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Markets Move Lower On Tuesday As Housing Starts Report Confirms Precipitous Drop In April

By John F. Heerdink, Jr.

We now have seen more than 4,867,515 confirmed cases of COVID-19 in the world with 1.664M cases that have recovered and more than 321k worldwide deaths. In the US, we have 1.55M confirmed cases with 291k that have recovered with 91,582 deaths. At the same time, the reopening processes across the US are proceeding for a number of dates and others are setting the stage like my home state of California that is still hunkered down in shut down mode. Stimulus measures are being pushed forward through the legislature and more, is on the way as many have collected their checks and these moves will hopefully speed up economic recovery.

Today, the stock market reversed into negative territory after yesterday’s positive move. On the macroeconomic front, we received the Housing starts report which confirmed a precipitous drop of 30.2% month/month in April to a seasonally adjusted annual rate of 891k while building permits dropped significantly by 20.8% month/month to a seasonally adjusted annual rate of 1.074M. Housing permits for single-family dwellings dropped a whopping 24.3% month/month to 669k. In a sort of a repeat from recent revelations and without much fanfare, the Fed’s Chair Jerome Powell & Treasury Secretary Mnuchin testified before the Senate Banking Committee respectively reiterating their commitment to support the use of all stimulus tools & the preparation to raise the risk & the lending of money.

As a result the S&P 500 closed down 1.05% as eleven of 11 S&P 500 sectors closed in the red led by energy (down 2.9%) and financials (down 2.5%). The Dow lost 1.59% after tow components reported their quarter including Walmart (WMT) closing at $124.95/share down 2.1% & Home Depot (HD) closing at $238.10/share down 3.0%. Walmart confirmed that they will discontinue jet.com, the online-only marketplace that they had acquired for $3B in 2016 citing that they are seeing strength in walmart.com brand. The Nasdaq closed down .54% & the Russell 2000 gave back 1.95 after yesterday’s whopping move up (6.1%). 

The popular FAANG stocks slowed overall and closed as follows: Facebook (FB) closed at $216.88/share, up by 1.73%, Amazon (AMZN) closed at $2,449.33/share, up .95%,  Apple (AAPL) closed at $313.14/share down by .58%, & Netflix (NFLX) dropped .34% closing at $451.04/share, & Alphabet (GOOG) closed at $1,373.49/share down .76%.

Oil prices jumped another today 1.5%  (+18% in the last 3 days) and closed at $32.30/bbl. This move came after the recent surfacing of the May IEA report confirming that global oil supply is set to fall by a “spectacular” 12 mb/d in May to a nine-year low of 88 mb/d, as the OPEC+ agreement takes effect and production declines elsewhere. Chevron (CVX) closed at $89.62/share down 3.17%, Exxon (XOM) closed at $43.94/share down by 3.09% & Occidental Petroleum Corporation (OXY) closed at $14.37/share down 4.64%. 

The 2-yr US treasury yield moved down 1 basis point to end at .18% & the 10-yr yield moved down by 3 basis points to end at .71%. The U.S. Dollar Index weakened by .1% to end at 99.55. 

Gold prices ended at $1,722/oz (+30) while silver prices closed at $17.78/oz (+.52). North American silver and gold producer Hecla Mining Company (HL) continued its recent run closing at $3.35/share up 6.35% while First Majestic Silver (AG) rose 1.73% closing at $9.42/share.

MOVERS

  • Shares Schrödinger, Inc. (Nasdaq: SDGR) rose 12.58% closing at $66.48s/share. SDGR’s physics-based software platform enables the discovery of high-quality, novel molecules for therapeutics and materials. Today SDGR announced its financial results for the first quarter ended March 31, 2020. They highlighted the following: Total revenue of $26.2 million and strong growth of 26% year-over-year, record software revenue of $23.8 million, up 28% year-over-year & the raised $209.6 million in net proceeds through an initial public offering.
  • Shares of Beyond Meat, Inc. (BYND) closed t $136.20/share up +4.75% today.  BYND reported the following financial highlights about 14 days ago: First Quarter 2020 Net Revenues Increased 141% Year-Over-Year to $97.1 Million, Gross Profit Improved to $37.7 Million or 38.8% Gross Margin, & Net income of $1.8 Million or $0.03 per Common Diluted Share.

TOMORROW

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

  • The weekly MBA Mortgage Applications Index

Markets

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Big Movers

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Bond Markets & US Dollar

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Economic Reports

  • On Monday, we received the NAHB Housing Market Index Report for May, which confirmed a rise of 37 up from 30 the month before.
  • On Tuesday, we received the Housing starts report which confirmed a precipitous drop of 30.2% month/month in April to a seasonally adjusted annual rate of 891k while building permits dropped significantly by 20.8% month/month to a seasonally adjusted annual rate of 1.074M. Housing permits for single-family dwellings dropped a whopping 24.3% month/month to 669k. 

