“Strong Week But Weak Friday In The Markets” Vista Partners’ Friday Weekly Market Wrap For Feb.7, 2020

By John Heerdink LinkedIn Disclaimer

The broad markets overall rose this week (the biggest move in approx. 6-months) with a number of economic reports showing strong or steady moves including Friday’s Nonfarm payrolls report for January which moved higher by 225,000, the wholesale inventories report dropped by -.2% in December, & Consumer credit jumped by $22B in November. We also got the news this week that China will cut tariffs on $75B of U.S. goods as part of the Phase One Trade Deal by Feb 14th. However, Friday’s weak session saw indices drop across the board as the coronavirus worries & global growth concerns crept their way back into investors’ heads to end the week.

With the overall improved outlook this week leading up to Friday, US treasury prices lowered while yields rose as the inverse relationship dictates. The 2-yr yield moved up by 7 basis points ending at 1.39% while the 10-yr yield also moved up by 6 basis points to end at 1.58%. The U.S. Dollar Index strengthened by +1.3% to end at 98.69. Oil prices declined again this week ending down by -2.2% (down -17.4% YTD) closing at $50.42/bbl down from last week’s close of $51.64/bbl.

The Dow ended the week back over the 29k level again at 29,102.51, +3% week over week.

The S&P 500 ended the week at 3,227.71, representing a 3.2% weekly gain and now up 3% YTD. The information technology, +4.5%, materials, +4.5% led the pack of ten sectors that finished in the green this week but utilities, -.6%, sectors finished in the red.

The Nasdaq Composite closed at 9,520.51 on Friday, representing a weekly +4% jump and is up +6.1% YTD.

The Russell 2000 moved higher closing at 1656.78 representing a weekly +2.6% gain and is now down -.7% YTD.

The “fear gauge” Vix (TVIX) ended at $43.65/share up +2.71% today & down from $56.58/share last Friday’s close.

The FAANG stocks closed as follows on Friday and had an overall postive week of gains:

  • Facebook (FB) $212.33/share, +.7% ($201.91/share a week ago)
  • Amazon (AMZN) $2,079.28/share, +1.42% ($2,008.72/share a week ago)
  • Apple, Inc. (AAPL) closed at $320.03/share, -1.59% ($309.51/share a week ago)
  • Netflix (NFLX) $366.77/share, -.05%, ($345.09/share a week ago)
  • Alphabet (GOOG) $1479.23/share, +.20%, ($1434.23/share a week ago)

Markets

Symbol Name Last Price Change % Change

Big Movers

Shares of Moderna, Inc. (MRNA) shot up +16.9% on Friday closing at $12.24/share as stories that health officials are saying that its virus vaccine had “no glitches” to date.

Shares of Uber (UBER) closed at $40.63/shr,+9.5% today after beating Wall Street’s expectations and profitability forecast.

Symbol Name Last Price Change % Change

Bond Markets & US Dollar

Treasuries yields moved lower & the yield curve flattened over the course of the week as there was a fight to safety. The 2-yr yield went dropped from 1.48%, 16 basis points to 1.32% while the 10-yr yield dropped from 1.68%, 16 basis points to end at 1.52%.

The U.S. Dollar Index weakened over the course of the week from 97.86 to end at 97.37 off -.5%

 

Symbol Name Last Price Change % Change

Economic Reports

On Monday we received the ISM Manufacturing Index report for January which moved up to 50.9% & back into the expansion mode level. However total construction spending went down by -.2% month/month in December while residential spending moved higher bu +1.4% month/month & nonresidential spending lowered by -1.2% month/month.

On Tuesday, we received The Factory Orders Report which confirmed a rise of +1.8% month/month in December.

On Wednesday the ISM Non-Manufacturing Index Report for January clocked in a 55.5% reading in December. The Trade Balance report for December confirmed growth in the deficit to $48.9B. The ADP Employment Change report confirmed an estimated 291k jobs were created to private-sector payrolls in January. The weekly MBA Mortgage Applications Index rose 5%.

