Uncoordinated Reopening Confusion & Frustration Helps Drive Markets Down Today

We now have seen more than 4.23M confirmed cases of COVID-19 in the world with 1.48M cases that have recovered and more than 290k worldwide deaths. In the US, we have 1.39M confirmed cases with 223k that have recovered with 82,485 deaths while our economy has been shut down for the most part, but hopes and market returns have been rising as of late fueled by reopening plans and active measures to do so brought forth a belief that the economy was coming alive again. However, today on the backside of Germany and South Korea’s recent report of an uptick of cases post their steps to reopen, our dear Dr. Fauci, Director of the National Institute of Allergy and Infectious Diseases, advised caution on how fast we should reopen as there could be a second wave of increased infections that “you might not be able to control” and the markets sold off throughout the day. We also got word that some states and/or parts of states i.e Los Angeles, are further adding confusion to the reopening processes and are considering an extended stay in place order that may extend for up to 3 months this adding to the confusion and frustration with regard to this topic.

The market does not like uncoordinated or confusing affairs. In turn, the Nasdaq closed down -2.06% aided by the cooling market sentiment and the highly weighted negative results of the popular FAANG stocks which closed as follows: Facebook (FB) closed at $210.10/share, down by -1.44%, Amazon (AMZN) closed at $2,356.95/share, down by -2.16%,  Apple (AAPL) closed at $311.41/share down by -1.14%, & Netflix (NFLX) declining -1.97% closing at $431.82/share, & Alphabet (GOOG) closed at $1,375.74/share down -1.96%. The S&P 500 also closed down -2.05%, the Dow lost -1.89% & the Russell 2000 dropped -3.46%. The real estate sector down -4.3%, the industrials down -2.8%, & the financials sector down -2.7% led the decline which included a red day for all eleven sectors.

On the macroeconomic front we received the following reports: 

• The Consumer Price Index report showed a decrease of -.8% month/month in April, while core CPI decreased -.4%. 
• The Treasury Budget report for April confirmed a deficit of $737.85B vs. a surplus of $160.3B during the same period a year ago.
• The NFIB Small Business Optimism Index report for April decreased to 90.9.

Oil prices rose to close at $26.76/bbl up +5.3%. Chevron (CVX) closed at $91.10/share down -2.43%, Exxon (XOM) closed at $44.12/share down by -1.67% & Occidental Petroleum Corporation (OXY) closed at $14.58/share down 2.99%. 

The 2-yr US treasury yield moved down 2 basis points to end at .16% & the 10-yr yield moved down by 5 basis points to end at .68%. The U.S. Dollar Index weakened by -.3% to end at 99.97. 

Gold prices ended lower today at $1,722/oz (+30) while silver prices closed at $15.64/oz (-.04). North American silver and gold producer Hecla Mining Company (HL) ended the day at $2.53/share off -.78%.

MOVERS

The following stocks moved significantly today:

• Shares of Novavax (NVAX) have shot up during the COVID-19 crisis from its 52-wk low of $3.54/share to an all-time high of $44.94/share today prior to closing at $39.82/share up +62.53%. NVAX is a late-stage biotechnology company developing next-generation vaccines for serious infectious diseases. Yesterday they announced that the Coalition for Epidemic Preparedness Innovations (CEPI) will invest up to $384 million of additional funding, on top of $4 million it invested in March, to advance the clinical development of NVX-CoV2373, Novavax’ coronavirus vaccine candidate against SARS-CoV-2. The additional funding from CEPI will also support the rapid scale-up of the NVX-CoV2373 vaccine antigen, as well as Novavax’ proprietary Matrix-M™ adjuvant, which is expected to enhance immune responses by stimulating high levels of neutralizing antibodies. In addition, the CEPI funding will allow Novavax to dramatically increase its large-scale manufacturing capacity for both antigen and adjuvant in multiple locations.

• Shares of Grubhub, Inc. (GRUB), a leading online and mobile food-ordering and delivery marketplace with the largest and most comprehensive network of restaurant partners, closed at $60.39/share up +29.07%. This move came after Bloomberg reported that Uber had reportedly approached Grubhub with a buyout offer. Grubhub offered the following statement in a press release: “While our policy remains to not comment on specific market rumors, we want to reiterate our views with respect to M&A-related matters given the current level of recent speculation. We remain squarely focused on delivering shareholder value. As we have consistently said, consolidation could make sense in our industry, and, like any responsible company, we are always looking at value-enhancing opportunities. That said, we remain confident in our current strategy and our recent initiatives to support restaurants in this challenging environment.”

TOMORROW

Fed Chair Jerome Powell is set to speak about the current economic situation via a webcast hosted by the Peterson Institute for International Economics at 9am eastern.

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

• The Producer Price Index for April
• The weekly MBA Mortgage Applications Index

Economic Reports

• On Monday, we did not receive any significant economic data.
• On Tuesday, we received the following reports:  the Consumer Price Index report showed a decrease of -.8% month/month in April, while core CPI decreased -.4%, the Treasury Budget report for April confirmed a deficit of $737.85B vs. a surplus of $160.3B during the same period a year ago., & the NFIB Small Business Optimism Index report for April decreased to 90.9.

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 include the following:

• The Employment Situation Report for April
• The Wholesale Inventories for March