Sobering COVID-19 Influenced Economic & Corporate Earnings Reports Keep Markets In Check This Week

This week, we saw the number of worldwide coronavirus cases grow to more than 3.3 million from 2.7 million while the number of worldwide deaths jumped to 235,290 from 190k. The good news is that 1,039,588 cases have now recovered. In the US, we now have over 1.1M cases up from 905,000 cases last Friday and 64,867 (up from 51,209 last week) US citizens have now past away due to COVID-19 with 136,270 cases that have recovered. In response, we are seeing moves to reopen local economies in some parts of the US, however not in my home state of California where we got out proverbial hands slapped by the governor stating that too many of us were heading to the beach and parks on our time off and getting a bit too close. Hopefully, we will do better on all fronts next week.

On the macroeconomic side of the coin, a number of negative economic reports continued to come in as well as the shutdown continues. Here’s a summary of this week’s economic reports: On Monday, we did receive any significant economic reports. On Tuesday, we received the following reports: The Conference Board’s Consumer Confidence Index for April dove to 86.9, the advance goods trade deficit came in at $64.2B in March, & the advance retail inventories decreased by -1.3% in March while advance wholesale inventories dropped by -1% in March. The S&P Case-Shiller Home Price Index for February moved higher by +3.5%. On Wednesday, we received the following reports: The Q1 GDP report confirmed a decline at an annualized rate of 4.8% as the GDP Price Deflator came in at 1.3%. The Pending Home Sales report confirmed a -20.8% decrease in March. The Weekly Mortgage Applications Index dropped by -3.3%. On Thursday we received the following significant economic reports today: Initial jobless claims decreased by 603k to 3.839M for the week ending April 25, continuing jobless claims totaled 17.992M for the week ending April 18 another unfortunate record, & the six-week total for initial claims now exceeds 30M. Personal income decreased by -2.0% month/month in March while personal spending fell -7.5%. The PCE Price Index decreased -.3% and the core PCE Price Index (excludes food & energy) dropped by -.1%. The Q1 Employment Cost Index rose +.8% seasonally adjusted, for the 3-month period ending in March 2020. Wages and salaries accounting for approx. 70% of compensation costs, increased +.9%, while benefit costs rose +.4%. The Chicago PMI decreased to 35.4 for April which is down from 47.8 in March. On Friday, the ISM Manufacturing index for April came in at 41.5% reading (Briefing.com consensus 39.0%), marking the lowest level since April 2009. The headline number was better than expected, but when you look within the report, it was mostly bad. Total construction spending rose +.9% month/month in March while residential spending was also rose +2.3% month/month & nonresidential spending decreased by -.1% month/month. 

On Wednesday, the Federal Reserve issued their FOMC Statement keeping rates in check at 0.00-0.25% while increasing the scope & eligibility for its Main Street Lending Program. Here’s the statement.

TREATMENT UPDATES

On the world’s mission to discover effective treatments or prevention of COVID-19, Gilead (GILD) ($79.95/share -4.82% Friday) announced that the U.S. Food and Drug Administration (FDA) has granted emergency use authorization (EUA) for the investigational antiviral remdesivir to treat COVID-19. The EUA will facilitate broader use of remdesivir to treat hospitalized patients with severe COVID-19 disease, enabling access to remdesivir at additional hospitals across the country. Allocation of the currently limited available supply of remdesivir will be made based on guiding principles that aim to maximize access for appropriate patients in urgent need of treatment, with direction from and in collaboration with the government. Remdesivir is authorized for the treatment of hospitalized patients with severe COVID-19 disease. The optimal duration of treatment is still being studied in ongoing clinical trials. Under the EUA, both 5-day and 10-day treatment durations are suggested, based on the severity of disease. The authorization is temporary and does not take the place of the formal new drug application submission, review and approval process. The EUA allows for the distribution and emergency use of remdesivir only for the treatment of COVID-19; remdesivir remains an investigational drug and has not been approved by FDA. The U.S. government will coordinate the donation and distribution of remdesivir to hospitals in cities most heavily impacted by COVID-19. Given the severity of illness of patients appropriate for remdesivir treatment and the limited availability of drug supply, hospitals with intensive care units and other hospitals that the government deems most in need will receive priority in the distribution of remdesivir. Gilead is working with the U.S. government on the logistics of remdesivir distribution and will provide more information when the company begins shipping the drug under the EUA.