On Thursday, the Initial claims report for the week ending February 1 dropped by 15k to 202k while continuing claims for the week ending January 25 moved higher by 48k to 1.751Mn. The BLS reported that nonfarm business sector labor productivity rose by +1.4% in Q4 while unit labor costs rose +1.4%/

On Friday, we received the Nonfarm payrolls report for January which by 225,000. The wholesale inventories report dropped by -.2% in December. Consumer credit jumped by $22B in November.

Agriculture & Energy

Oil prices declined again this week ending down by -2.2% (down -17.4% YTD) closing at $50.42/bbl down from last week’s close of $51.64/bbl. Global growth concerns are certainly impacting the decline and OPEC’s movements to possibly cut production has not been able to overcome it.

Symbol Name Last Price Change % Change

Biotech & Healthcare

The S&P 500 healthcare sector closed at 1,199.276 up from 1,153.96 last Friday.

The Ishares Nasdaq Biotechnology ETF (IBB) moved higher this week closing at $1121.53 vs. last Friday’s close of $113.81. The 52-wk range is $96.03 – $123.74.

The NYSE Arca Biotech Index (^BTK) closed at 5,105.78 down from the 4,830.27 level last week.

Johnson & Johnson (JNJ) closed at $151.89/share slightly up from $148.87/share last Friday.

Shares of Atossa Therapeutics,  Inc. (NASDAQ: ATOS) closed at $1.50/share this week. Atossa Therapeutics is a clinical-stage pharmaceutical company developing novel therapeutics and delivery methods to treat breast cancer and other breast conditions, closed trading today at $1.49/share. Maxim Group’s Sell-side Biotech Analyst Jason McCarthy recently issued an update report upgrading ATOS shares to a Buy with a $4/share 12-month price target, stating that the company is “ready to advance its modified-release oral tablet of endoxifen to a P2 study for the treatment of mammographic breast density (MBD).”

Recently, Atossa issued the following letter from Dr. Steven C. Quay, President and CEO, to Atossa shareholders:

To Our Valued Shareholders:

I begin this letter with a sense of great pride about our accomplishments at Atossa. During 2019, we focused on developing our proprietary drug Endoxifen to reduce mammographic breast density (MBD) and to treat breast cancer after a woman is diagnosed but before her surgery. We advanced our goal of developing our intraductal microcatheter technology to deliver drugs and immunotherapies to treat breast cancer. Recent highlights in advancing our goals include:

Oral Endoxifen for MBD. Our lead program is to develop our proprietary oral Endoxifen to reduce MBD. MBD is an emerging public health issue affecting over 10 million women in the United States. Studies conducted by others have shown that MBD increases the risk of developing breast cancer and that reducing MBD can reduce the incidence of breast cancer. In 2019, we completed additional Phase 1 work with our oral Endoxifen, and, in December 2019, we contracted with South General Hospital in Stockholm, Sweden to conduct a Phase 2 study of our proprietary oral Endoxifen to reduce MBD. READ THE COMPLETE LETTER

This week I also had the distinct pleasure of interviewing Kyle Guse (pictured above), Chief Financial Officer of Seattle-based Atossa Therapeutics (NASDAQ: ATOS). a clinical-stage biopharmaceutical company developing novel, proprietary therapeutics and delivery methods for breast cancer and other breast conditions. They believe their innovative therapies and delivery methods can transform breast cancer treatment– with the goal of preventing breast cancer from developing in the first place to increase the odds of surviving for those who do develop this deadly disease. Mr. Guse has served as Chief Financial Officer, General Counsel and Secretary since January 2013. His experience includes more than 20 years of counseling life sciences and other rapid growth companies through all aspects of finance, corporate governance, securities laws, and commercialization. REVIEW THE HIGHLIGHTS.

Atossa announced that Kyle Guse, CFO will present a corporate overview at the 22nd Annual BIO CEO & Investor Conference being held on February 10 and 11, 2020, at the New York Marriott Marquis in New York City. Mr. Guse will present on Tuesday, February 11, 2020, at 10:45 am ET, in the Ziegfeld room. Mr. Guse will also be available for one-on-one meetings on February 11, 2020.