Agriculture & Energy

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Biotech & Healthcare

Shares of Atossa Therapeutics, Inc. (NASDAQ: ATOS) closed at $1.75/share well above its 50-Day MA. Atossa 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. Recently announced Atossa announced their Q1 2020 Financial Results and confirmed the following progress:

  • Launched a new drug development program called COVID-19 HOPE to test AT-H201, a novel combination of two drugs that have been previously approved by the FDA for other diseases. The goal of the COVID-19 HOPE program is to develop a therapy to improve lung function and reduce the amount of time that COVID-19 patients are on ventilators. Atossa has applied to the FDA for approval to commence a clinical study in this setting.
  • Announced that Atossa has contracted with NYC Health + Hospitals/Metropolitan in New York City to conduct the COVID-19 HOPE study of AT-H201.
  • Announced positive interim results from Atossa’s Phase 2 study of oral Endoxifen to treat breast cancer in the “window of opportunity” between the diagnosis of breast cancer and surgery. A statistically significant (p = 0.031) reduction of about 74% in tumor cell proliferation was achieved over an average of 22 days of dosing. Proliferation was measured by Ki-67, a recognized standard measurement of breast cancer cell proliferation. Other recent progress with this program includes contracting with Avance Clinical to open a second site for the study in Geelong, Victoria, Australia, with the goal of increasing the rate of enrollment; applying to the Institutional Review Board for approval to open the second site; and, manufacturing sufficient Endoxifen necessary for all patients expected to enroll in this study\
  • Announced that recent input from the FDA on Atossa’s oral Endoxifen program will inform Atossa’s clinical trial strategy and study design both in the U.S. and in Stockholm, Sweden, where Atossa is planning a Phase 2 study to reduce MBD. Atossa plans to commence the MBD study in Stockholm after receiving approval by the European Medical Product Authority (MPA) and the re-opening of mammography clinics in Stockholm following the COVID-19 closures.

Maxim Group’s Sell-side Biotech Analyst Jason McCarthy issued an update report maintaining his BUY Rating on Atossa Therapeutics,  Inc. (NASDAQ: ATOS) with a $4/share 12-month price target. View Maxim’s report here.


INVO Bioscience (INVO) has made a number of moves to build out its organization while focusing its efforts to increase access to its INVOcell procedure globally. INVO’s lead product, the INVOcell®, is a patented medical device used in infertility treatment and is considered an Assisted Reproductive Technology (ART). ART includes all fertility treatments in which both eggs and embryos are handled outside of the body. In general, ART procedures involve removing mature eggs from a woman’s ovaries using a needle, combining the eggs with sperm in the laboratory, and returning the embryos to the woman’s body or donating them to another woman. The main type of ART is in vitro fertilization (IVF). INVO’s INVOcell is the first Intravaginal Culture (IVC) system in the world used for the natural in vivo incubation of eggs and sperm during fertilization and early embryo development, as an alternative to traditional In Vitro Fertilization (IVF) and Intrauterine Insemination (IUI). INVO’s mission is to increase access to care and expand fertility treatment across the globe with a goal to lower the cost of care and increase the availability of care. The Company believes the worldwide fertility treatment market to be severely underserved with only 1% to 2% of the estimated 150 million infertile couples being treated. Since January 2019, INVO Bioscience has signed commercialization agreements in the United States, as well as parts of Africa, Eurasia for the INVOcell device. On January 16, 2020, INVO and Medesole, a leading supplier of healthcare products in India and the Middle East, announced the signing of a joint venture to operate dedicated INVOcell clinics in India. According to the Indian Society of Assisted Reproduction, between 10% and 14% of Indians struggle with their fertility. In 2015, 27.5 million couples in India seeking children experienced difficulty conceiving. In urban areas, one out of six couples is impacted. According to market research, the India IVF market is expected to reach $1.45 billion by 2026, a 14.7% increase from 2019. This double-digit growth of infertility in India has made it a personal, as well as public health issue. Social stigma apart, infertility leads to tremendous financial and emotional stress for couples with the cost being a limiting factor for many couples who want to opt for this procedure. The Company further reported recently 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.

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Consumer Goods & Trends

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Financials & Fintech

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Materials & Natural Resources

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Technology & Beyond

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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, 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

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Tomorrow

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

  • The Employment Situation Report for April
  • The Wholesale Inventories for March

Videos

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