Atossa Therapeutics (ATOS), which hit intraday high of $3.11/share (up from a recent low of $.76/share) recently prior to closing at $2.10 on Friday, announced a new drug development program called COVID-19 HOPE. (HOPE is an acronym for AT-H201in COVID-19 patients for Pulmonary Evaluation.) The program uses a novel combination of two drugs that have been previously approved by the FDA for other diseases. The intended primary function of the drug combination AT-H201 is to essentially mimic the function of the antibodies formed from a vaccine by blocking the ability of the virus to enter the target cells; a vaccine that may not be available for more than a year. Atossa has filed comprehensive provisional patent applications related to AT-H201 and intends to apply to the FDA under its Coronavirus Treatment Acceleration Program for approval to commence a clinical study. You can learn more by watching a KIRO-7 News interview of Atossa’s CEO Steven Quay M.D. Ph.D. Watch It Now! On Monday this week, Atossa announced that it has contracted with NYC Health + Hospitals/Metropolitan in New York City to conduct the NY HOPE Study of Atossa’s proprietary combination drug therapy called AT-H201. The NY HOPE Study will evaluate AT-H201 in COVID-19 patients on ventilators with the goal of reducing the amount of time on ventilators. The NY HOPE Study is currently pending IRB approval and will not commence without IRB and all necessary regulatory approvals, including FDA. The NY HOPE Study will assess the safety and efficacy of AT-H201 administered via inhalation in COVID-19 patients on mechanical ventilation support. Subject to FDA and IRB input, the study is currently designed as follows: Thirty-nine patients will be enrolled in the active treatment group and compared to the outcomes of 66 patients in a matched retrospective control group. Patients will be dosed with AT-H201 each day in addition to the standard of care, while on mechanical ventilation for up to seven days and will be followed up during hospitalization and for 28 days after discharge. The primary objectives are to determine the number of ventilator-free days after patients are removed from ventilators following the initial airway intervention; oxygenation levels; and survival rates. Secondary efficacy endpoints include a variety of lung function parameters and time in ICU. Secondary safety endpoints include markers of coagulation and system function.

“Managing patient care and ventilator use has become a major challenge. We have an urgent need for a therapy to reduce reliance on ventilators and we are looking forward to playing a key role in what could be a much-needed solution for our sickest COVID patients.” commented Getaw Hassen, M.D., Ph.D., Emergency Physician, at NYC Health + Hospitals/Metropolitan and the principal investigator of the NY HOPE Study. NYC Health + Hospitals/Metropolitan is the community hospital of choice for residents of East Harlem, northern Manhattan, and neighboring communities. NYC Health + Hospitals/Metropolitan provides culturally sensitive primary and specialized medical care to patients of all ages regardless of national origin, immigration status, or ability to pay. Since its founding in 1875, the hospital has been affiliated with New York Medical College, representing the oldest partnership between a hospital and a private medical school in the United States. NYC Health + Hospitals/Metropolitan is part of the NYC Health + Hospitals public health care system. For more information, please visit www.nychealthandhospitals.org/metropolitan.

CytoSorbents Corporation (NASDAQ: CTSO), a critical care immunotherapy leader commercializing its CytoSorb® blood purification technology to treat deadly inflammation in critically-ill and cardiac surgery patients around the world, today announced the appointment of Efthymios N. Deliargyris, MD, FACC, FESC, FSCAI as Chief Medical Officer, to begin employment on May 1, 2020. Dr. Deliargyris brings over 19 years of experience in both academic medicine and industry to the position of Chief Medical Officer. From 2010-2016, Dr. Deliargyris held roles of increasing responsibility as Vice President, European Medical Director, based in Munich, Germany and Global Medical Lead – Acute Cardiovascular Care at The Medicines Company, acquired by Novartis AG this year. Most recently Dr. Deliargyris was Chief Medical Officer of PLx Pharma, a NASDAQ-traded, U.S. specialty pharmaceutical company. 

