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

By John F. Heerdink, Jr.

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.

Markets

Symbol Name Last Price Change % Change

Big Movers

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Bond Markets & US Dollar

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%.

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Agriculture & Energy

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Biotech & Healthcare

The S&P 500 healthcare sector closed further down at 916.59 down from 1,053.92 last Friday.

The Ishares Nasdaq Biotechnology ETF (IBB) moved lower this week closing at $98.04 vs. last Friday’s close of $103.68. The 52-wk range is $92.15 – $123.92.

The NYSE Arca Biotech Index (^BTK) closed at 3,972.01 down from the 4,908.52 level last week.

Johnson & Johnson (JNJ) closed at $119.89/share down from $134.29/share last Friday.

Maxim Group’s Sell-side Biotech Analyst Jason McCarthy recently issued an update report upgrading Atossa Therapeutics,  Inc. (NASDAQ: ATOS), a clinical-stage pharmaceutical company developing novel therapeutics and delivery methods to treat breast cancer and other breast conditions, 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).”

On Friday, Atossa announced that it will meet with the U.S. FDA on April 30, 2020. The objective of this meeting is to discuss the clinical development of oral Endoxifen to reduce mammographic breast density (MBD). tossa further stated that as envisioned, a short course of oral Endoxifen may provide another option for women with high MBD. Atossa’s offices are located in Seattle, Washington and ongoing or planned clinical trials of Atossa’s Endoxifen are located in Australia and Sweden. Despite the well-publicized impacts of the current COVID-19 outbreak, Atossa’s operations, including clinical studies and the supply of Endoxifen, have not been negatively impacted. Sufficient quantities of the active pharmaceutical ingredient, Endoxifen, for the currently ongoing and planned clinical trials have been previously manufactured and are in secure storage. Management instituted a temporary policy of working from home, which has been in place since February 26, 2020, and of limited business travel. These policies remain in effect as of today. Finally, the Company has not been notified of any employee illness, as would be required by policy.

On March 3rd, Atossa Therapeutics, Inc. (Nasdaq: ATOS) announced that it has filed with the Swedish Medical Product Agency and the Institutional Review Board to initiate a Phase 2 study of its oral Endoxifen for the reduction of mammographic breast density (MBD). MBD is an emerging public health issue affecting more than 10 million women in the United States. Studies conducted by others have shown that MBD increases the risk of developing breast cancer, and reducing MBD can reduce the incidence of breast cancer. Atossa’s Chairman, and CEO, Steven Quay stated the following,

“This is an important milestone in the development of our oral Endoxifen product. Regulatory approval is necessary to commence the Phase 2 randomized, double-blinded, placebo-controlled study in Stockholm, which will include approximately 1,000 pre-menopausal women with MBD who will receive daily doses of Endoxifen or placebo for six months. We expect the Medical Product Authority will respond within 30 days and that the IRB approval will follow in the second quarter.”

Atossa has established both primary and secondary sources of manufacturing for the clinical supply of its oral Endoxifen capsules. With over three years of experience manufacturing and supplying the oral Endoxifen capsules for its completed clinical studies, Atossa believes adequate drug supply will be available to support this Phase 2 study.
The primary objective of the study is to determine if breast density changes compared to placebo and among different doses, with secondary endpoints to assess and characterize safety and tolerability. South General Hospital in Stockholm will be conducting this study at multiple sites, after having recently completed the company’s Phase 2 study of its topical form of Endoxifen. The study is being led by principal investigator Per Hall, M.D., Ph.D., Head of the Department of Medical Epidemiology and Biostatistics at Karolinska Institutet.

INVO Bioscience (IVOB) 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® (pictured), 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. 

Recently, INVO announced that Yve Lyppens has been appointed Director of Business Development Asia Pacific. Yve Lyppens comes to INVO Bioscience with more than a decade of experience in sales and distribution management. From 2016 to the present, he served as Asia Pacific Sales Director for Biomedic Hong Kong Ltd., a medical device distributor in Mainland China. Prior to that, from 2011 to 2016, Mr. Lyppens served as a Director, Shareholder and Sales Manager at F Care Systems Hong Kong Ltd., a developer, and exporter of medical aesthetics equipment. Based in Hong Kong, Mr. Lyppens will work with the company’s COO and VP of Business Development, Michael Campbell, in developing the Company’s sales and distribution network throughout Asia. He will be responsible for developing and implementing a regional business strategy to expand the companies INVO solution through joint venture partnerships and/or distribution relationships. He will also be identifying and solving all potential issues working with cross-functional development teams. He will be attending industry symposiums, seminars and training sessions necessary to promote the technology. Read More.

 

Symbol Name Last Price Change % Change

Consumer Goods & Trends

Shares of Coca-Cola (KO) closed at $38.30 share down from last Friday’s close of $48.47/share.

Shares of Disney (DIS) closed at $85.98/share down from last Friday’s close of $102.52/share after having to shutter or suspend parks, cuisine line and some manner of movie development over the coronavirus situation.

Shares of Nike (NKE) closed at $67.45/share down from $75.06/share last Friday as it shut down all store fronts for now.

Symbol Name Last Price Change % Change

Financials & Fintech

Shares of Goldman Sachs (GS) closed trading at $138.41/share down from the $177.17/share last Friday as M&A, IPO’s and secondaries have essentially come to a halt.

American Express (AXP) closed at $74.12/share down from the $99.60/share last Friday.

Visa (V) closed trading at $146.83/share down from the $175.83/share last Friday. 

Shares of Morgan Stanley (MS) closed at $29.67/share down from last Friday’s close of $37.50/share.

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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, 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

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Tomorrow

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

Videos

Please consider viewing these interesting videos:



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