Second Wave Fears & Expanded Fed Policy Swings Markets

This weekend the current COVID-19 fear of the day, the “second wave,” grew as it was reported that nearly half of the US was seeing cases uptick which could retard the reopening steps and delay recovery. In reaction, the futures were down significantly heading into Monday’s open and once we opened the Dow dropped as much as 1000 points along with precipitous drops in the other indices.

However, our good ole pals, The Federal Reserve Board, came to the rescue adding stimulus to the market and the market responded positively swinging into the close. Specifically, the Fed announced updates to the Secondary Market Corporate Credit Facility (SMCCF), which will begin buying a broad and diversified portfolio of corporate bonds to support market liquidity and the availability of credit for large employers. As detailed in a revised term sheet and updated FAQs, the SMCCF will purchase corporate bonds to create a corporate bond portfolio that is based on a broad, diversified market index of U.S. corporate bonds. This index is made up of all the bonds in the secondary market that have been issued by U.S. companies that satisfy the facility’s minimum rating, maximum maturity, and other criteria. This indexing approach will complement the facility’s current purchases of exchange-traded funds. The Primary Market and Secondary Market Corporate Credit Facilities were established with the approval of the Treasury Secretary and with $75 billion in equity provided by the Treasury Department from the CARES Act.

As a result, we saw the S&P 500 close up .83% at 3,066.59 all 11 S&P 500 sectors ended the session in the gree with the financials sector up +1.4% led the way. The Dow recovered from its intraday low to add .62% as Dow 30 component Walmart (WMT) closed at $118.08/share up .3% after announcing that they were moving into a new partnership with Shopify (SHOP) which closed at $805.47 up a sizable+8.5%. The Russell 2000 jumped 2.3%. The Nasdaq climbed 1.43% closing at 9,726.02 and is eyeing the 10k level once again.

The FAANG stocks ended in positive territory across the board as follows: Facebook (FB) closed at $232.50/share up 1.71%, Amazon (AMZN) closed at $2,572.68 up 1.09%,  Apple (AAPL) closed at $342.99/share up by 1.24%, Netflix (NFLX) gained 1.78% closing at $425.50/share, & Alphabet (GOOG) closed at $1,419.85/share up by .47%. I would continue to expect market volatility than cam back into vogue last week and trade accordingly.

Gold gold closed at $1,727/oz (-4) & silver prices closed at $17.50/oz (-.11). North American silver and gold producer Hecla Mining Company (HL) closed at $3.13/share up .97% while First Majestic Silver (AG) lost 1.3% closing at $9.14/share.

Oil prices bounced up 1.9% as it closed at $36.94/bbl. Energy leaders Chevron (CVX) closed at $91.23/share down 1.26%, Exxon (XOM) closed at $47.14/share down .06% & highly leveraged Occidental Petroleum Corporation (OXY) closed at $19.05/shareup 2.97%. 

On the macroeconomic front, the Empire State Manufacturing Survey for June moved up to -0.2 after hitting record lows in April and May.

The 2-yr US treasury yield flat at .18% & the 10-yr yield ended flat at .70%. The U.S. Dollar Index weakened by .6% to end at 96.71. 

Here’s a couple of other equities that moved significantly higher today:

• Shares of Neubase Therapeutics (NBSE) continued to find rarified air today closed at $10.32/share up a whopping 22.27% today after touching $10.58/share a new intraday all-time high. As we have been stating, we are following Neubase Therapeutics (NBSE) for a number of reasons including its development of a modular antisense peptide nucleic acid (PNA) platform with the capability to address rare genetic disease caused by mutant proteins with a single, cohesive approach,  but it also because it may be added to a Russell index this month. Here’s the preliminary list of additions. where you will find NBSE listed. Here are the following June dates for Russell indices inclusion for 2020:

  • June 12 & 19 – US index add & delete lists (reflecting any updates) posted to the FTSE Russell website after 6 PM US eastern time.
  • June 15 – “lock down” period begins – US index adds & delete lists are considered final
  • June 26 – Russell Reconstitution is final after the close of the US equity markets.
  • June 29 – equity markets open with the newly reconstituted Russell US Indexes.]

• Shares of OneConnect Financial Technology (OCFT) jumped 23.22% today closing at $19.26/share and is now sporting a $7.11B market cap. No news was reported since their last earnings statement on May 5, 2020, where they reported revenue growth 

TOMORROW

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

• The Retail Sales report for May
• The Capacity Utilization and Industrial Production for May
• The Business Inventories for May
• The NAHB Housing Market Index for June.
• Fed Chair Powell will provide his semiannual monetary policy testimony

