“Markets Love Insurance” Vista Partners Daily Market Recap 7/10/19

By John Heerdink LinkedIn

The markets today seemed to love the insurance or at least the belief that Fed Chair Jerome Powell provided with his prepared remarks within the semi-annual Monetary Policy Report that he served Congress. Basically, he gave most the feeling that a quarter-point interest rate cut would be in the cards during their meeting later this month and set worries aside that arose with last weeks better than expected jobs report. Here’s an excerpt from Powell’s comments that gave the crew the “warm and fuzzies” that propelled the markets today which included a record high for the S&P 500 that eclipsed 3000 for the first time in history:

Our baseline outlook is for economic growth to remain solid, labor markets to stay strong, and inflation to move back up over time to the Committee’s 2 percent objective. However, uncertainties about the outlook have increased in recent months. In particular, economic momentum appears to have slowed in some major foreign economies, and that weakness could affect the U.S. economy. Moreover, a number of government policy issues have yet to be resolved, including trade developments, the federal debt ceiling, and Brexit. And there is a risk that weak inflation will be even more persistent than we currently anticipate. We are carefully monitoring these developments, and we will continue to assess their implications for the U.S economic outlook and inflation.

The nation also continues to confront important longer-run challenges. Labor force participation by those in their prime working years is now lower in the United States than in most other nations with comparable economies. As I mentioned, there are troubling labor market disparities across demographic groups and different parts of the country. The relative stagnation of middle and lower incomes and low levels of upward mobility for lower-income families are also ongoing concerns. In addition, finding ways to boost productivity growth, which leads to rising wages and living standards over the longer term, should remain a high national priority. And I remain concerned about the longer-term effects of high and rising federal debt, which can restrain private investment and, in turn, reduce productivity and overall economic growth. The longer-run vitality of the U.S. economy would benefit from efforts to address these issues.

 
Against this backdrop, the FOMC maintained the target range for the federal funds rate at 2‑1/4 to 2-1/2 percent in the first half of this year. At our January, March, and May meetings, we stated that we would be patient as we determined what future adjustments to the federal funds rate might be appropriate to support our goals of maximum employment and price stability.

At the time of our May meeting, we were mindful of the ongoing crosscurrents from global growth and trade, but there was tentative evidence that these crosscurrents were moderating. The latest data from China and Europe were encouraging, and there were reports of progress in trade negotiations with China. Our continued patient stance seemed appropriate, and the Committee saw no strong case for adjusting our policy rate.

Since our May meeting, however, these crosscurrents have reemerged, creating greater uncertainty. Apparent progress on trade turned to greater uncertainty, and our contacts in business and agriculture report heightened concerns over trade developments. Growth indicators from around the world have disappointed on net, raising concerns that weakness in the global economy will continue to affect the U.S. economy. These concerns may have contributed to the drop in business confidence in some recent surveys and may have started to show through to incoming data.

In our June meeting statement, we indicated that, in light of increased uncertainties about the economic outlook and muted inflation pressures, we would closely monitor the implications of incoming information for the economic outlook and would act as appropriate to sustain the expansion. Many FOMC participants saw that the case for a somewhat more accommodative monetary policy had strengthened. Since then, based on incoming data and other developments, it appears that uncertainties around trade tensions and concerns about the strength of the global economy continue to weigh on the U.S. economic outlook. Inflation pressures remain muted.

After all had digested Powell’s complete remarks, the four indices proceeded to rise today. The S&P 500 managed to move up past 3000 during intraday trading eclipsing its previous record high and moved up 13.44 points while closing at 2,993.07 up .45%. The Dow gained 76.71 points closing up .29% ending at 26,860.20 and seemingly a stone’s throw away from hurdling the 27k mark. The tech-heavy Nasdaq closed at 8,202.53 up 75.% up 60.80 points. The Russell 2000, the small-cap stock market index representing the bottom 2,000 stocks in the Russell 3000 Index added a weak 2.46 point gain closing at 1,565.05 up .16%. 

Volatility bets took a significant hit today with the positive move of the markets. The CBOE Volatility Index (VIX) closed higher at $13.03 down by 7.52% or $1.06/share. It traded between $12.98 – $14.69. The 2x leveraged ETF TVIX also closed lower at $15.43 down 5.57% or $.91/share and traded between $15.35 and $115.94 today.

The US Dollar Index dropped today ending the day at 97.10 down .4%.

The 2-yr treasury yield ended at 1.82%  & the 10-year Treasury note closed up at 2.06%.

 Oil prices popped by 4.7% to close at $60.48/bbl up $2.69 on the strong invenory data.  Dow 30 energy participants Chevron (CVX) moved higher by 1.69% closing at $125.44 & Exxon (XOM) closed higher by 1.41% closing at $77.51.

Gold moved higher too up $9.99 and closing at $1420.09/oz.