INVO Bioscience, Inc. (IVOB) is a medical device company focused on creating alternative treatments for patients diagnosed with infertility and developers of INVOcell®, the world’s only in vivo Intravaginal Culture System. Recently, The Crain’s Chicago Business publication wrote an interesting and related story highlighting how and why another fertility clinic is launching INVOcell to their patients titled: “A less expensive, more predictable alternative to in vitro”: Vios Fertility Institute is a leader in launching InvoCell, which costs half that of in vitro, and anecdotal evidence suggests fertilization rates are higher with it. READ COMPLETE STORY.

This week, INVO announced receipt of Institutional Review Board (IRB) approval to commence its planned clinical trial to evaluate the modified INVOcell system for the effectiveness of achieving fertilization, implantation, embryo development, clinical pregnancy, and live birth after 5-days of continuous vaginal incubation. The objective of this study is to assess the efficacy, comfort, and retention of the INVOcell with the retention device, and demonstrate superiority following 5-day vaginal incubation as compared to current 3-day vaginal incubation indication. The pivotal trial (clinicaltrials.gov identifier: NCT04246268) is a single-arm, multicenter, open-label trial at three clinical centers in the United States with each center enrolling 60 patients between the ages of 18 and 37 years old. The providers at each center will conduct the processes of ovarian stimulation, egg retrieval and embryo transfer per the standard protocols for their centers. Patient recruitment at each site has begun.

Currently, in the United States, 62% of fresh embryo transfers are performed on Day 5 and 30% on Day 3 (CDC Assisted Reproductive Technology report, 2016 data).

“Expansion of our label to 5-day continuous vaginal incubation is a key objective as we look to enhance the INVOcell procedure beyond its currently approved 3-day use and align with the current standards within the fertility industry,” commented Steve Shum, CEO of INVO Bioscience. “Now that we have begun recruitment, we look forward to the clinical sites commencing enrollment shortly.”

INVO Bioscience’s U.S. distribution partner, Ferring Pharmaceuticals, is providing MENOPUR® (menotropins for injection) at no cost to clinical participants. Per terms of an existing commercialization agreement, INVO Bioscience will receive a $3 million milestone payment from Ferring, upon successful FDA-clearance for 5-day continuous vaginal incubation. LEARN MORE.

Symbol Name Last Price Change % Change

Consumer Goods & Trends

Shares of Coca-Cola (KO) closed at $59.19/share up from last Friday’s close of $58.40/share as they recently beat Wall Street expectations

Shares of Disney (DIS) closed at $141.02/share up from last Friday’s close of $140.08/share. Disney reported this week beating Wall Street’s estimates and came in with 26.5 million Disney+ subscribers vs the 20-25 million that was expected, however, it also confirmed that the coronavirus is going to have a negative impact on their financial results.

Shares of Nike (NKE) closed at $99.44/share down from $102.03/share last Friday. UBS upgraded Nike this week to a BUY.

Symbol Name Last Price Change % Change

Financials & Fintech

Shares of Goldman Sachs (GS) closed trading at $238/share up a quarter from the $237.75/share last Friday. Recently, Goldman Sachs reported quarterly profits beating analysts’ estimates for revenue but failed to meet quarterly profit expectations due to the litigation charges of $1.1 billion, as per reports. Goldman announced quarterly revenue of $9.96B, a 23% increase beating expectations at $8.51B. The quarterly profits declined 22% with $4.69/share.

American Express  (AXP) closed at $131.82 up from the $129.87/share last Friday. American Express reported Q4 earnings recently, reporting figures far ahead of analysts’ expectations for earnings per share. The company reported an EPS of $2.03 a share from a revenue of $11.4 billion during the quarter, beating FactSet, Wall Street estimates of EPS of $2.01 and $11.4 billion in revenue. Card-fee revenue grew 17% in 2019 and 20% year over year in the fourth quarter. READ THE COMPLETE STORY.

