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“Stimulus Rolling With COVID-19, Oil, McDonald’s, Russell 2000 Surge, Major Indices End Positively” Vista’s Daily – March 19, 2020

By John F. Heerdink, Jr.

It was another “yoyo” kind of day for the major indices which ended in positive territory after experiencing a decent amount of volatility throughout. More stimulus rolled out in the form of further Fed support which established a Money Market Mutual Fund Liquidity Facility (MMLF) a new acronym for most of us, but hopefully, this will add ammunition for a positive outcome and stability. The ECB & Bank of Japan also announced that they were implementing an emergency bond-buying program to do the same. We also heard that the Bank of England cut interest rates and it will be increasing daily asset purchases with the goal of adding its own stability measures. The US Congress continued to mull over the $1.2T or $1.3T stimulus package as we continue to see reports that the spread of COVID-19 is continuing to grow and that might take up to 18-months to deal with. We also heard that more of the US and countries abroad are seeking to lock down their borders and citizens in a worldwide containment initiative while a number of groups work at possible vaccines, treatments, and cures. Fingers are crossed worldwide that we see some light at the end of this current dark tunnel soon.

At the close of trading the S&P 500 moved higher by +.47%, the Dow added +.95%% while McDonalds (MCD) surged +8.89% today, the Nasdaq increased by +2.3% & the Russell 2000 jumped a healthy +6.82%. The FAANG stocks gained ground today except for Apple (AAPL) which closed at $244.78/share down by -77%. Amazon (AMZN) closed at $1,830/share, up by +1.23%. Facebook (FB) closed at $153.13/share,+4.2%, Alphabet (GOOG) closed at $1,115.29/share, +1.69% & Netflix (NFLX) closed at $332/share, up by a sizable +5.25%. 

Oil was an amazingly positive story today as President Trump stepped into the mix suggesting he would get into the oil skirmish with Saudia Arabia and Russia. Oil closed at $25.28/bbl up a whopping 24%. Gold dropped down at $1476/oz & silver closed up at $12.16/oz. U.S. Treasury yields moved higher today. The 2-yr yield moved down aggressively by 14 basis points to .38% & the 10-yr yield moved lower by 12basis points to 1.12%. The U.S. Dollar Index jumped another +1.5% to 102.67. 

A couple of economic reports surfaced as the Initial claims for the week ending March 14 confirmed a move higher by 70k to 281k while continuing claims for the week ending March 7 was confirmed to have moved higher by 2k to 1.701M.
The Philadelphia Fed Index for March decreased to -12.7. The current account deficit for Q4 totaled $109.8B. 

Irvines’s Biomerica Inc. (NASDAQ: BMRA) was an amazingly bright spot again today jumping into the close up +55% at $16/sh after skyrocketing +340.17% yesterday. They announced yesterday that it had commenced shipping initial samples of its COVID-19 IgG/IgM Rapid Test (a finger prick blood test with results in 10 minutes, that can be performed by trained professionals anywhere, e.g. airports, schools, work, pharmacies, and doctors’ offices) to countries outside the US. Evaluation test kits have been requested by Ministries of Health in multiple countries through the Company’s distribution partners who are working with their government agencies to assess the tests and forecast demand. This disposable point-of-care serology test is different than the current polymerase chain reaction (PCR) tests in that initial studies indicate that serology tests can identify if someone has been exposed to the COVID-19 virus, and can further detect if a person was recently infected with the disease even if they have never shown or are no longer showing symptoms. This can help health agencies focus on prior contacts of persons previously infected. Existing PCR tests generally only show positive if a person is currently infected and the virus is still present. Furthermore, PCR tests require patient samples to be sent to a lab, thus increasing the cost of the test and reducing the speed to obtain a result. Biomerica’s test could also be used in conjunction with the PCR test by rapidly pre-screening larger groups of individuals, who if tested positive could be further tested using a PCR test for verification. Biomerica is positioned to begin filling large international orders of these disposable one-use tests within weeks, assuming international product shipping channels remain open and active. In addition, Biomerica has begun the application process with the FDA under the COVID-19 Emergency Use Authorization (EUA), aimed at the possible clearance and eventual use of the test in the US. At this time, the product is not available for sale or use in the US. Biomerica is also announcing that it has filed a provisional patent application with broad claims around technology that can be used to identify several Coronaviruses including SARS-CoV-2, SARS, MERS and potential future mutations or strains of these viruses. Biomerica expects to sell these disposable, single-use devices for less than $10 per test.

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.

On Wednesday, On Wednesday, the Housing starts report confirmed were greater than expected February as it came in at a seasonally adjusted annual rate of 1.599M, however, building permits cam in lower than expected at 1.464M. The weekly MBA Mortgage Applications Index Report showed a drop of -8.4%.

On Thursday, the Initial claims for the week ending March 14  confirmed a move higher by 70k to 281k while continuing claims for the week ending March 7 was confirmed to have moved higher by 2k to 1.701M.
The Philadelphia Fed Index for March decreased to -12.7. The current account deficit for Q4 totaled $109.8B. 

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:

  • The Existing Home Sales for February

Videos

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