Big tech stocks were up for the most part as the FANGS were out to play yet again today.  Apple (AAPL) was up .99% closing at $203.23/share &  Amazon (AMZN) which gained strongly by 1.46% closing at 2,017.41. Alphabet (GOOG) gained 1.39% closing at $1,140.48 & Facebook (FB) finished strongly too at $202.73 up 1.77%. Shares of Microsoft (MSFT) gained 1.02% closing at $137.85. Chipmaker Intel (INTC) ended up .96% closing at $48.21/share & Micron (MU) added a more than solid 3.75% closing at $42.90/share after its recent earnings beat. Netflix (NFLX) added .28% ending at $381.00/share.

Money management

Institutional alternative asset manager Och-Ziff Capital Management Group (OZM) to a breather after its recent charge forward closing at $24.14 down 1.79% or $.45/share closing off yesterday’s newly minted 52-wk high of $25.49. The 52-wk range is $8.60 – $25.49. OZM sports a 4.11% cash dividend.

Los Angeles-based Colony Capital (CLNY) a leading global investment management firm with assets under management of $43 billion closed at $5.13 down .97% after hitting an intraday high of $5.21. CLNY pays an 8.58% cash dividend.

Nike (NKE) closed at $887.44 losing .68%. Nike recently missed analyst earnings estimates but maintained full-year guidance.

Healthcare

The S&P 500 healthcare sector closed at 1082.10 up .36%.

Community Health Systems, Inc. (CYH) one of the largest publicly traded hospital companies in the US closed at $2.60 after hitting an intraday high of $2.65/share. CYH also traded at low of $2.57 today on lower than average volume clocking only 606,976 shares of trading. On June 27th CYH announced that its subsidiaries signed a definitive agreement to sell 92-bed Bluefield Regional Medical Center in Bluefield, West Virginia, and its associated ancillary healthcare operations to subsidiaries of Princeton Community Hospital. The hospital included in this transaction is among the additional planned divestitures discussed on the Company’s Q1 2019 earnings call. Also, note there has been more insider buying occurred recently as Michael Dinkins bought shares at $3.168/share on 5/28/19 according to the latest Form 4 filed at SEC.gov. Michael Dinkins has served on our Board of Directors since December 2017. Mr. Dinkins has served as president and chief executive officer of Dinkins Financial, a consulting firm that helps small businesses gain access to capital, since October 2017. See our story more details: INSIDER BUYING ALERT: Community Health Systems, Inc. (CYH) Director Michael Dinkins.

Change Healthcare Inc., a leading independent healthcare technology platform, announced Wednesday after the close that they had priced their initial public offering of 42,857,142 shares of its common stock at a price to the public of $13.00 per share and its concurrent offering of 5,000,000 of its 6.00% tangible equity units (“Units”), with a stated amount of $50. The offerings are expected to close on July 1, 2019, subject to customary closing conditions. The completion of the Units offering is conditioned upon the completion of the common stock offering, but the completion of the common stock offering is not conditioned upon the completion of the Units offering. Change has granted the underwriters in the common stock offering a 30-day option to purchase up to an additional 6,428,571 shares of common stock. Change has granted the underwriters in the Units offering an option to purchase, within a 13-day period beginning on, and including, the date of the initial issuance of the Units, up to an additional 750,000 Units. The shares and the Units began trading on the Nasdaq Global Select Market today, under the symbols “CHNG” and “CHNGU,” respectively. CHNG shares rose to a high of $15.19 and closed at $15/share up 15.38% in its first day of trading on Thursday but closed today at $14.65 down 1.08%.

Biotech

The Ishares Nasdaq Biotechnology ETF (IBB) gave back .28% closing at $108.53. This sector has been on a more than healthy run over the last 30 days. The 52-wk range is $89.01 – 122.97.

Atossa Genetics (ATOS),  a Seattle-based biotech firm developing novel therapeutics and delivery methods to treat breast cancer and other breast conditions regained momentum closing at the high of the day or $2.24 up 5.16%. The average daily trading volume is 816,801 shares per day.  Atossa announced last week that a preliminary analysis from its recently completed Phase 2 study of the company’s proprietary 20mg daily topical Z Endoxifen (“Endoxifen”) showed a significant and rapid reduction in mammographic breast density (MBD). Studies by others using tamoxifen have demonstrated that density reduction induced by tamoxifen is associated with a significant reduction in breast cancer incidence. See complete story.

Biohaven Pharmaceutical Holding Company Ltd., (BHVN), a clinical-stage biopharmaceutical company with a portfolio of innovative, late-stage product candidates targeting migraine and neurological diseases, including rare disorders, announced recently the pricing of an underwritten public offering of 6,976,745 of its common shares at a price of $43.00/share. The gross proceeds of the offering are expected to be $300 million.  Shares of BHVN closed at $43.71 today up 1.09% after hitting an intraday high of $43.90/share on 568,561 shares of trading. The 52-wk range $29.17 to $67.86. Today, Biohaven announced that positive results from a Phase 3 pivotal clinical trial of rimegepant, Biohaven’s small molecule calcitonin gene-related peptide (CGRP) receptor antagonist, for the acute treatment of migraine, are published in the July 12, 2019 issue of the New England Journal of Medicine (NEJM). These data were reported to show that, compared to placebo, patients treated with a single dose of oral rimegepant 75mg experienced superior, rapid pain freedom and freedom from the most bothersome migraine-associated symptom. Approximately 40 million people in the U.S. suffer from migraine and there has been minimal improvement in the standard of care acute treatment of migraine since the 1990s. Rimegepant is an oral calcitonin gene-related peptide (CGRP) antagonist being developed for the acute and preventive treatment of migraines. See Complete Story. BHVN Shares are at $45/share in the aftermarket up 2.95%.