Visa (V) closed trading at $202.74/share up from the $198.97/share last Friday. Visa recently agreed to acquire Plaid for $5.3B. Plaid is a fintech firm that connects apps to consumers’ data in the banking system that works with Venmo, Coinbase, etc. Visa reported Q1 2020 earnings on Thursday missing analyst’s expectations.

Shares of Morgan Stanley (MS) closed at $55.03/share up from last Friday’s close of $52.26/share.

Symbol Name Last Price Change % Change

Materials & Natural Resources

 

Gold prices closed at $1,593.40/0z. up from $1,571.30/oz last Friday.

Silver closed lower at $18.03/oz down from $18.12/oz last Friday.

First Majestic Silver (AG) closed at $9.57/share down from $10.07/share last Friday. The 52-week high is $12.69/share. AG recently hit a new 52-wk high of $12.26/share. On Jan. 21 First Majestic announced the Company’s 2020 production and cost guidance including capital investments and future growth initiatives. Keith Neumeyer, President & CEO stated, “For 2020, our focus remains on adopting new innovation projects to modernize our processing plants to achieve higher recoveries, improve efficiencies and reduce operating costs. We have witnessed significant benefits from high-intensity grinding at our Santa Elena operation in 2019 and we plan to install the same technology at San Dimas in 2020. In addition, we continue to advance underground development activities at the Ermitaño project near Santa Elena to prepare the mine for initial production in early 2021. Our increased investments in underground development and innovation in 2020 is expected to result in significant production growth in 2021 and beyond.” SEE COMPLETE STORY.

Hecla Mining Company (HL) closed at $3.43/share up from $3.03/share last Friday after reaching a new 52-wk high of $3.51 recently. This week HL announced their fourth-quarter and full-year 2019 financial and operating results that beat Wall Street expectations and advancing operations. Phillips S. Baker, Jr., President and CEO stated, “2019 was a tale of two halves where the second half had higher production, higher prices, better earnings and more cash flow. The strong third and fourth quarters markedly improved our financial condition, putting us in a better position to refinance the Senior Notes. In 2020, at current prices, we expect continued strong cash flow generation with the ongoing solid performance at Greens Creek, the ramp-up of Lucky Friday, expected improvements at Casa Berardi and the potential mine life extension at San Sebastian from the Hugh Zone.”

Symbol Name Last Price Change % Change

Technology & Beyond

The FAANG stocks closed as follows on Friday and had an overall postive week of gains:

  • Facebook (FB) $212.33/share, +.7% ($201.91/share a week ago)
  • Amazon (AMZN) $2,079.28/share, +1.42% ($2,008.72/share a week ago)
  • Apple, Inc. (AAPL) closed at $320.03/share, -1.59% ($309.51/share a week ago)
  • Netflix (NFLX) $366.77/share, -.05%, ($345.09/share a week ago)
  • Alphabet (GOOG) $1479.23/share, +.20%, ($1434.23/share a week ago)
Symbol Name Last Price Change % Change

Investing & Inspiration

 

“In investing, what is comfortable is rarely profitable.” -Robert Arnott

“The fundamental law of investing is the uncertainty of the future.” -Peter Bernstein

“How many millionaires do you know who have become wealthy by investing in savings accounts?” -Robert G Allen

“Greed is all right, by the way. I think greed is healthy. You can be greedy and still feel good about yourself.”-Ivan Boesky

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

“I talk about macro themes a lot because they are fun to talk about, but it is the risk management that is the most important thing. The risk control is all bottom-up. I structured the business right from the get-go so that we would have lots of diversification.” -Michael Platt

“Blaming speculators as a response to financial crisis goes back at least to the Greeks. It’s almost always the wrong response.” -Larry Summers

Symbol Name Last Price Change % Change

Tomorrow

We are due to receive the following significant economic data next week:

  • The inflation data report on Thursday,
  • The retails sales report on Thursday,
  • The Consumer sentiment report on Friday &
  • 13% of the S&P 500 companies will report earnings results

Videos

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