Dr. Deliargyris commented, “I am very excited about joining this talented executive team during a time of tremendous progress as evidenced by FDA Emergency Use Authorization of CytoSorb for critically-ill COVID-19 patients, and also FDA Breakthrough Designation for removal of ticagrelor during on-pump emergent and urgent cardiothoracic surgery. Whether silencing the cytokine storm or eliminating the risk of life-threating bleeding, CytoSorb is a game-changer with the potential to save thousands of lives and millions of healthcare dollars. We plan to design and execute a world-class clinical trial program and generate the necessary data to support regulatory approvals and establish CytoSorb as a life-saving therapy in multiple indications in the intensive care unit and cardiac surgery.”

VACCINES

Johnson & Johnson (JNJ) & Moderna (MRNA) & a few others continue to press forward with vaccines that reportedly could be brought to the market in 2021, however, virologists that we have spoken to are skeptical that this will happen as to the mutating nature of the virus.

MARKETS

With the coronavirus pandemic and associated lack of worldwide economic activity in the atmosphere again this week the markets this week we dropped marginally week/week except for the Russell 2000 which shook off the troubles and rose over +2%. 

• The Dow ended the week at 23,723.69 representing a weekly decline of -.2% and is now down -16.9% YTD
• The S&P 500 closed at 2830.71 for a weekly loss of -.2% and is now down -12.4%
• The Nasdaq Composite closed at 8,604.95 on Friday, representing a weekly -.3% downward move and is now down -4.1% YTD
• The Russell 2000 closed at 1,260.48 representing a weekly +2.2% increase and is now down a -24.4% YTD. The smalls are still trailing but it is good to see 2 consecutive weeks of gains.

The FAANG’s results ended a bit mixed.  Amazon being humbled via a beat on quarterly revenue but EPS at $5.01 was a $1.22/share as they realized saw a sudden surge in demand for some categories and a simultaneous huge drop off in others while experiencing higher COVID costs & they were forced to hire 175k new employees to fulfill deliveries. Amazon (AMZN) closed at $2,286.04/share, -7.60% Friday, ($2,410.22/share a week ago but up approx. 40% since mid-march). Facebook (FB) closed at $202.27/share, -1.19% Friday, ($190.07/share a week ago), Apple, Inc. (AAPL) closed at $289.07/share, -1.61% Friday, ($282.97/share a week ago), Netflix (NFLX) closed at $415.27/share, -1.09% Friday, ($424.99/share a week ago) & Alphabet (GOOG) closed at $1,320.61/share, -2.08%, ($1,279.31/share a week ago.)

COMMODITIES

Oil prices were all over the place this week but overall rebounded as it ended  Up +16.1% gain at $19.77/bbl and up from last week’s close of $17.03/bbl. Chevron (CVX) moved up this week to close at $89.44/share ($87.01, last wk) and Exxon (XOM) moved down closing at $43.14/share ($43.73, last wk.). The energy sector rose +2.9%.

Gold prices closed at $1,707/0z. down from $1,735/oz & silver prices closed down a dime at $15.17/oz from $15.27/oz last Friday. 

DOLLAR & YIELD

The U.S. Dollar Index weakened to end the week at 99.03 down from 100.24 last week.  US Treasury yields were mixed week over week. The 2-yr Treasury yield closed at the same mark at .2o% (two consecutive weeks), the 10-yr yield closed at .64% up from .60%, & the 30-yr yield ended at 1.25% up from 1.117%.  

NEXT WEEK

We are due to receive the following significant economic data next week:

• The earnings season continues this week with about one-third of the companies in the S&P 500 reporting Q1 results
• The factory orders report on Monday
• The non-manufacturing Purchasing Managers’ Index (PMI) on Tuesday
• The April’s jobs report on Friday

STOCKS IN VIEW

•  Atossa Therapeutics’ (ATOS) is positioned to possibly begin making several announcements surrounding the potential progress of their NY COVID-19 HOPE Study which is currently pending IRB approval and will not commence without IRB and all necessary regulatory approvals, including FDA. Review Maxim’s BUY RATING & $4/share Target Price here. The 52-week high is $3.25/share.