INVO Bioscience, Inc. (IVOB) ended the day at $.3747/share as daily trading volume continues to rise in concert with their announcing progress after their exclusive U.S. partnership with Ferring Pharmaceuticals, a leader in the reproductive health industry was announced in Q1-2019. Ferring has committed to providing the necessary sales and marketing resources to more fully develop the market in the United States. There are countless couples not able to receive reproductive treatments today, and Ferring can be instrumental in addressing the unmet needs of this cohort. Ferring has the industry experience, relationships and the marketing capabilities to successfully embed the INVOcell in clinics throughout the country.  IVOB is a medical device company, headquartered in Sarasota, FL focused on creating simplified, lower-cost treatment options for patients diagnosed with infertility. The company’s lead product, the INVOcell, is a novel medical device used in infertility treatment that is FDA cleared and that enables egg fertilization and early embryo development in the woman’s vaginal cavity. IVOB also announced last week news of their recent appointment of Pressly Ahammed as the new Director of International Business Development and he will be responsible for the Company’s international distribution channels in Europe, Middle East, Africa & parts of Asia. Ahammed joined IVOB from Cooper Surgical where he held a similar position. See complete story.

Leap Therapeutics (LPTX) closed up .73% at $2.06 on 296,400 shares of trading.  LPTX is a biotechnology firm developing targeted and immuno-oncology therapeutics. The 52-wk range is $1.35 – $8.75.

Pfizer (PFE) closed lower at $44.06 up 1.59% after the recent announcement regarding their acquisition of Array BioPharma (ARRY) for ~$11.4 billion or $48/share in cash.  See complete story.

The pharmaceutical giant and Dow component Merck & Co, Inc. (MRK) that recently announced the acquisition of Tilos Therapeutics for a consideration of up to $773 million closed at $84.82 down slightly by .05%

San Diego-based biotech Fate Therapeutics (NASDAQ: FATE), dedicated to the development of programmed cellular immunotherapies for cancer and immune disorders,  closed flat at $20.50/share 748,985 shares of trading after establishing a new all-time intraday high of $22.35 last week. The 52-week range is $8.64 – $22.35. Guggenheim Securities initiated coverage on FATE last week with a “Buy Rating” and a $25/share price target. Scott Wolcho, President and CEO of Fate Therapeutics presented at the Jefferies 2019 Healthcare Conference in New York recently. Roth Capital initiated coverage on FATE with a Neutral rating and a $20 price target last Friday, June 7th. Mizuho initiated coverage with a price target of $27/share about a week ago.

Boston-based Pieris Pharmaceuticals (PIRS) closed at $4.50 up 1.81% on 247,627 shares of trading. The stock traded between $4.41 & $4.64 today and the 52-wk range is $2.39 – $6.55.

Bedford, Massachusetts-based Stoke Therapeutics is a biotechnology company pioneering a new way to treat the underlying cause of severe genetic diseases by precisely upregulating protein expression. Recently Stoke Therapeutics announced the pricing of its initial public offering (IPO) of 7,891,110 shares of its common stock at a price to the public of $18.00 per share. The shares are now trading on The Nasdaq Global Select Market as of June 19, 20,19 under the symbol “STOK.” Stoke’s stock traded as high as $31.76 recently a new all-time high prior to closing trading at $26.71/share up .23% today. See complete story.  

Xeris Pharmacueticals, Inc. (XERS) closed flat at $12.57. Xeris is a specialty pharmaceutical company leveraging its novel formulation technology platforms to develop and commercialize ready-to-use injectable and infusible drug formulations.

Elsewhere on the recent IPO front, Zoom Video Communications (ZM) moved up by 1.97% closing at $92.72 & Uber Technologies (UBER), the ride-sharing company closed lower at $43.70/share down by 1.13% & still below its recent IPO price of $45. Plant-based burger maker Beyond Meat (BYND) closed up sharply at $163.51 adding 3.61%. Their meat is made of four main ingredients: water, pea protein isolate, canola oil & refined coconut oil and is meant to taste like “meat.  Slack Technologies (WORK) which jumped into the public markets with their IPO last week flying up 48.5% from their offering price of $26/share & closed today at $35.19 down 1.26% on the day. Slack is a provider of a cloud-based workplace messaging app and went public via a direct listing avoiding paying fees to the relevant banks.

Vista Partners LLC (”Vista”) is a California Registered Investment Advisor based in San Francisco. Vista delivers timely and relevant insights via the website: www.vistapglobal.com with daily stories, weekly market updates, monthly macroeconomic newsletters, podcasts, & Vista’s proprietary equity and market research to help you stay informed and stay competitive. Vista’s mission is to invest partner capital while arming investors with a comprehensive global financial perspective across all market sectors. Vista also seeks to provide select issuers with actionable advice regarding fundamental development, corporate governance, and capital market directives.

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