Another Record Week In The Markets Fueled By Vaccine, Stimulus & Economic Expansion Hopes

Investors embraced the major headlines of the week surrounding COVID-19, stimulus, and economic expansion resulting in the markets bullishly charging forward to new record highs. Indeed more COVID-19 vaccine progress was reported from Pfizer (FFE) and BioNTech (BNTX) which received approval for emergency authorization use for their vaccine in the UK. They also expect to receive similar approval in the US in December, however they also reported that supply chain issues will reduce their expected delivery by half. Moderna (MRNA) also confirmed that their COVID-19 vaccine was 94.1% effective in preventing COVID-19 & an amazing 100% effective in protecting against serious outcomes. Unfortunately these stated advances were somewhat countered by ongoing stories and moves from states, like my home state of California that that implemented roll back steps towards shutting many municipalities down again until the first of the year as the coronavirus pandemic is continuing to run wild across our good ole US of A and around the world.

However, investors seemingly again shrugged off any negative news and embraced further good news that came out from our US politicians. Our very own politicians were reported, believe it or not, to be back to behaving like adults conducting a civil process regarding a $908B stimulus, albeit not the $2 Trillion that many had hoped for, but nonetheless perceived progress towards further supporting our economy as jobs growth slowed down per Friday’s report.  

The macroeconomic schedule also served up a number of reports supporting expansion, as well as, data supporting further stimulus as follows: On Monday, we received the Chicago PMI report for November which fell to 58.2%. The Pending home sales report confirmed a drop by 1.1% in October. On Tuesday, the ISM Manufacturing Index report confirmed that it had ticked lower to 57.5% in November but still above the expansion line. The total construction spending report showed a rise by 1.3% month/month in October while total private construction spending increased 1.4% month/month & total public construction spending rose 1% as low mortgage rates persist which is helping drive demand. The Markit Manufacturing PMI report for November was moved lower to 56.7%. On Wednesday, the ADP Employment Change report for November estimated 307k jobs were added to private-sector payrolls. The weekly MBA Mortgage Applications Index confirmed a drop by .6%. The weekly crude oil inventories report showed a continued decline as it dropped by 679k barrels. On Thursday, the Initial claims report for the week ending November 28 confirmed a drop by 75k to 712k and continuing claims for the week ending November 21 dropped by 569k to 5.520M. The ISM Non-Manufacturing Index report confirmed a fall to 55.9% in November but above expansion. On Friday, the November nonfarm payrolls report confirmed a rise by 245k & the November unemployment rate lowered to 6.7%. The November average hourly earnings report confirmed a rise by .3%. The U.S. trade deficit report confirmed a widening move to $63.1B in October. October exports ended at $4B greater than September exports while October imports came in $5B greater than September imports reflecting a increase in global trade. The Factory orders for manufactured goods  report confirmed a rise by 1% month/month in October, now an increase for six straight months.

MARKET RECORDS

Over the course of the week the major indices achieved record highs. The S&P 500 closed at 3,638.35 (+2.3%) wk/wk and is up 14.5% YTD. The Dow ended the week at 30,218.26 (+1%) wk/wk & is now up 5.9% YTD. The tech-heavy Nasdaq Composite also managed a big move again this week as it closed at 12,464.23 (+2.1%) now up a gaudy 38.9% YTD. The Russell 2000 enjoyed another solid advance as it closed at 1,892.45 (+2%) wk/wk (+20.9% over last 5 weeks) and is now up a more than respectable 13.5% YTD.

9 out the eleven sectors ended in the green with the energy sector leading the way again jumping another 4.5% week-over-week (14% over 2 weeks) as oil prices rose another 1% to end above $46 at $46.04/bbl. OPEC+ also agreed this week to increase production more slowly than was previously planned and understood that helped feed this move. Energy giant Chevron (CVX) closed at $93.28/share again up from last Friday’s close of $91.31/share and is now up roughly 23 points in 3 weeks.

