“Happy St. Patty’s Brings Stimulus & Rising Markets” Vista Partners Daily – March 17, 2020

Happy St. Patty’s Day to one and all. I truly hope that you are enjoying a green beer or a beverage of choice in the current worldwide contained state that we are living in.  We survived our first day of “Shelter In Place” in San Francisco which means we are enjoying even greater time with the family as just about everything is closed and we have been asked to stay home. We, like all, are keeping busy working through our 2019 tax returns, working out a bit, eating a bit more and of course exploring our wine collection. I also am spending a great deal of time speaking to all of you about the markets and placing some daily bets and adding to core positions as they come in. Keep the calls coming as it is great to hear from you and let’s figure out all of this together and make some money in the markets as we go.

As suggested yesterday, we thought we would see a bounce today after the harsh selloff and that is what we received. The ProShares UltrPro QQQ (TQQQ) ETF an investment that seeks daily investment results, before fees and expenses, that correspond to three times (3x) the daily performance of the NASDAQ-100 Index® was our “bet of choice” today, as we mentioned in yesterday’s recap as we sought to take advantage of that bullish disposition. The TQQQ  rose to an intraday high of $45.13/share before closing at $43.32 up +16.30%. Hopefully some of you had a bet on this pony as the US Government and the Fed continued to push forward stimulus measures again and the markets rebounded out of the gate even as worldwide cases of coronavirus have surpassed 190k. Tonight I would suggest that the Velocity Shares Daily 2x VIX Short-Term ETN (TVIX), a leveraged “bet” against the market rising would be the play for tomorrow as we should see this “yoyo’ ing” of the market continue on its recent ways if I am reading the tea leaves correctly as we should see at least a drop out fo the gate.

At the close of trading the S&P 500 rose by +6%, the Dow rose by +5.2%, the Nasdaq rose by +6.23% & the Russell gained +6.66%. The FAANG stocks rebounded today. Facebook (FB) closed at $149.42/share, +2.34%, Alphabet (GOOG) closed at $1,119.80/share, +3.27%.  Amazon (AMZN) closed at $1,807.84/share, +7.03% announcing that it will only receive vital supplies at its the US and the UK & other European warehouses until April 5th to make room for medical and household goods that have surged in demand.  Apple (AAPL) closed at $252.86/share up +4.4%  & Netflix (NFLX) closed at $319.75/share, up +7%.

Oil closed at $26.71/bbl down another -$.11//bbl or  -.41%.

U.S. Treasury yields moved higher today. The 2-yr yield moved up by 8 basis points to .45% & the 10-yr yield moved higher by 27 basis points to 1%. The U.S. Dollar Index jumped 1.7% to 99.81.

A few economic reports surfaced as 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.

San Francisco’s Vir Biotechnology (VIR) continued to be a bright spot rising another +9.83% to close at $50.26/share. Vir announced last week that it has signed a letter of intent with Biogen Inc. (BIIB) for the development and clinical manufacturing of human monoclonal antibodies for the potential treatment of COVID-19, the disease caused by the SARS-CoV-2 virus. Because of the urgency of the situation, the companies have begun work while a Clinical Development and Manufacturing Agreement is being negotiated. Subject to the completion of a definitive agreement, Biogen would continue cell line development, process development, and clinical manufacturing activities in order to advance the development of Vir’s proprietary antibodies. week a research collaboration agreement with the National Institutes of Health (NIH) and the National Institute of Allergy and Infectious Diseases (NIAID), Vaccine Research Center (VRC) to advance characterization and development of human monoclonal antibodies (mAbs) against coronaviruses, including SARS-CoV-2, the virus that causes the disease COVID-19. The joint project, which will begin this week, will augment ongoing efforts by both parties to identify antibodies that can be used to prevent or treat the infection with existing and emerging viruses and help inform the development of vaccines. Under the terms of the agreement, Vir and NIAID will work together to identify and optimize combinations of antibodies against coronaviruses, including SARS-CoV-2, SARS, and MERS, as well as antibodies that may be effective across additional types of coronaviruses. The two parties will exchange antibodies and other materials for testing in combination and individually and, by mutual agreement, will perform in vivo animal studies to analyze immune responses.

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.

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:

• Housing Starts and Building Permits for February
• The weekly MBA Mortgage Applications Index