WATCH LIST

• Shares of Fate Therapeutics (FATE) closed at $31.91/share up 3.77% still below its recent 52-week high of $37.24 but up from its 52-week low of $12.59.  Last week announced on June 11th that it had closed an underwritten public offering of 7,108,796 shares of its common stock, which included 927,324 shares that were issued pursuant to the full exercise of the underwriters’ option to purchase additional shares, at a public offering price of $28.31 per share. Aggregate gross proceeds from this offering, including the exercise of the option, were approximately $201.3 million, prior to deducting underwriting discounts and commissions and estimated offering expenses. Fate Therapeutics, Inc. (FATE), a clinical-stage biopharmaceutical company dedicated to the development of programmed cellular immunotherapies for cancer and immune disorders. Are you still invested in Fate after meeting them via this newsletter and attending meetings over the last couple of years when it was in the $3-4 range?… Recently, Fate announced that the U.S. Food and Drug Administration (FDA) has cleared the Company’s Investigational New Drug (IND) application for FT538, the first CRISPR-edited, iPSC-derived cell therapy. FT538 is an off-the-shelf natural killer (NK) cell cancer immunotherapy that is derived from a clonal master induced pluripotent stem cell (iPSC) line engineered with three functional components to enhance innate immunity: a novel high-affinity, non-cleavable CD16 (hnCD16) Fc receptor; an IL-15/IL-15 receptor fusion (IL-15RF); and the elimination of CD38 expression. The Company plans to initiate a clinical investigation of three once-weekly doses of FT538 as monotherapy in acute myeloid leukemia (AML) and in combination with daratumumab, a CD38-directed monoclonal antibody therapy, for the treatment of multiple myeloma.
• Shares of INVO Bioscience (INVO) closed at $3.49/share up 5.44% today. INVO Biosciences (INVO) has made a number of moves to build out its organization while focusing its efforts to increase access to its INVOcell procedure globally. On May 26, the company reversed its outstanding share count 1-20 and now has ~7.8M shares with 15% in the hands of insiders.  INVO Bioscience’s 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. On Friday last week, INVO effected a 1-for-20 reverse stock split. It will be exciting to see how this company moves forward and how the stock performs with less 8 million shares issued outstanding post the reverse and the company now showing up on low float lists. Steve Shum, Chief Executive Officer of INVO Bioscience, stated, “As we continue to improve our commercialization activities and expand the awareness of our FDA-cleared INVOcell device both domestically and abroad, we also set the objective to improve the capitalization structure of the company in order to enhance our public company visibility and attract a larger audience of investors. Today’s announcement is an important step in that process.”  Recently they added cash on the balance sheet raising convertible debt (conversion price is $3.60/share) to foster growth initiatives in the back half of this year. Currently, it is estimated that only 1% to 2% of the estimated 150 million infertile couples worldwide are being treated, but help is on the way…Recently, The Morning Blend aired an interview on WTMJ-4 Milwaukee where Dr. Ellen Hayes, a Reproductive Endocrinologist and Infertility Specialist from Vios Fertility Institute, discussed information regarding their new research in health, pregnancy, and COVID19. Dr. Hayes also shares their research and a new offering of INVO Bioscience’s  (INVO) FDA cleared infertility treatment called INVOcell The INVOcell technology, which continues to gain worldwide recognition and adoption, provides an in-vivo incubation solution that can help increase access and capacity to the large underserved global fertility market. The INVO Procedure is a revolutionary in vivo method of vaginal incubation that offers patients a more natural and intimate experience and more cost-effective. For the rest of 2020 Vios Fertility Institute is giving a special offer for InVoCell. The offer includes retrieval, monitoring, fresh embryo transfer for $6500, it normally costs $7200, which is still significantly less expensive than traditional lab-intensive IVF. Please watch the concise interview by clicking this link now!

• Shares of Atossa Therapeutics (ATOS) closed at $3.06/share today after reaching a new high of $3.48 recently as interest continues to swell around their breast cancer treatment programs and their COVID-19 drug candidates. Atossa Therapeutics, Inc. (Nasdaq: ATOS), 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, announced recently that it has begun the development of a second COVID-19 program using its proprietary drug candidate AT-301, to be administered by nasal spray as is teaming with nasal spray specialist firm Summit Biosciences. AT-301 is Atossa’s proprietary formula intended for nasal administration in patients immediately following a diagnosis of COVID-19 but who have not yet exhibited symptoms severe enough to require hospitalization. Atossa confirmed that it is intended for at-home use to proactively reduce symptoms of COVID-19 and to slow the infection rate so that a person’s immune system can more effectively fight SARS-CoV-2 (coronavirus). Atossa also intends to conduct testing to determine whether AT-301 can be used as a prophylaxis to prevent or mitigate SARS-CoV-2, with the goal that it could become a “bridge to the vaccine” and be useful in the next phase of the coronavirus pandemic. CEO of Atossa, Dr. Steven Quay, MD, PhD, author and physician-scientist, announced the availability of his 158-page book, “Your COVID-19 Survival Manual: A Physician’s Guide to Keep You and Your Family Healthy During the Pandemic and Beyond,” in paperback and eBook format on his website, www.DrQuay.com, beginning Monday, June 8, 2020. Proceeds from the book will go to military veterans performing COVID-19 relief work in their communities. 

Economic Reports

• On Monday, we did not receive any significant reports.
• On Tuesday, we received the NFIB Small Business Optimism Index report for May confirmed a rise to 94.9 from 90.9 in April. The April job openings report showed a decline to 5.046M from a revised 6.011M in March. The Wholesale inventories report showed a rise of .3% in April.
• On Wednesday, we received the Consumer Price Index Report for May confirmed a drop of .1% month/month while the Core CPI, excluding food & energy, also dropped by .1%. The weekly MBA Mortgage Applications Index Report showed a 9.3% move higher.
• On Thursday, we received the Initial jobless claims report for the week ending June 6 declined by 355k to a 1.542M & continuing claims for the week ending May 30 dropped by 339k to an eye-popping 20.929M. The Producer Price Index for final demand report rose .4% month/month in May while the index for final demand, which excluded food & energy, dropped .1% leaving the year/year rates at -.8% & .3%.

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

Tomorrow

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

• The preliminary University of Michigan Index of Consumer Sentiment for June
• The Export and Import Prices for May