In the financials sector we saw the shares of Goldman Sachs (GS) close trading at $239.58/share up from last Friday’s close of $235.40/share, American Express (AXP) closed at $125.04/share up from the $120.59/share close last Friday, Visa (V) closed trading at $212.68/share up from the $211/share last Friday & shares of Morgan Stanley (MS) closed at $65/share up from last Friday’s close of $63.84/share. JPMorgan Chase (JPM) closed at $122.34 up from $121.22/share last Friday & Citigroup (C) $58.62/share up from $56.67/share last week. PayPal Holdings (PYPL) closed at $217.77/share up from last Friday’s close of $211.39/share and Square (SQ) closed at $208.15 down substantially from last week’s close of $212.52/share.  

The Utilities sector dropped by 2.2% to add a bit of a drag. 

TECH HIGHLIGHTS

The highly weighted FAANG’s ended up week-over-week and ended as follows: Facebook (FB) closed at $279.701/share, -.76% Friday up from $277.81/share a week ago, Apple (AAPL) closed down -.56% on Friday at $122.25/share and up from $116.59/share a week ago. Amazon (AMZN) closed at $3,162.58/share, -.76% Friday & down from $3,195.34/share a week ago, Netflix (NFLX) closed at $498.31/share, +.16% Friday, up from $491.64/share a week ago, & Alphabet (GOOG) closed at $1,827.99/share, +.07% Friday up from $1,793.19/share a week ago. 

Shares of Microsoft (MSFT) closed at $214.36/share down from last Friday’s close of $215.23/share, Salesforce (CRM) closed at $225.86 down again from $247.63 last Friday. This week,  Salesforce (CRM) confirmed that they have acquired Slack Technologies (WORK) for a cool $27.7B in a cash and stock deal which many believe may present a major challenge to the momentum that Microsoft (MSFT) and Azure have enjoyed. Marc Benioff, Chairman, founder and co-CEO of Salesforce reportedly sees that Salesforce stands to become the “central nervous system” for the corporate office & that it may even supplant Microsoft. Regardless, I believe it is safe to say that the Benioff will aggressively continue to acquire and push his way into a position in order to create a dominant hold on whatever he aims his company towards.

Peter Thiel co-founded software firm Palantir Technologies  (PLTR) which surged 52% last week (adding approx. $17B in valuation) pulled back this week to end at $23.85/share. Another software firm,  Snowflake (SNOW), which recently had the high flying successful IPO, closed at $387.70/share, +30% over Thursday and Friday’s trading.

Lemonade. Inc. (NYSE: LMND), a company that offers renters, homeowners, and pet health insurance in the United States, and contents and liability insurance in Germany and the Netherlands, through its full-stack insurance carriers while being powered by artificial intelligence and behavioral economics & that has a mission to replace brokers and bureaucracy with bots and machine learning, aiming for zero paperwork, shot up +20.23% on Thursday as it closed at $80.35/share then legged up another 5.84% on Friday to close at $85.04. The stock had previously been hit recently after it released its Q3 results that you can review here within their letter to shareholders. 

The electric vehicle (EV) market continued its recent move as Elon Musk’s EV company Tesla (TSLA) shares closed at $599.04/share up (nearly $115/share over last weeks) from $585.76/share last Friday.   

ACROSS THE DOW 30

Around the Dow 30, Johnson & Johnson (JNJ) closed at $150.27/share up from last week’s close of $146.36 & Pharmaceutical giant Merck (MRK) closed at $81.94/share closed up from last Friday’s close of $79.86/share.

Shares of Coca-Cola (KO) closed at $53.85/share up from last Friday’s close of $52.70/share. Shares of Disney (DIS) closed at $154.14/share up again from last Friday’s close of $147.13/share after recently reporting that Disney+ subscribers are exceeding expectations and losses from parks were less than expected. Shares of Nike (NKE) closed at $137.19/share up again from $134.25/share after recently boosting its dividend by 12% as earnings & are expecting to be trending positively.

