Dizzying US-China Trade War Headlines Lead To Records As SRPT, NBSE, ASO’s Rise!

Vista Partners Friday-Weekly Recap For Dec. 15, 2019

The broad markets on Friday suffered through the ups and downs of the continuing US-China Trade War saga headlines that were a bit dizzying at times, but we still managed to see the markets lift into record territory. Friday’s conclusion can be summed up as follows: there is a Phase One agreed to but not signed where the $250B of Chinese imports will still be hit with a 25% tariff, however, the tariff rate on $120B of Chinese imports will be 7.5% and down from the 15% that was contemplated. China will supposedly attempt to buy $40-50B in U.S. agriculture goods and the deal for Phase One is due to be signed in the first part of January. We also were hit with President Trump’s confirmation that “Phase Two” discussions are to be conducted immediately and are supposed to center around forced tech transfers & IP.

As a result on Friday, the S&P 500 & Nasdaq Composite both ended at new record highs again. The S&P 500 ended the day up +.o1% as the S&P 500 utilities (+.8%) and information technology (+.6%) sectors led the advance while the energy (-.9%), materials (-.8%), & financials (-.5%) sectors ended in negative territory. The S&P 500 is now up 36.4% YTD. The Nasdaq Composite gained +.2% and is up +31.6% YTD as Apple (AAPL) rose +1.36% ending at $275.15/share and hitting a new record high of $275.30. The Dow Jones Industrial Average ended up +.1% and is up +20.6% YTD. The Russell 2000 moved lower -.42% at the close of trading Friday is up +21.5% YTD. The “fear gauge” Vix (TVIX) ended significantly lower again at $54.76/share at the close of trading down -8.72% putting another nail into the bears. The Fed met again this week and left interest rates unchanged while suggesting at least a pause through next year citing persistently low inflation.

Economic Reports

No material economic data surfaced on Monday.

On Tuesday, we received the Nonfarm business sector labor productivity report which went down by -.2% in Q3. Unit labor costs rose by +2.5%. The NFIB Small Business Optimism Index for November confirmed a move higher to 104.7 from the October mark of 102.4.

On Wednesday, the Consumer Price Index (CPI) report shoed a positive move up +.3% m/m in November whie the core CPI, sans food and energy, moved up +.2%. The Treasury Budget for November came in as a deficit of $208.8B while the budget deficit over the last 12 months is $1.022T up from $1.018T in October. The fiscal y-t-d deficit is $343.3B up from the $305.4B a year ago. The weekly MBA Mortgage Applications Index jumped +3.8%.

On Thursday, we received the Producer Price Index for final demand (PPI) report which was flat m/m in November, however, core PPI that excludes food & energy went down by -.2%. Y/Y increases are now at +1.1% & +1.3%. Initial claims for the week ending December 7 surfaced showing an increase of 49k to 252k while continuing claims for the week ending November 30 went down by 31k to 1.667M.

On Friday, the Total retail sales report showed a move higher by +.2% month/month in November. When you take out autos, the retail sales moved up by +.1%. The Import prices report for November came in up +.2%. When you take out fuel, then they decreased by -.1%. The Export prices report increased by +.2%. When you take out agricultural products, then they were even. The Total business inventories report showed a move higher by +.2% m/m in October while Total business sales decreased by -.1%.

Investing & Inspiration

“For better or worse we’re a herd leader. We’re at the front of the pack, we are one of the first movers. First movers are interesting; you get to the good grass first, or sometimes the lion eats you.” -David Tepper

Tomorrow

I added Travena, Inc. (TRVN) in the $.75/share range this week and are looking for the continued turn up of shares beginning Monday. The 52-week range is $.38-$2.  On December 12, Trevena, a biopharmaceutical company focused on the development and commercialization of novel medicines for patients with central nervous system (CNS) disorders,  announced a poster presentation at the 58th Annual Meeting of the American College of Neuropsychopharmacology (ACNP), in Orlando, FL. The poster presentation featured results from a Phase 1 first-in-human study that evaluated the safety, tolerability, and pharmacokinetics (PK) of TRV250, the Company’s novel G protein-selective delta-receptor agonist being developed for the acute treatment of migraine. TRV250 was well-tolerated up to 30 mg, with a PK profile appropriate for an acute migraine therapy. There were no serious adverse events and no clinically significant changes in EEG, ECG, or other safety parameters. Mark A. Demitrack, M.D., Senior Vice President and Chief Medical Officer of Trevena, Inc. Mark A. Demitrack, M.D., Senior Vice President and Chief Medical Officer of Trevena, Inc. stated, “We are excited to be pursuing TRV250 as a potential new therapeutic option for migraine sufferers, many of whom struggle to achieve relief with currently available options. The positive data from this Phase 1 study informed our recently initiated proof-of-concept study, with topline data anticipated in the second half of next year.”