“Rare Earth Fears” Vista Partners Daily Market Recap 5/29/19

By John Heerdink LinkedIn

It was quite a day that was full of fear and volatility in the markets. The US-China trade wars continued to produce its daily headlines on cue and the markets crashed early on with it but began to recover towards the end of the day. The S&P 500 ended the session down .69% at 2783.02 above its 200-day moving average of 2776. The Dow ended lower by 221.36 points and ended down .87% closing at 25,126.41 while the tech-heavy Nasdaq fell .79% closing at 7547.31 & the Russell 2000 forfeited almost a full point dropping .94% and closed at 1489.95.

Today the US-China trade war produced reports of China’s threat to restrict the supply of rare earth metals to the US. These rare earth metals are vital to producing many technologies used in consumer electronics & national defense. China controls approximately 40% of global rare earth deposits & produces 120,000 metric tons a year that is equivalent to nearly 80% of the global supply annually.  According to a report via the U.S. Geological Survey, Mineral Commodity Summaries, February 2019 the US imports approximately 80% of rare earth metals from China, however, the US represents just 4% of China’s annual shipments. Most US companies requiring rare earth metals are already manufacturing in China or somewhere outside the US today.

Nevertheless, rare earth metals will remain needed for much of our tech,  our ability to quantify the true risks is limited and a moving target, & the fear will persist along with the headlines as the world markets are amazingly connected via ownership across so many borders.

The inverted yield curve US Treasury worries were also buzzing & at one point today the shorter 3-month yield was incredibly 14 basis points higher than the longer 10-yr yield which truly represented an inverted yield curve.  The yield curve situation “righted itself” as demand waned for US Treasuries & as the equity markets recovered and at the close the 2yr yield closed at 2.08% & the 10yr yield is now down to 2.23%.

The US Dollar Index continued to be stable and increased .2% ending at 98.16. 

Oil prices decreased by .5% &  closed at $58.84/bbl. Dow 30 energy participants Chevron (CVX) closed down at $116.31 or 1.34% & Exxon (XOM) closed down at $72.16 dropping .62%.

Volatility ruled the land again but was a tale of two tapes. The CBOE Volatility Index (VIX)  closed up at $17.90 up 2.29% after giving back much of its early gains as the markets recovered. It traded between $17.62 – $19.04. The 2x leverage ETF TVIX also closed higher at $24.68 jumping 3.65% and trading between $24.00 and $25.61 today.

Dow 30 components & the world’s leading manufacturer of construction & mining equipment Caterpillar (CAT) closed relatively flat at $121.48 down .09%.

Pharmaceutical giant Merck & Co, Inc. (MRK) closed at $79.36 down 1.12%.

Intel (INTC) had a good day moving 1.51% closing at $44.23/share. Shares of Microsoft (MSFT) closed lower at $124.94 down by .97%.  Apple (AAPL) moved lower again closing at $177.38/share down .48%. Uber Technologies (UBER), the ride-sharing company closed lower at $39.94 dropping another 2.47% and still drifting significantly below their recent IPO price of $45/share.

Disney (DIS) closed at $131.57 down .79%.

Home Depot (HD) shares slid .81% closing at $189.99.

Community Health Systems, Inc (CYH) one of the largest publicly traded hospital companies in the US hit an intraday high of $3.06/share & a low of $2.895 today and closed the day at $2.93 down 4.56% on 2.9 million shares of trading. More insider buying occurred recently as Michael Dinkins bought 4000 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.

The Seattle-based biotech firm developing novel therapeutics and delivery methods to treat breast cancer and other breast conditions Atossa Genetics (ATOS) closed at $2.62/share as traded as high as $2.6958. The average daily trading volume is 3.15 million shares per day.  The Maxim’s Group’s biotech analyst, Jason McCarthy, Ph.D., reiterated his ATOS buy rating recently with a $9/share 12-Month Target Price. See his update report which is called “Reports the Quarter, Endoxifen Programs Progressing, Data Updates Expected Over 2019.”

San Diego-based biotech Fate Therapeutics (NASDAQ: FATE) which is dedicated to the development of programmed cellular immunotherapies for cancer and immune disorders closed at $20.19/share on 907,102 shares of trading after establishing a new all-time intraday high of $20.65. The 52-week range is $8.64 – $20.65.

We also received the weekly MBA Mortgage Applications Index report and it went down 3.3%.

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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