Shares of Deere (DE) cooled down closing at $253.95/share down from last week’s close of $261.95/share & Caterpillar (CAT) closed at $182.21/share up from last Friday’s close of $175.08/share.  Walmart (WMT) closed at $148.91/share down from last Friday’s close of $151.50/share.

Boeing (BA) closed $232.71 jumping up again from last Friday’s close of $216.50/share as their troubled 737 Max recently got the nod from US regulators.  

COMMODITY MOVES HIGHER TOO

Gold prices closed at $1,840/oz. up from $1,808/0z. last Friday & silver prices closed at $24.29/oz. up from $23.41/oz. last Friday. Barrick Gold Corp. (GOLD) closed trading at at $23.50 up from last Friday’s close of $22.69/share after recently confirming that it had increased its operating cash flow by 80% Q/Q to $1.9B.  North American silver and gold producer Hecla Mining Company (HL) ended the week at $5.18/share up from last Friday’s close of $4.79/share after recently establishing a new 52-week high of $6.79. Hecla recently announced Q3 2020 financial and operating results. Phillips S. Baker, Jr., Hecla’s President and CEO stated, “Because of our strong operating performance and higher prices, Hecla had record adjusted EBITDA, generated the most free cash flow in a decade and repaid our revolver in full. These accomplishments were achieved because of our workforces’ resiliency and our commitment to health and safety. With the Lucky Friday ramp-up ahead of schedule, the expected improvements at Casa Berardi, and our modest planned capital expenditures, we are well positioned to further strengthen our balance sheet, increase exploration activities, and pay our enhanced dividend.” 

MONEY UPDATE

The U.S. Dollar Index weakened to end the week at 90.76 down from 92.30 last Friday. This is a 2.5 year low for the dollar against major currencies. 

The 2-yr Treasury yield closed even at .14% this week, the 10-yr yield moved up 12 basis points ending at .97% while the 30-yr yield ended at 1.741% up from 1.576% last Friday.

NEXT WEEK

We will have a full week of trading week. 

NEXT WEEK’S KEY MACROECONOMIC DATA

The macroeconomic schedule will deliver the small business optimism index report on Tuesday, the inflation report on Thursday, and the consumer sentiment report on Friday.

STOCKS IN VIEW NEXT WEEK

• Shares of Fate Therapeutics (FATE) closed at $60.79/share up from last Friday’s close of $57.92 after hitting a new all-time high of $62.50 on Friday and enjoying nearly a $6 Billion market value. We started with this one folks over 3 years ago when it was in the $3 range. 
  
  • Fate is a clinical-stage biopharmaceutical company dedicated to the development of programmed cellular immunotherapies for cancer and immune disorders.

• • On Friday after the close, Fate announced positive interim data from the Company’s dose escalation Phase 1 study of FT516 in combination with rituximab for patients with relapsed / refractory B-cell lymphoma. FT516 is the Company’s universal, off-the-shelf natural killer (NK) cell product candidate derived from a clonal master induced pluripotent stem cell (iPSC) line engineered with a novel high-affinity, non-cleavable CD16 (hnCD16) Fc receptor, which is designed to maximize antibody-dependent cellular cytotoxicity (ADCC), a potent anti-tumor mechanism by which NK cells recognize, bind and kill antibody-coated cancer cells.

• Shares of Atossa Therapeutics (ATOS) closed at $1.48 down from $1.74/share last Friday after recently announcing progress in their AT-301 administered by nasal spray being developed for at home use for patients recently diagnosed with COVID-19.

• • Atossa Therapeutics is a clinical-stage biopharmaceutical company seeking to discover and develop innovative medicines in areas of significant unmet medical need with a current focus on breast cancer and COVID-19.

