“The Yoyo & The Stampede For Liquidity” – Vista’s Weekly – March 20, 2020

We experienced another volatile and downward trending week during our currently contained state of existence that will hopefully prove to be effective in the worldwide fight against the spread of the coronavirus. The markets suffered another “stampede” or rush towards the exits searching for liquidity and there seemed to be next to no place for safety as just about all assets dropped in value this week. As a Morgan Stanley report stated summing up the last couple of weeks “The Rush for liquidity prompts record -$74b redemptions from prime money funds, despite the overall deluge of +$100b inflows into Money Market funds last week. Fed steps in to establish Money Market MF Liquidity Facility, in efforts to backstop the industry’s ability to meet redemptions & ease liquidity strain.”  With these moves we saw the market yoyo each day where Monday was down, Tuesday was up, Wednesday was down, Thursday was up and finally, Friday was down again. It was a bit dizzying as the markets sold off overall throughout even after one stimulus measure and/or containment effort after another were lobbed our way. The disruptions in our normal daily lives, market fluctuations and worry about if/when the coronavirus will be controlled and when we all might go back to work is truly troubling, to say the least. However, as a positive, I am seeing that many of us are unifying and I hope that the measures we are taking and the new experiences we are living through will end up making us a better world and better prepared for whatever is thrown our way in the future.

In a review of the markets, we saw double-digit losses across the board.  The Dow ended the week at 19,173.98, down -17.3.% and is now down -32.8% YTD. The S&P 500 ended the week at 2,304.92, representing a -15% weekly loss and is now down -28.7% YTD. The Nasdaq Composite closed at 6,879.52 on Friday, representing a weekly -12.6% downward move and is now down -23.3% YTD. The Russell 2000 moved lower closing at 1,014.05 representing a weekly -16.1% drop and is now down a whopping -39.2% YTD. 

Oil prices dropped significantly again this week to end at $23.73/bbl down 24.3% from last week’s close of $31.80/bbl. Global growth concerns, a production glut, and a price war between Russian and Saudia Arabia have directly caused the pain.

The Velocity Shares Daily 2x VIX Short-Term ETN (TVIX), a leveraged bet against the market, was a big winner again this week as it ended at $607.56/share (after hitting $1000/share in intraday trading this week) & was up from $335.40/share last Friday’s close. The 52-wk low is $38.33 which was realized relatively recently. Amazing!

The FAANG stocks ended mostly down except for Amazon which rose week over week as we are all ordering online and grabbing as much food as possible when shelves refill at our local Whole Foods. Facebook (FB) closed at $149.73/share, -2.22% Friday, ($170.28/share a week ago), Amazon (AMZN) closed at $1,846.09/share, -1.85% Friday, ($1,785/share a week ago), Apple, Inc. (AAPL) closed at $229.24/share, -6.35% Friday, ($287.97/share a week ago), Netflix (NFLX) closed at $332.83/share, +.24% Friday, ($336.30/share a week ago) & Alphabet (GOOG) closed at $1,072.32/share, -3.85%, ($1,219.73/share a week ago.)

Gold prices fell this week and failed to prove to be a defensive position closing at $1,484/0z. down from $1,530/oz. Silver closed sharply lower again at $12.49/oz down from $14.74/oz last Friday. 

The U.S. Dollar Index strengthened to end the week at 102.74 up from 98.69 last week.  US Treasury yields were down week over week. The 2-yr Treasury yield closed at .37% down from .506%, the 10-yr yield closed at .94% down from .981%, & the 30-yr yield ended at 1.424% down from 1.548%. The Fed’s interest rate decision was declared on Wednesday, March 18 as it cut the target range for the fed funds rate to 0%-.25%. The fed also dropped the discount rate to .25% while putting a $700 billion quantitative easing program in play.

Here’s a summary of this week’s 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. On Friday, the Existing Home Sales report confirmed a move higher by +6.5% month/month in February to a seasonally adjusted annual rate of 5.77M units. 

In the meantime, please enjoy the weekend at home with the family, appreciate what you have, stay flexible in the markets to strike when the opportunity appears attractive, and plan and dream of what life may bring all of us in we can move forward safely through this period together. We will find a way in this world that is currently inhabited by more than +7.7B people to survive and thrive once more.

Also, please enjoy the balance of the weekly newsletter’s videos, quotes, updates, and especially review the healthcare section where we highlight the progress including the following two companies:

Breast cancer-focused biotech Atossa Therapeutics (ATOS) rose +8.45% on Friday after recently announcing an upcoming meeting with the FDA. Also, note the Founder, Chairman & CEO of Atossa Dr. Steven Quay M.D., Ph.D. is a physician-scientist who has invented seven FDA-approved medicines. He also provides helpful tips and information on his website under the heading of ElevatorMedicine™, information you can learn in the time of an elevator ride at www.DrQuay.com. He is currently writing daily about the coronavirus so please check it out now.

INVO Bioscience (INVO) also rose 9.9% on Friday. INVO recently announced a  key hire in Asia as it continues its global rollout of the INVOcell system, a revolutionary in vivo method of vaginal incubation that offers patients a more natural and intimate experience. This week INVO Bioscience made a strategic branding move and changed its trading symbol to INVO. Learn more here.  Note that the Global Fertility Services market size is expected to reach $36 billion with a CAGR of 8.5% by 2023, according to a recent report by Market Research Future (MRFR) highlighted in Forbes. With that being the case, over the last handful of years, we are seeing growing investor interest and a growing number of startups being funded in the fertility marketplace, which is still severely underserved due to prohibitive treatment costs, reasonable access to care & as couples are waiting to have children later in life. Currently, it is believed that only 1% to 2% of the estimated 150 million infertile couples worldwide are being treated.

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, Former Ceo of Disney

“In the short run, the market is a voting machine. But in the long run, it is a weighing machine.” – Ben Graham

“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

Tomorrow

We have a full week of trading next week and are not due to receive any significant economic data.