• Shares of Neubase Therapeutics (NASDAQ: NBSE) closed this week at $7.67/share up +1.05% after hitting a new all-time high of $8.85/share recently. Investment banks BTIG, HCW, Oppenheimer & Guggenheim maintain analyst coverage with BUY ratings on NBSE that include a price target that ranges in a $13-$15/share target price range. NBSE recently. NeuBase, a preclinical-stage biotechnology company focused on developing next-generation therapies to treat rare genetic diseases caused by mutant genes announced Thursday that they had closed of a previously announced underwritten public offering of 6,037,500 shares of its common stock (inclusive of 787,500 shares that were sold pursuant to the underwriters’ full exercise of their option to purchase additional shares of NeuBase’s common stock), at a price to the public of $6.00 per share. The net proceeds to NeuBase from the offering are expected to be approximately $33.3 million, after deducting the underwriting discounts and commissions and other estimated offering expenses payable by NeuBase. NeuBase intends to use the net proceeds from this offering for working capital and general corporate purposes and to advance the development of its product candidates and expand its pipeline. Oppenheimer & Co. Inc. and BTIG acted as the joint book-running managers for the offering, and Chardan and National Securities Corporation, a wholly-owned subsidiary of National Holdings, Inc. (Nasdaq: NHLD), acted as the co-managers.

In the meantime, I believe that we will continue to see volatility in the markets, but at a rate reduced from the 10% wild swings that we recently stomached, however, President Trump is now threatening new tariffs on China for its handling of the coronavirus outbreak so hold on to your seats as he might get a few hearts beating above average again & extreme volatility could return. This gives us even more of a reason to make sure that we are being selective in building our positions. 

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.

Please also enjoy the balance of the weekly newsletter’s videos, quotes, updates, and keep up the great work in helping our nation and world recover from the coronavirus epidemic.

Economic Reports

A number of negative economic reports continued to come in as well. Here’s a summary of this week’s economic reports: On Monday, we did receive any significant economic reports. On Tuesday, we received the following reports: The Conference Board’s Consumer Confidence Index for April dove to 86.9, the advance goods trade deficit came in at $64.2B in March, & the advance retail inventories decreased by -1.3% in March while advance wholesale inventories dropped by -1% in March. The S&P Case-Shiller Home Price Index for February moved higher by +3.5%. On Wednesday, we received the following reports: The Q1 GDP report confirmed a decline at an annualized rate of 4.8% as the GDP Price Deflator came in at 1.3%. The Pending Home Sales report confirmed a -20.8% decrease in March. The Weekly Mortgage Applications Index dropped by -3.3%. On Thursday we received the following significant economic reports today: Initial jobless claims decreased by 603k to 3.839M for the week ending April 25, continuing jobless claims totaled 17.992M for the week ending April 18 another unfortunate record, & the six-week total for initial claims now exceeds 30M. Personal income decreased by -2.0% month/month in March while personal spending fell -7.5%. The PCE Price Index decreased -.3% and the core PCE Price Index (excludes food & energy) dropped by -.1%. The Q1 Employment Cost Index rose +.8% seasonally adjusted, for the 3-month period ending in March 2020. Wages and salaries accounting for approx. 70% of compensation costs, increased +.9%, while benefit costs rose +.4%. The Chicago PMI decreased to 35.4 for April which is down from 47.8 in March. On Friday, the ISM Manufacturing index for April came in at 41.5% reading (Briefing.com consensus 39.0%), marking the lowest level since April 2009. The headline number was better than expected, but when you look within the report, it was mostly bad. Total construction spending rose +.9% month/month in March while residential spending was also rose +2.3% month/month & nonresidential spending decreased by -.1% month/month. 

Investing & Inspiration

“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

Tomorrow

We are due to receive the following significant economic data next week:

• The earnings season continues this week with about one-third of the companies in the S&P 500 reporting Q1 results
• The Q1 GDP estimate and the Federal Reserve rate announcement on Wednesday
• The manufacturing Purchasing Managers’ Index (PMI) on Friday