  • Atossa recently announced blinded preliminary results from its Phase 1 clinical study using Atossa’s proprietary drug candidate AT-301 administered by nasal spray. AT-301 was found to be safe and well tolerated in this study at two different dose levels in both single and multiple dose forms over 14 days. AT-301 is being developed for at home use for patients recently diagnosed with COVID-19. There are currently no FDA-approved therapies to treat COVID-19 at home. Learn more now.

• Shares of INVO Bioscience (NASDAQ: INVO) closed at $3.15 down from $3.22/share last Friday.

• • INVO Bioscience, Inc. (INVO), the developers of INVOcell®, the world’s only in vivo Intravaginal Culture System, has a mission to increase access to care and expand infertility treatment across the globe with a goal of improving patient affordability and industry capacity. Industry forecasts suggest that only 1% to 2% of the estimated 150 million infertile couples worldwide are currently being treated which presents and interesting opportunity.

• • Recently, INVO filed an 8k highlighting three new partners that they have established to distribute or develop invocell only clinics in Malaysia and North Macedonia. 

• • INVO Bioscience recently announced the pricing of an underwritten public offering of 3,625,000 shares of its common stock at a public offering price of $3.20 per share. The gross proceeds to INVO Bioscience from this offering are expected to be approximately $11.6 million, before deducting underwriting discounts and commissions and other estimated offering expenses. INVO Bioscience has granted the underwriters a 45-day option to purchase up to an additional 543,750 shares of common stock to cover over-allotments, if any. The offering is expected to close on November 17, 2020, subject to customary closing conditions. Shares of their common stock  began trading on Friday, November 13, 2020 under the symbol “INVO” on the Nasdaq Capital Market. Roth Capital Partners acted as the sole book-running manager, with Colliers Securities LLC and Paulson Investment Company, LLC acting as co-managers for the offering. Learn More Now. 

• Shares of NeuBase Therapeutics (NBSE) closed trading at $8.30 up from the $7.70/share close last Friday.
  • NeuBase is developing the next generation of gene silencing therapies with its flexible, highly specific synthetic antisense oligonucleotides. The proprietary NeuBase peptide-nucleic acid (PNA) antisense oligonucleotide (PATrOL™) platform allows for the rapid development of targeted drugs, increasing the treatment opportunities for the hundreds of millions of people affected by rare genetic diseases, including those that can only be treated through accessing of secondary RNA structures. Using PATrOL technology, NeuBase aims to first tackle rare, genetic neurological disorders. NeuBase is continuing its progress towards developing treatment candidates in Huntington’s Disease (HD) and Myotonic Dystrophy (DM1) and is expected to release further data prior to year end 2020.

• • RBC Capital Markets recently initiated coverage of NBSE with an Outperform, Speculative Risk rating & a $16 price target. 

• We continue to like clean hydrogen solution provider Plug Power (PLUG) which closed at $24.85 down after hitting a new all-time high of $28.70 recently. Plug confirmed that they had sold 38M shares priced at $22.25/shares raising a whopping $845.5M which represented about 9.1% of the shares outstanding making it a total 1.14B raised this fall. 

• Buyout rumors are still surfacing around wireless home system provider, Sonos (SNOS), who recently lost sponsorship from Apple (AAPL) which is thought to be entering the market with their own products. The stock ended the week at $22.94/share up again from the $16.62 level 3 weeks ago when we highlighted them. SONO reported better than expected Q4 and fiscal 2020 results on Nov. 18th.

Thanks again for your attention this week. Please continue to share your thoughts, questions, & ideas as we move forward. 

In the meantime, please enjoy the balance of the weekly newsletter’s videos, quotes, updates. 

As always, I will leave you with an insightful quote to help form your investment thesis this week.

