  INVO Bioscience (INVO), &  Neubase Therapeutics (NBSE.)  Here are some quick updates on each of these companies:

• Atossa Therapeutics’ founder, Chairman, and CEO, Steven Quay, M.D., PhD., announced a new combination treatment with the potential to improve pulmonary function and reduce or eliminate mechanical ventilation in patients with the coronavirus infection. The treatment uses two drugs previously approved by the FDA for other conditions: nebulized (inhaled as a fine mist) heparin combined with N-acetylcysteine (NAC), termed “H-NAC.” Dr. Quay is currently scheduled to be interviewed on Fox News on Monday, April 6th (6 am pacific – 9 am eastern.) Atossa also announced its recent progress with its Phase 2 study administering oral Endoxifen in the “window of opportunity” between diagnosis of breast cancer and surgery, as well as the company’s proposed Phase 2 clinical trial to reduce mammographic breast density (MBD). Additionally, Atossa submitted materials to the FDA in advance of its scheduled April 30 meeting and has confirmed at least three years of stability data on its proprietary Endoxifen. Learn more.

• Fate Therapeutics (NASDAQ: FATE), a clinical-stage biopharmaceutical company dedicated to the development of programmed cellular immunotherapies for cancer and immune disorders,  announced a global collaboration and option agreement with Janssen Biotech, Inc. (Janssen), one of the Janssen Pharmaceutical Companies of Johnson & Johnson. Under the multi-year collaboration agreement, Janssen will contribute proprietary antigen-binding domains for up to four tumor-associated antigen targets. The Company will apply its iPSC product platform to research and preclinically develop new iPSC-derived chimeric antigen receptor (CAR) NK and CAR T-cell product candidates. The Company will receive $50 million in cash and $50 million from the purchase by Johnson & Johnson Innovation – JJDC, Inc. of newly issued shares of the Company’s common stock at a price per share of $31.00. Janssen will also reimburse the Company for all activities conducted under the collaboration.

• INVO Bioscience (INVO), a medical device company that provides novel solutions in assisted reproductive technologies to the reproductive health care community worldwide with its lead product, INVOcell, is a novel medical device, which is used in infertility treatment that enables egg fertilization and early embryo development in the woman’s body, announced its financial results for the year ended December 31, 2019, which was highlighted by a 199% increase of their topline revenues in 2019 while gross margins also grew to approximately 91% compared to approximately 82% in 2018. The growth was driven primarily by increased product sales in the U.S. as the Company’s U.S. commercialization partner, Ferring International Center, S.A. (“Ferring”), began to ramp their marketing activities as well as from recognizing $714,286 of the $5,000,000 Ferring seven-year U.S. exclusive licensing & distribution fee. Learn more. The Company further reported that the U.S. clinic locations which are trained to offer INVOcell have nearly tripled since their January 2019 agreement with Ferring & confirmed that each clinic location will vary in terms of implementation time and growth. Ferring has established a website, www.invocell.com, which provides information for patients and health care professionals, in addition to providing a tool to search for clinic locations that offer INVOcell. 

• Neubase Therapeutics (NASDAQ: NBSE) announced positive preclinical data from its pharmacokinetics studies in non-human primates (“NHPs”) and in vitro pharmacodynamics data in patient-derived cell lines. NeuBase believes these data validate the key advantages of the proprietary NeuBase peptide-nucleic acid (“PNA”) antisense oligonucleotide (PATrOL™) platform and support the Company’s decision to advance the development of its Huntington’s disease (“HD”) and myotonic dystrophy type 1 (“DM1”) programs, as well as the potential expansion of its therapeutic pipeline into other indications. Dr. George Church, professor of genetics at Harvard Medical School and member of the National Academy of Sciences, stated, “Given the activity and broad biodistribution observed in these studies and the potential for easier target definition, I believe the PATrOL™ technology may have a potent impact on the future of drug development and treatment of genetic diseases.”

In the meantime, please enjoy the weekend at home with the family, appreciate what you have, stay flexible in the markets to strike when the opportunity appears attractive, and plan and dream of what life may bring all of us in we can move forward safely through this period together. Please enjoy the balance of the weekly newsletter’s videos, quotes, updates and keep up the great work in helping our nation and world recover from the coronavirus epidemic.

Investing & Inspiration

“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

Tomorrow

Trading hours are normal next except that markets are closed on Friday in observance of Good Friday.

We are also due to receive the following significant economic data next week:

• The Fed minutes on Wednesday
• The consumer sentiment report on Thursday
• The consumer inflation report on Friday