“The investor’s chief problem — even his worst enemy — is likely to be himself.” — Benjamin Graham

Economic Reports

The macroeconomic schedule also produced a number of overall positive reports as follows: On Monday, we received the Chicago PMI report for November which fell to 58.2%. The Pending home sales report confirmed a drop by 1.1% in October. On Tuesday, the ISM Manufacturing Index report confirmed that it had ticked lower to 57.5% in November but still above the expansion line. The total construction spending report showed a rise by 1.3% month/month in October while total private construction spending increased 1.4% month/month & total public construction spending rose 1% as low mortgage rates persist which is helping drive demand. The Markit Manufacturing PMI report for November was moved lower to 56.7%. On Wednesday, the ADP Employment Change report for November estimated 307k jobs were added to private-sector payrolls. The weekly MBA Mortgage Applications Index confirmed a drop by .6%. The weekly crude oil inventories report showed a continued decline as it dropped by 679k barrels. On Thursday, the Initial claims report for the week ending November 28 confirmed a drop by 75k to 712k and continuing claims for the week ending November 21 dropped by 569k to 5.520M. The ISM Non-Manufacturing Index report confirmed a fall to 55.9% in November but above expansion. On Friday, the November nonfarm payrolls report confirmed a rise by 245k & the November unemployment rate lowered to 6.7%. The November average hourly earnings report confirmed a rise by .3%. The U.S. trade deficit report confirmed a widening move to $63.1B in October. October exports ended at $4B greater than September exports while October imports came in $5B greater than September imports reflecting a increase in global trade. The Factory orders for manufactured goods  report confirmed a rise by 1% month/month in October, now an increase for six straight months.

Investing & Inspiration

“The investor’s chief problem — even his worst enemy — is likely to be himself.” — Benjamin Graham

“No profession requires more hard work, intelligence, patience, and mental discipline than successful speculation.” – Robert Rhea

“The most contrarian thing of all is not to oppose the crowd but to think for yourself.” — Peter Thiel

“Money is like a sixth sense – and you can’t make use of the other five without it.” – William Somerset Maugham

“Compound interest is the eighth wonder of the world. He who understands it, earns it. He who doesn’t, pays it.” — Albert Einstein

“The stock market is a device for transferring money from the impatient to the patient.” – Warren Buffett

“Thousands of experts study overbought indicators, head-and-shoulder patterns, put-call ratios, the Fed’s policy on money supply…and they can’t predict markets with any useful consistency, any more than the gizzard squeezers could tell the Roman emperors when the Huns would attack.” – Peter Lynch

“Investing puts money to work. The only reason to save money is to invest it.” – Grant Cardone

“Formal education will make you a living; self-education will make you a fortune.” – Jim Rohn

“You cannot save time for your future use however you can invest time for your future.” – John F. Heerdink, Jr. 

“We always live in an uncertain world. What is certain is that the United States will go forward over time.” – Warren Buffett

“Never test the depth of the river with both of your feet.” – Warren Buffet

“Know what you own, and know why you own it.” – Peter Lynch

“Liquidity is only there when you don’t need it.” -Old Proverb

“There is no such thing as no risk. There’s only this choice of what to risk, and when to risk it.” – Nick Murray

“If you want to be a millionaire, start with a billion dollars and launch a new airline.” – Richard Branson

“Fear incites human action far more urgently than does the impressive weight of historical evidence.” – Jeremy Siegel

“In investing, what is comfortable is rarely profitable.” – Robert Arnott

“Spend each day trying to be a little wiser than you were when you woke up.” – Charlie Munger

“The entrance strategy is actually more important than the exit strategy.” – Edward Lampert

“The rivers don’t drink their own water; Trees don’t eat their own fruits. The sun does not shine for itself, And flowers do not spread their fragrance For themselves. Living for others is a rule of nature” – PopeFrancis

“It is impossible to produce superior performance unless you do something different from the majority.” – John Templeton

“Inaction and patience are almost always the wisest options for investors in the stock market.” – Guy Spier

“Remember that the stock market is a manic depressive.”  – Warren Buffett

“An investment in knowledge pays the best interest.” – Benjamin Franklin

“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